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How To Form Your Own Nonprofit Organization


How To Form Your Own Nonprofit Organization

Nonprofit organizations strive to serve their communities. Creating and sustaining a successful nonprofit is no easy feat, which makes their contributions all the more impressive. Though it’s sure to have its challenges, starting a nonprofit is entirely plausible. If you’re looking to establish a company with a focus on making a difference, review this guide on how to form your own nonprofit organization. We’ll cover the basic steps to start your company on the right foot.

Determine the Best Route

Before your company can hit the ground running, you’ll need to conduct some research.

A Needs Analysis

You should know whether organizations with the same goals exist in your area. This will determine community needs and inform how much support your nonprofit gets. If a similar nonprofit exists, what sets you apart? Why build something anew instead of improving the existing one?

Confirm Your Motive

Nonprofit organizations must be operated for exempt purposes as outlined in the Internal Revenue Code’s section 501(c)(3). If you’re looking to start a nonprofit company to cut yourself a bigger check with grant money, you should reconsider the endeavor.

Lay the Foundation

No business can expect to succeed without laying a strong foundation first.

Draft the Mission Statement

The mission statement outlines the reason behind your nonprofit. A comprehensive statement is crucial to getting donors’ attention and financial support. Learn how to write a mission statement to ensure you don’t leave anything out.

Develop Your Plan and Your Board

Just as you would establish a for-profit business, you must mock up a business plan. This will include details on how you intend to reach the goals laid out in your mission statement. The board will consist of folks who fulfill various legal responsibilities to help reach these goals.

Incorporate Your Nonprofit

In gathering how to form your own nonprofit organization, you’ll find how beneficial it is to incorporate it. Incorporating your nonprofit offers a range of perks, including the following:

  • Creates formal structure that establishes credibility.
  • Limits the organization officer and director’s liability.
  • Ensures completion of organizing documents, governance policies, and procedures required by the IRS.

Secure a 501(c)(3) Tax-Exempt Status

You’ll have to apply for the tax-exempt status with the IRS. There will be a user fee dependent upon your application method and can take the IRS anywhere from three months to a year to determine their approval.

Ongoing Compliance Considerations

A few more steps will ensure the legitimacy of your nonprofit. As the owner of the organization, you’ll need to:

  • Register with your state’s agency.
  • Prepare for annual reporting requirements.
  • Follow tax-exempt status rules.

Once you’ve thoroughly completed each step, you and your nonprofit organization will be ready to make tangible impacts within your community and the world.

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