How To Start a NonProfit Organization

Generally the primary difference between a non-profit and for-profit organization can be summed up by who ultimately receives money on after expense profits. A for-profit organization will disburse these funds to owners or stockholders while a non-profit organization will use this money to further whatever cause they are promoting.

While such groups as trade organizations, chambers of commerce, unions, social and fraternal clubs, local, state and federal government organizations and politically oriented groups can all be created as non-profit, it is the charitable organizations we shall discuss here.

You must develop a mission statement. You must know who you are helping with your efforts and a general idea of how you are going to perform that service for them. It should include the reasons that people would be willing to donate their money and time to aid your cause. Then you must form your board of directors. Finding dedicated, like-minded people can be essential for developing a non-profit organization that will help fulfill your mission statement.

You are now ready to file your articles of incorporation so that none of the members or board can be held personally liable for debts incurred by the organization. You will want to refrain from soliciting donations until all the legal paperwork on your new non-profit organization is complete. Also at this time you will want to develop your organization’s by-laws. This guide will state how you want the organization to be run. It can establish order, precedent and a focus for all future volunteers and employees to follow.

Once you have your articles of incorporation you will need to file for non-profit tax status. In the United States that agency is the Internal Revenue Service. Once you have obtained your Letter of Determination from the federal government it is time to apply to your state’s Department of Revenue and the Department of Regulation and Licensing. Be sure to apply for State Sales Tax Exemption as well.

You will be required to at least apply for a solicitation license in your local community. Without this permit you will not be legally allowed to solicit funds from anyone. It is also highly recommended that you register with the Departments of Regulation in any other states you may wish to solicit in. While some states do not charge for this registration, others will charge at least a small fee. In this way, anyone who wishes to check that you are a legitimate non-profit organization can find you listed with their state government and will be more likely to feel their donation is not wasted effort.

Applying for a non-profit bulk mailing permit from the Post Office is needed if you are going to do any mail solicitations. Not only does this help give you a better non-profit image, it will save you a great deal of money over having to mail your messages at the First Class rate.

Finally, in order to protect the assets of you and your board members, you should obtain a Director’s and Officer’s Liability Insurance policy. This will help prevent a failing in the organization or a lawsuit against it from being able to take your board member’s personal assets.


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