How to Start a 501(c)(3) Nonprofit Organization
You have a cause you are passionate about and are exploring the idea of starting a nonprofit organization to address the issues around your cause and make a lasting impact. Starting a nonprofit is a phenomenal way to do so, but it can also be a challenging process that requires careful planning and execution. If you're considering starting a nonprofit organization, here are ten steps to help guide you through the process.
Create a name for your nonprofit. Be sure to check with your Secretary of State for name availability.
Select individuals to serve on your Board of Directors. In most states, you need at least three (3) non-related people. This typically includes a President or Board Chair, Vice President or Co-Chair, Treasurer, and Secretary.
Develop a Mission, Vision, and Values for your nonprofit.
Create your Bylaws, which are the rules and procedures that govern the nonprofit organization. This should include policies and procedures like code of ethics, conflict of interest, board structure, voting, meetings, compensation setting, fiscal management, restricted gifts, etc.
File your Articles of Incorporation with the Secretary of State to obtain your EIN (this is not your 501c3!). It typically includes your organization’s name, purpose, registered agent, and board information. (Involves a fee of about $50).
Apply for tax-exempt status with the Internal Revenue Service (IRS) by filing Form 1023. This is necessary to qualify for tax-exempt status and to receive donations that are tax-deductible for donors. There is also a much faster version, Form 1023-EZ, for smaller nonprofits. If you do not plan to have a revenue of more than $50,000 per year for the first three years of operations, you can file Form 1023-EZ.
Register for your Charitable Solicitations Permit with your Secretary of State.
Open a bank account in your nonprofit’s name. It is important to develop a system for tracking income and expenses to ensure that your organization complies with the financial reporting requirements of a 501c3.
Develop a Budget.
Develop a Fundraising Plan and a 3-Year Strategic Plan to ensure you start your nonprofit on the right foot. The key to a successful nonprofit is both a passion for its mission and excellence in its systems and strategies.
