Saving the world is tough to do alone – so why not consider forming a non-profit? Non-profits can help you expand on your incredibly important work, but it can be tricky getting them off the ground. Between filing paperwork and finding the right staff, you want to be sure that you’re doing everything right before taking your cause to the next level. And we have your back every step of the way! In this blog, we’ll outline the steps you don’t want to miss when starting your non-profit – from registering a name to registering for fundraising!

Define Your Values & Mission

If you’re going to form a non-profit, you need a solid foundation to build upon. First things first, decide what your values statement and mission statement will be. Your values statement will be the principles that influence the decisions you, your staff, your board, and the organization as a whole make day-to-day. Whichever values you choose will act as the guiding light keeping your non-profit ethical while leading you toward success. Meanwhile, your mission statement, or purpose statement, will define why your non-profit exists. Think of it as an elevator pitch – it should be 50 words or less that help persuade people to support your cause.

Pick a Name

Once you have your values and mission defined, take the time to choose a name for your non-profit that reflects them both. Just be sure to check that the name you’ve chosen is available. This can be done using the business search database on the Secretary of State’s website. If the name is available, then you can then register it with the Secretary of State.

Pick Your Board

Now’s the time to start putting together a strong board of directors who will lead your organization. Think about who can fulfill the skills and expertise needed for your non-profit to be successful. Of course, these things might mean nothing if the people you choose aren’t committed to your cause. You’ll need all three – knowledge, experience, and passion for the cause – to create your non-profit’s dream team.

Create Bylaws

Bylaws are the rules that your board will use to run the non-profit legally, effectively, and impactfully. Some bylaws that you may want to include are:

  • Board member roles and responsibilities
  • Voting procedures
  • How often you want the board to meet
  • Expectations for board attendance
  • Term lengths for board members
  • Approval process for financial purchases

You can also consider adding a conflict-of-interest policy to your bylaws, to prohibit board members from voting on any matters that they could have a personal stake in.

Let the Board Meeting Commence

With a board and bylaws in place, it’s time to put it all together and hold your first meeting. This first board meeting will be more of an organizational meeting, and it’ll be a chance for your board to make decisions on matters such as:

  • Approving the values statement, mission statement, and bylaws
  • Electing directors
  • Appointing Officers
  • Setting budgets and accounting periods
  • Opening a corporate bank account
  • Choosing to pursue incorporation and tax exemption for the organization

Apply for an EIN

Every business, no matter the state, needs an EIN, or Employer Identification Number – even if you don’t have any employees yet. The EIN is a unique, 9-digit number that will identify your non-profit to the IRS. It will also allow you to legally run your organization in the state where you’re located. To obtain an EIN, you can fill out an Application for Employer Identification Number either online, by mail, or by fax.

Incorporate Your Non-profit

Aside from an EIN, you also need to file Articles of Incorporation to be recognized as a business within your state. The articles are a set of documents that may include the name of your nonprofit, its address, the type of corporate structure, your board of directors, and other information.  To get started, you can visit your Secretary of State’s office to file the form. Keep in mind that requirements for this step can differ from state to state, so it’s important to do your research before jumping into the incorporation process. For example, in California you’re also required to file a Statement of Information within 90 days of filing the Articles of Incorporation. Plus, the Financial Crimes Enforcement Network (FinCen) now requires businesses to file a Beneficial Ownership Information (BOI) report 90 days after incorporation.

Apply for Tax Exemptions

After your non-profit is formed, you can start seeking tax-exemption status. The majority of non-profits are recognized as a 501(c)(3), which recognizes all charitable, religious, scientific, and literary organizations. To apply for this status, you’ll need to file a form with the IRS, which can differ based on your non-profit’s size and gross income. Be prepared, as this form can range from anywhere between 50-100 pages of information. Think of it as a comprehensive and thorough audit of your non-profit’s board, purpose, planned programs, and other proposed activity.

Register to Fundraise

To get your cause up and running, you’ll need a little cash to back you up. Again, whether or not you need to complete this step depends on the state you’re conducting business in, so be sure to look up your state’s requirements before filling out any forms. If you are part of the 40 states that require fundraising registration, then you’ll need to reach out to your department of charitable solicitations – which can usually be done throughout the Attorney General’s office or the Secretary of State. In addition, you may need to renew your registration annually or your non-profit could be fined and lose its ability to operate within your state.

Stay Compliant

This brings us to the last point – once your non-profit has hit the ground running, don’t let noncompliance knock you off course. Here are a few things you can do to keep your organization on the right track:

  • Make sure that everyone in your organization is following the by-laws.
  • Keep detailed records of your non-profit’s activities and your financial documents to maintain your tax-exempt status.
  • Record the discussions and decisions that take place in your board meetings.
  • File your federal tax forms each year to show how your non-profit is raising funds and avoiding any conflicts of interest.
  • If necessary for your location, file your state tax forms each year so you can continue your fundraising efforts within the state.