A Step by Step Guide for Starting a 501 (c) (3) Nonprofit Organization

Volunteering your money, energy, or time to help others does not only make the world a better place – it also makes you better. In fact, helping others makes you feel great. Starting a 501 (c) (3) nonprofit organization is the great initiative to help others and give back to your community. However, it is significant to understand the nonprofit nuisances before moving forward.

Starting a nonprofit isn’t a piece of cake; you will need to think about how your efforts can bring value to the public. It requires excellent strategy, planning, and efforts, but most important “an organization.”. What will be your strategies to obtain funds? How will you attract more volunteers to your organization? How will you build a board of directors? You need to ask yourself these questions to determine whether you should begin with the nonprofit organization or not? It may take years of experience, determination, hard work, and willpower for growing and sustaining a nonprofit. But if you follow the right steps, you can get your nonprofit organization up and running.

Here are 5 basic steps for starting a nonprofit public benefit organization

Decide the Purpose of your Nonprofit

An essential quality of a successful nonprofit organization is clarity about its purposes. What are your nonprofit’s aspirations and why is the purpose is important?  You need to write a basic mission statement to shed light on the overall purposes of the organization.  There should be transparency between the nonprofit and its stakeholders- partners, volunteers, board of directors, donors, staff, and the general public. It will help them to better understand your goals and work toward a common purpose. Each and every step of your nonprofit’s programs and events should be united to move forward its mission.

In addition, a great nonprofit is one that is able to explain and communicate its services seamlessly within the organization. For example, social welfare organization should be able to explain how their work will help society. For example, animal organizations should be able to describe how their services meet real demands.

Decide what Type of Nonprofit You want to Establish

The second step to starting a nonprofit organization is to decide an issue that is important to you or something that can help to fulfill your nonprofit’s goals and objectives. There are different types of 501(c) (3) nonprofits such as religious, scientific, educational, and charitable.  You need to choose one from these various nonprofit types and work for the fulfillment of your ambition. Moreover, you will have to decide whether you want to create an informal nonprofit organization with the help of some friends, e.g., to form a self-help group or if you want to incorporate your nonprofit for making it a separate legal organization.

Find Out the Name of the Organization

Although each state in the USA has different rules and regulations, there are 3 general rules to apply for the nonprofit organization’s name:

  • The name you are planning to choose for your corporation should be unique. An organization’s name may be adopted if the name is different from an existing name on the records of the state’s corporation division. You can refer to the secretary of state’s website to check the current database of existing nonprofit’s names.
  • Your nonprofit organization’s name should end with a corporate designator, such as Limited (Ltd.), Incorporated (Inc.) or Corporation (Corp.)
  • Your nonprofit name should avoid any designation reserved for the state which includes Federal, United States, Bank, cooperative or reserve.

Hire an Attorney

When it comes to nonprofit organizations, legal advice and guidance are critical. No doubt, you can do a variety of the organization’s work on your own, but there is work such as tax-exemption, tax-deductibility and incorporation which demands guidance and advice. An experienced attorney understands nonprofit matters and helps in planning for incorporation with your state, and tax-exemption with IRS. You need to choose the right attorney for your nonprofit; otherwise, you will have to pay federal taxes on your income.

In addition, taxes, donations, documentations and filing processes are very complicated and a nonprofit knowledgeable attorney can guide you throughout the process. Hiring 501 (c) (3) experienced attorney not only helps you file state and federal exemption forms but you will save your valuable time and money in the long run.

Appoint the Board of Directors

Appointing your nonprofit’s board is a challenging task. The board of directors plays an important legal and practical role for handling the nonprofit’s everyday affairs. Basically, the board of directors is the organization’s trustees whose responsibilities include keeping the organization true to its public service mission. In addition, a good board of directors helps in setting policies and maintaining the organization’s overall direction which include:

  • Contributin to the organization’s mission and vision
  • Implementing a strategy to achieve the nonprofit’s overall goals and objectives
  • Defines priorities
  • Ensures that plans, events, and programs are implemented.

It is imperative to select skilled, experienced and enthusiastic board members to help your nonprofit organization grow.