How To Start a Non-Profit

By Sandra Arcadipane

So, you want to help change the world, raise support for orphans, feed the poor or build a youth center in the inner city. If you are contemplating starting a non-profit organization it isn’t something to be taken lightly, it takes a lot of work and almost always requires an upfront investment. But, if it’s done right, your organization can have positive and lasting effects for generations to come. Here are 12 steps to consider as you move forward, the “how to” of forming a non-profit.

1. Understand what a non-profit really is and decide if it’s right for you.  A non-profit is a charitable or service-type organization. If you are looking to get rich and distribute it to shareholders or executives, this isn’t the avenue you want to take. Most of the funds earned stay within the organization to help meet its goals and continue its service to the community. A 501(c)(3) is a type of non-profit that can receive charitable donations and is exempt from income and (sometimes) property taxes.
2. Create a mission statement. This statement should be one or two sentences that describe the purpose, mission, values and goals of your organization.
3. Form a Board of Directors.  Research your state’s guidelines for the minimum number of board members you must have.  When deciding who will be on your board, look at the qualities each person possesses. You want someone who has integrity, is honest and supportive of you and your mission. 
4. Hire an attorney who specializes in non-profit law.  There is a lot of paper work involved in creating a non-profit such as filing articles of incorporation with the state.  Each state has specific laws that govern how a business or organization can incorporate and you want to make certain that you are filing the right papers at the right time and are taking the appropriate steps to reaching your goals.
5. Open a bank account in the organizations name and hire an accountant that will help you set up your basic bookkeeping.
6. Create a budget.  You need to estimate what your potential income will be and break down all the costs that you estimate having. This budget will be one of the main guides to running your organization.
7. Get insured.  Ask for a referral and speak with an agent about what you are planning to do and find out what type of insurance you may need.
8. Draft your bylaws. Your attorney will help you write these rules or laws that will help govern your organization.
9. File for your 501(c)(3) status.  You can find forms for this in your local IRS office.  Form 1023 (application) and Publication 557 will allow you to do this. You must have your budget worked out before you do this because the fee that you will pay depends on the size of your budget.
10. Complete more paperwork. You will need to apply to get your Federal Tax ID number. This may automatically happen through the paperwork that your attorney or bookkeeper files for you. Additionally you will need your attorney or accountant to file for incorporation with the state, file for federal and state tax exemption, and file for property tax exemption.
11. Obtain a solicitation license if you plan on soliciting funds. Your attorney can also help you with that.
12. Market your service. Even non-profits need to raise awareness of what it is they do. You can do a mass mailing and file for a permit that will give you a discount. Also radio, print, television and internet provide many streams of advertising possibilities. Often times discounts are available based on your non-profit status.

Feeling overwhelmed? Speak with people in your life who you consider to be wise. Explain your desires and vision. They will give you a perspective you had not looked at.  If you decide to form a non-profit, know that every work comes with a cost, there is sacrifice that will be involved. Enduring projects come with blood, sweat, and tears but if you ask those who have gone before you, they would not change anything! It is always more than worth it in the end.