How to Start a Formal Charitable Nonprofit Organization?

Any group that is organized with a common purpose of serving the community in some capacity can be an informal nonprofit (NPO). However, in order to maintain the integrity and professional presence of the organization, it needs to become a formal organization.

The first step is to become incorporated. Begin this process by writing out a statement of purpose that includes an explanation of the target population to be served, a list of board members, a budget with expectations for funding, and the overall mission. The statement of purpose is vital for increasing public awareness and maintaining a professionalism for the organization and its mission. The incorporation allows the organization to own property, open a bank account and continue when the founder is no longer involved for whatever reason.

The second step is to find a location that is suitable for the needs of the NPO. Having a central operating site is necessary to show a presence to the community at large, as well validating the organization to the target population. Some groups, such as domestic violence shelters and rape havens, require that the location be unknown due to the nature of the services. Another issue is the cost of renting a space, as the NPO may not have sufficient funding at this stage.

The third step is to apply with the federal government to gain 501(c)(3) status. By filing as a charitable NPO, the organization becomes tax-exempt with the federal government, as well as with state and property taxes, banking fees and postage costs. Many grant providers and funding sources require some sort of status to be filed with the IRS in order for the NPO to even be considered for funding. Since most of the funding for NPOs comes from grants and donations instead of the distribution of services to the public as with for-profit organizations, this is crucial.

Throughout this process it is a good idea to have a lawyer whom will file the necessary paperwork to make certain that nothing is forgotten. While this process takes time and money, the end results are that under-served populations will be helped in a professional manner.