A nonprofit organization is a corporation which operates to fulfill a charitable, scientific, political, educational, religious, or literary purpose.
A non-profit corporation differs from a “for-profit” corporation in a number of ways.
Non-profit corporations are exempt from paying federal and state incomes taxes.
The primary goal of a non-profit corporation is to promote the greater good, not monetary gain.
A nonprofit corporation also has different processes for going out of business than a “for-profit” corporation.
If interested in starting a non-profit organization, there are a number of steps to take in order to be formally recognized by the government and be able to operate as a non-profit. Following these steps will ensure that the nonprofit is properly set up and fully operational.
Write a mission statement for the organization indicating a clear purpose and reasons why others would want to invest in the organization.
Establish members that will be a part of the organization, similar to a board of directors.
File articles of incorporation to eliminate the risk of any individuals in your organization being held liable in case of a lawsuit. Articles of incorporation should be filed with the Secretary of State.
Write a thorough document outlining the bylaws and rules of the organization.
Apply for nonprofit status from the IRS. The needed forms include IRS Form 1023 and the IRS publication 557.
Upon receipt of a letter of determination from the IRS, apply to the State Department of Revenue and the state department that is in charge of regulations. The Department of Revenue will grant state tax exemption. The Department of Regulations is the office from which a solicitation license can be obtained.
Register the organization with the state by contacting the Secretary of State and the Attorney General in the Charities Division.
Purchase liability insurance to protect the assets any members of the organization.
Apply for grants to start the organization with a good financial status and solid budget. Also apply for a nonprofit bulk mail permit from the post office for solicitation purposes.
While it is possible to do most of the work in starting a non-profit organization on your own, it is a good idea to have any documents checked by an attorney experienced with handling non-profit matters.
Many attorneys specialize with matters in the non-profit sector and can assist with the formation of a non-profit organization by making sure that the process is completed as the law requires.