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Starting a Nonprofit can be an enriching experience. However, growing and sustaining a nonprofit may take years of effort and a great deal of perseverance. The biggest challenge for most new nonprofits is to develop and maintain reliable income streams. For a Nonprofit organization to be successful, the planning process should begin well before you decide to form your organization. Planning your programs, creating a start-up budget, and solidifying your mission statement should be among the first things you do.
Forming a Nonprofit organization is similar to starting a for-profit business; it requires a solid understanding of business planning, tax law, marketing, financing options, and leadership.
Here is an essential checklist for how to start a Nonprofit Organization.
1. Do your homework, conduct a needs analysis.
Find out if organizations are already providing similar services in your community. Also, locate demographic data that proves a need for your services. If there are already organizations in your area that offer the same services, the need and support for your organizations' services may be limited.
2. Build a solid foundation.
Building your foundation includes drafting your mission statement, writing a business plan, and developing your board of directors. Having a solid foundation is the most critical step in the planning process. The mission statement defines your organization, the who, the what and the how. The business plan can also help describe how it intends to achieve that mission, and your board of directors will help you attain those objectives.
3. Name and Incorporate your Nonprofit.
Choose a name that communicates your organization's identity and mission. Incorporating your Nonprofit creates formal structure, limits liability, and adds to the credibility of your programs.
4. File 501c3 Tax-Exempt Status
Apply for exempt status with the Internal Revenue Service. The cost typically ranges from $300-$600 and can take anywhere from 3-12 months.
5. Don’t forget about ongoing compliance.
Register with your state's agency and prepare for annual reporting requirements. i.e., Form 990, which shows your organization's finances, activities, governance, processes, directors, key staff, and is open to public inspection. Maintaining your nonprofit status is an ongoing process, and the consequences are severe if you don’t follow the rules. (Check your state for reporting and renewal requirements)
Before you tackle the challenge of starting a nonprofit, weigh your pros and cons of meeting all the legal and tax requirements of forming and operating an official nonprofit organization. Starting a Nonprofit is not an easy task, with so many steps to take in the early stages, many fail within the first year. However, with proper planning, research, and determination, your organization can be successful.
Written by: Takiya Green, Founder of Divine Writing Solutions