Most people don’t realize that starting a nonprofit organization involves a great deal of research, work, and time. It’s also a complex process that consists in protecting the organization and its leaders from legal harm. Before you can begin this process, you should do some research to ensure the type of organization you’re thinking about starting is necessary and unique to your community. If so, you can follow this guide.
Create a Business Plan
To get started, you will have to create a business plan that’s just as detailed as the plan you would make for a commercial business. This begins with a mission statement that outlines your organization’s purpose and the people it’s intended to help. Your mission statement should also outline a strategy for achieving the goals you set for the organization. This step in the process should also involve establishing a board that will oversee the organization’s management.
Protect Your Organization Against Liability
You’ll find that most nonprofit organizations are incorporated, and there are many reasons for taking this step. By incorporating your organization, you’ll establish credibility and authority for your organization, which will go a long way towards establishing trust with the people in your community. More importantly, incorporating your nonprofit will protect the board members from liability if anyone seeks damages against the organization. Finally, it’s easier to comply with the regulations set by the IRS when you already have to meet those requirements to be eligible for your status as an incorporated organization.
Seek Tax-Exempt Status
You’ll also have to apply for 501(c)(3) status with the IRS to ensure your organization will be exempt from paying revenue taxes. It’s wise to consult a tax attorney as you start this process because there are different tax-exempt applications. You may need help in determining which is the right form for your nonprofit organization. The fees for filing range from $275 to $600, and it can take up to one year to get the final approval from the IRS.
Even after you follow these steps, the hard work is far from over. You will still have to raise funds, establish an online presence, set up a brick-and-mortar facility, and market your organization. This is a lifelong endeavor that can become just as time-consuming as starting any commercial business. Before you get started, be sure you’re ready for the responsibilities that creating a nonprofit organization entails.