How to Start a Nonprofit

Do you have a great idea for a nonprofit that could improve the community, but don’t know how to get started? Starting a business or nonprofit is no easy task, but these first steps should get you going in the right direction.

Step 1: Do Your Research

It is important to know exactly what you are getting into before taking on such a project. To ensure that your nonprofit will be successful for years to come, first determine if there is a demonstrated need for an organization with the mission that you envision for yours. If not, then maybe it is time to go back to the drawing board to look for something that is needed in your community.

Next you should ask yourself if you have a plan for financing the organization. While it would be ideal to get donors to finance everything your nonprofit needs, that is not always going to be feasible. You will need to come up with capital for starting the organization and a plan for what will happen when the organization falls on hard times, as every business does at some point.

You should also determine if you will be able to achieve the mission you have set for your organization. This mission serves as a promise to the community that you will want to make good on. Also, successful nonprofits tend to get more donor funding.

Step 2: Build a Foundation

When building the foundation of your organization, one thing you can do to ensure that you have covered all of your bases is answer the ‘5 Ws’.

WHO will be involved? It is important to have an expansive support system when starting your nonprofit. You will need board members, volunteers, organizational partners, and more. Without all of these people, your organization may not have success.

WHAT do you need to do? Stay on top of your business plan, including your mission, budget, organizational structure, marketing plan, and fundraising. Letting any of these fall by the wayside will create a gap in the plan, which could be dangerous for your organization.

WHEN should you file your paperwork? A lot of tedious paperwork comes with opening up a nonprofit organization. You must incorporate yourself at the state level and them file for your federal tax-exempt status. After this is done, there is plenty of ongoing reporting, including annual state and federal filings, submitting required information to funders, and acknowledging contributions from individual donors.

WHERE can you go to get reliable help? Reach out to lawyers who have experience in tax-exempt law. Nonprofits operate by a whole different set of rules, so it is important that you seek out a lawyer with specific nonprofit experience. Your state bar association may be able to get you in contact with a qualified person.

WHY is starting a new organization the only way to accomplish the mission? You will need to be able to answer this question if you want to recruit strong candidates for seats on the board, staff, donors, and volunteers. Tell them why they should align with your organization rather than take the safer route of working with an already established nonprofit.

Step 3: Incorporation and State Forms

The first part of this step involves contacting your local state association of nonprofits, because the requirements for this step often vary by location. Additionally, you may again want to seek out legal counsel with experience in tax exempt law to ensure that your forms are completed correctly.

Although requirements vary, incorporation often involves registering your intended name, filing articles of incorporation, publishing articles of incorporation in newspapers, and preparing and adopting bylaws, a conflict of interests policy, and compensation policies.

Step 4: File for Federal Tax Exemption

It is important to contact a tax exemption law lawyer for this step. There are several forms that must be completed properly in order for tax exemption to be granted. This step is vital to the long-term survival of your nonprofit, so work with someone who has experience.

Step 5: Ongoing Reporting and Compliance

There is a lot involved with ensuring your organization is compliant with state and federal regulations on all initiatives. Be sure to have someone qualified and knowledgeable assisting your organization when it comes to registering for fundraising and lobbying, securing any licenses or permits, registering for unemployment insurance, and registering for any additional tax exemptions.

While this is by no means everything involved with starting a nonprofit, it can get you going in the right direction. For more information on creating and running nonprofit organizations, visit www.NWISOI.org.

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