Registering a nonprofit is similar to creating a business — it’s tedious, methodical, and rigorous. But it‘s worth it. Luckily, for those of you thinking about taking the plunge, we narrowed the process down to 8 key steps in order to make it less overwhelming.
1. Perform a Needs Analysis
To begin, you will want to find out if any organizations are already doing the work you intend to do. If so, you might want to rethink your idea as it will be harder for you to get support. You should also ensure that you are targeting a population’s specific needs, instead of providing a service that nobody has any use for. For this, you will want to research demographic data that illustrates this need. If, after these analyses, you find that you have an idea for a nonprofit that will meet the unmet needs of a population, go ahead and pursue it.
2. Draft Your Mission Statement
As a nonprofit organization, you aim to accomplish a mission based on certain values. If you hope to fund your organization through donations, your potential donors will need to be aware of what this mission is. You can let them know by drafting a short description of your organization, its target population, its purpose, and how it plans to fulfill this purpose — also known as a mission statement. You should ensure that your mission statement differentiates your nonprofit from other similar organizations.
Mission statements vary in length and format, sometimes consisting of a few sentences and other times a few pages. Whatever the format you choose, make sure that your statement is compelling, as you will likely use it in the majority of your published materials, including public relations documents and donation requests.
3. Build Your Board
Next, you will need to create your board of directors. As a new organization, you will want to recruit board members based on their expertise and enthusiasm. Your board members should be interested in your mission, have relevant experience (fundraising, nonprofits, boards), and have enough time and energy to devote to your organization.
Board regulations vary between states, with the minimum board size often ranging between 3 and 7 members. However, the size of your board should be based on the needs of your organization. As your nonprofit grows and develops, your board is likely to expand with it.
4. Draft Your Articles of Incorporation and Bylaws
Your nonprofit will need a formal corporate structure in order for it to gain credibility. By incorporating your nonprofit, you are registering it under law, where it is effectively recognized as a person.
You should begin this process by filing your Articles of Incorporation, official statements announcing the creation of your organization. These will be filed with your relevant local government agency, which varies between states. Articles of Incorporation protect your organization’s board and staff from legal liabilities, placing these liabilities on the corporation itself.
Requirements for how to incorporate an organization also varies between states — we recommend you contact your Secretary of State’s office or your state Attorney General’s office for more information. Depending on your state, these Articles of Incorporation may also be known under other names such as “articles of association,” “corporate charter,” or “trust instrument.” You should consult with an attorney experienced in nonprofit law as you draft these forms, in order to prevent any major or common mistakes.
You should then draft your By Laws, the internal rules of the organization, which dictate how the nonprofit is managed and will operate. Some states require By Laws in order to file for incorporation. These should be written with the help of an attorney and approved by your board.
5. File for 501©(3) Status
You will then want to apply to be recognized as a tax-exempt public charity by the IRS. Publication 557 will help you figure out whether you need to file Form 1023 or 1024. The filing fee for these forms ranges between $400 to $850, depending on the size of your budget and your expected average annual gross receipts. The IRS usually takes between 3 to 12 months to return its decision about your application.
6. Compliance
Before you begin soliciting donations, you have to register with the agency that regulates charitable organizations and solicitations in your state. Here again, requirements for registration vary between states, but usually consist of obtaining a solicitation license or permit, and filing annual reports and financial statements (some version of Form 990) with the IRS. If you plan to fundraising in multiple states, you need to register in every single one.
7. Create a Website
Nowadays, everyone turns to the internet for solutions and answers to their questions. Therefore, individuals looking for the service you provide or wanting donate to a charitable cause should be able to easily find you online. Website builders like WordPress, Squarespace, or Weebly make it easy for you to create a professional website with little time, effort, and budgeting. You will also want to create a few social media accounts, on Twitter, Facebook, or LinkedIn for example. These accounts will expand your online visibility, and help you better communicate with your clients and donors.
8. Set Up Online Fundraising
Once you have filed all the necessary documents and your nonprofit is set up and ready to go, you will need to set up your donation platform. This is where we come in — Donorbox is the most affordable donation platform on the market, charging only a 0.89% transaction fee — and that’s only if you reach $1K in donations. If you don’t, we won’t charge you! Our customizable donation form can easily be integrated into your website, so your donors can checkout faster and more easily.
Sign up on donorbox.org and create an account with Stripe, our trusty payment processor, and you’ll be ready to start taking in donations in under an hour!
This integration guide was originally published on the Donorbox Nonprofit Tips Blog.
