Starting a non-profit

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How to Start a Non-Profit Manual

Starting Your Nonprofit

Should You Really Start a New Nonprofit?

There is a great deal of misunderstanding about the benefits of starting a nonprofit. Particularly in times of a poor or rough economy, people think they can start a nonprofit to quickly generate income. Or, when people see a strong, unmet need in the community, they often focus only on the singular solution to start a new nonprofit. The following article gives a very useful description of the realities of starting yet another new nonprofit.
New Year's Resolution -- No New Nonprofits Unless ...

Also see the article:
Should I Start a For-Profit or a Nonprofit?

Before starting a nonprofit business, there is some preliminary "business" thinking that you really should do. Doing this thinking now can save you -- and maybe your employees and clients -- a great deal of anguish.
Preparation for Planning a Business Venture

What Do You Mean by "Starting a Nonprofit"?

Get Clear About the Purpose (the Mission) for Your New Organization

Perhaps the best way to really clarify to yourself what you intend to accomplish by starting a new nonprofit is to write a basic mission statement for your organization. You'll soon need this mission statement anyway if you plan to incorporate your nonprofit (more about incorporation a little later on). The following guidelines may be helpful to you when writing your first, basic mission statement.

1. At is most basic, the mission statement describes the overall purpose of the organization. It addresses the question "Why does the organization exist?"

2. The statement can be in a wide variety of formats and lengths, ranging from a few sentences to a few pages. At this stage in the development of your nonprofit, it might be best to keep your mission statement to at most about half a page.

3. When writing the mission statement, try include description of what you think will be the new nonprofit's
a) primary benefits and services to clients
b) groups of clients who will benefit from those services
c) values that will guide how your nonprofit will operate
d) how you'd like others to view your nonprofit

4. It's often useful to refine the first, basic mission statement by adding or deleting a sentence or a word from the mission statement until you feel the remaining wording accurately describes the purpose of the new nonprofit organization.

(You may want to read more about Developing/Updating Mission Statements.)

Now Think About What Kind of Nonprofit You Want to Start

The phrase "starting a nonprofit" can mean several things. Read the following very basic information to begin thinking about what you mean when you set out to "start a nonprofit". Keep your mission statement in mind when thinking about each of the following. (There will be more specific guidance later on when you read the next subsection Variety of Checklists to Reference When Formalizing Your New Nonprofit.)

• You can be a nonprofit organization just by getting together with some friends, eg, to form a self-help group. In this case, you’re an informal nonprofit organization.

• You can incorporate your nonprofit so it exists as a separate legal organization in order to a) own its own property and its own bank account; b) ensure that the nonprofit can continue on its own (even after you’re gone); and c) protect yourself personally from liability from operations of the nonprofit. You incorporate your nonprofit by filing articles of incorporation (or other charter documents) with the appropriate local state office. (An incorporated nonprofit requires a board of directors.) In Canada, you can file for incorporation at the provincial or Federal levels.

• If you want your nonprofit (and if you think your nonprofit deserves) to be exempt from federal taxes (and maybe some other taxes, too), you should file with the IRS to be a "tax-exempt" organization. (The IRS states that you must be a corporation, community chest, fund, or foundation to receive tax-exempt status. Articles of association may also be used in place of incorporation.) (Probably the most well known type of nonprofit is a the IRS classification of 501(c)(3), a “charitable nonprofit’.) (Being tax-exempt is not the same as being tax-deductible.) In Canada, you can file for tax-exemption at the provincial and Federal levels.

• Depending on the nature of your organization, you may also granted tax-deductible status from the IRS. Publication 526 lists the types of organizations to which donations are deductible. In Canada, the Canada Customs and Revenue Agency (CCRA) grants charitable status, and you must be incorporated to achieve charitable status.

• So, for example, you could start a nonprofit that is incorporated, tax-exempt and eligible to receive tax deductible donations.

• The particular steps you take when starting your nonprofit depend on your plans for your organization, including the nature of its services. They also depend on how the IRS interprets the nature of your organization, including its services. Again, in Canada, you can file for incorporation and tax-exempt status at the provincial or Federal levels.

You may want to read more about What is a Nonprofit?.)

Consider Fiscal Sponsorship to Jump Start Your Organization

In some cases, you might find and work with another nonprofit organization that will act as your fiscal sponsor. A fiscal sponsor might be useful to you if your nonprofit:
1) Does not have sufficient resources to handle startup costs and fees
2) Does not have sufficient skills initially to manage your finances
3) Will address a community need and then no longer need to exist. See Fiscal Sponsorship -- Help You Get Started?

Do You Need a Lawyer to Start Your Nonprofit?

You Can Do Much of the Work Yourself -- But Get Legal Advice and Guidance

You can do much of the work yourself to get incorporated and/or tax-exemption and/or tax-deductibility, but you should have some basic guidance and advice from a lawyer who understands nonprofit matters. For example, in the USA, it's very important how you characterize your plans when filing for incorporation with your state and/or for tax-exemption and/or tax-deductibility with the IRS -- otherwise, your new organization may be deemed a for-profit or you may have to pay federal taxes (among other taxes) on your income. In addition, there are various reports and filings you may have to submit. A nonprofit-knowledgeable lawyer can help you a great deal. Ask other nonprofits for references to good lawyers. Ask a local funder. Call the local bar association.The following link might also help you. See Getting and Using a Lawyer

Nonprofit Incubators

Business incubators are usually facilities that help businesses share resources as low-cost means to getting started. You may have a nonprofit incubator in your community. Contact the local office of the National Council of Nonprofit Associations to find out. The following links will give you an overview of business incubators.
Business Incubation FAQ

The following table depicts the important steps required to register your new nonprofit. These steps are also mentioned across many of the checklists referenced above. These steps also assume that you chose not to seek Fiscal Sponsorship.

activity	comment	for help
draft mission statement	draft a brief mission statement that describes the charitable purpose of your new organization; your board should soon review it during strategic planning and authorize the statement	here
recruit board members	(if you plan to incorporate in your state) recruit at least enough board members to meet state requirements for a corporate board (contact state attorney's office); if you don't plan to incorporate, consider an informal advisory board to help guide you	here
get a lawyer	to help you file articles of incorporation (if you plan to incorporate), application to IRS for tax-exemption (if you plan to seek exemption from federal taxes); you can do most of the work yourself, but at least have a lawyer review the materials before submission; will eventually need special expertise to review personnel policies	here
get banker and bank account	get a bank account; seek bank that understands needs of new, small nonprofit	here
get accountant	get an accountant or other finance expert to help you set up basic bookkeeping system; when you get a board treasurer, then he/she can be very helpful in this regard	here
get insurance agent	you may need liability insurance, property insurance, and when you hire staff: worker's compensation, health and life insurance benefits, etc.	here
draft articles of incorporation and get board approval	these specify legal description of your organization and power to the board; you'll need to draft these only if you plan to file for incorporation with your state; the Board should approve the Articles before submission	here
draft bylaws and get board approval	these specify how the board will operate and configure the staff; some states require these; some of this information will be in the Articles if you file Articles; the board should approve the bylaws	here
file for incorporation with state	register for incorporation including submitting your drafted and approved Articles (if you plan to incorporate); may need to submit bylaws, too; also find out what various reports the state wants from nonprofits	secretary of state or secretary of commerce
file for federal tax-exempt with IRS	apply for tax-exempt status (to be exempt from paying federal taxes); board should approve this filing before submission;	here
get state tax exemption from state	once you get IRS exemption, file for any state tax exemptions	state attorney, attorney general or secretary of commerce
get property tax exemption from city	once you get IRS exemption, file for any state tax exemptions	local city tax assessor
get solicitation license	if you plan to solicit funds, your city may require a solicitation license	local city offices
get mail permit	this permit gives you a discount on bulk mailings	local post office
get federal employer number	(do this once you start to hire employees) get federal employer number to withhold income and FICA (once you hire employees)	secretary of state, secretary of commerce
get unemployment insurance req's	do this once you start to hire employees	secretary of state, secretary of commerce