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How to Start a Nonprofit Organization

Thinking about starting a nonprofit organization? Starting a new nonprofit and joining the 1,536,084 currently registered organizations is the first step to making a positive difference in the world. In total, the National Center for Charitable Statistics has reported that in the year 2013 alone, $316.23 billion dollars were distributed to causes throughout the United States. If you’re ready to pursue a cause that you’re truly passionate about, here are some tips and advice on how to get started.

Take Advantage Of The Planning Stage

The most successful nonprofit organizations are the ones that are prepared from the very beginning. Recruit an experienced and dependable board of directors with a diverse background that can benefit you when you start a nonprofit organization. Work together with these individuals to plan for any potential kinks that could arise during the incorporation stage, and while managing the nonprofit during day-to-day operations.

After brainstorming potential problems, use this information to write up a strong business plan that you’ll be able to use to lure in donors and submit to the IRS during the 501c3 application stage. Your business plan at minimum should include:

  • Cover Page
  • Executive Summary
  • Industry Analysis
  • Marketing Plan
  • Operations Plan
  • Management Team
  • Financial Plan

The executive summary should be written at the end of the business plan and is one of the most important provisions in the entire document. Without a well-formulated executive summary, donors and volunteers are going to skip over the rest of your business plan without interest.

File for Incorporation and Apply for Licenses

After working out all the potential problems and developing a solid business plan, you’re going to need to file for incorporation with the state and the federal government. Every state has different rules that will vary depending on your industry; some states require special licenses and filing fees, others do not. Check with your municipal and state government to determine what will apply to your organization.

Next, you’ll want to fill out IRS Form 1023 to apply for 501c3 status with the federal government. This is an authorization for tax-exemption that will ensure that you won’t have to pay corporate income taxes on any charitable donations made to your organization. The average time it takes to process applications is around 2-12 months, so make sure that you file this information early on in the year before tax season comes around. If you’re approved, you’ll be expected to file a 990-tax form to claim donations thereafter.

Consider retaining a nonprofit attorney during this stage of starting a nonprofit organization as they have experience in tax code and incorporation laws. Often times, attorneys can help expedite the application process and put you in a better position right out of the gate to get your organization in operation.

Marketing and Fundraising

Nonprofit marketing requires a unique blend of brand, search and social media strategy. Work off your business plan to begin marketing your organization and building brand recognition. Use social media and content marketing to get yourself started. Also, make it easy for interested parties to make donations by offering payment options through PayPal, or any other secure form of online collection.

Remember that businesses and individuals that make donations to federally recognized nonprofits receive tax incentives when they go to file their annual return; take advantage of this information as much as possible, and get comfortable asking for money if you aren’t already. The more money that you are able to collect for donors, the better suited you’ll be able to help your cause. An attorney can ensure that these funds are being collected within the law and that you won’t become a victim to frivolous lawsuits that can jeopardize the organization.

[image credit: Room to Read]

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