Steps to Starting a Non-Profit

Check out the FOUR steps to starting a nonprofit and important tips on when to get help from a lawyer and accountant.Looking back to when I started my first non-profit, Super Heroines, Etc., I was terrified. It seemed like there were so many rules and possibly even more paperwork. I really just wanted us to be more organized, but the amount of steps and things to consider seemed beyond what a small team of passionate, but busy board members could tackle.

That’s when I did thorough reviews of all the information I could find. Some resources were better than others, but what helped me wrap my head around the information was that the steps were essentially the same across the board. Below, I’ve outlined the basic steps for starting a non-profit, and included notes on when you should bring in a lawyer or accountant. Plus, I’ve included my favorite resources at the bottom of this post.

Step One: Conduct a needs analysis

One reason you probably want to start a non-profit is because you noticed a need in your community. As I listed in my 8 Questions to Ask Before Starting a Non-profit post, one of the first things you’ll want to do before starting a non-profit is find out if another organization is doing the same thing you’re planning on doing. Even if there is a need in your community, duplicating services can cause confusion for the community so at the very least you want to be aware of what else is out there. If you’re the first to notice this need, you’ll want to backup your observation with data. Search for research done about your topic and the demographics you want to serve.

Step Two: Strategic planningpro tip 1

This is just a fancy way of saying get organized. Things you’ll want to do during this step include: creating a mission statement, writing a business plan, building your budget, developing your board, and generating goals for the organization. One of the best resources for this step is The One Page Business Plan for Non-Profit Organizations. This book walks you through creating a mission, building a budget, generating goals and more. I’ll go into my own detail on each of these topics and developing your board in later posts.

Step Three: Paperwork

Personally, this is where I started freaking out. Why do states make the incorporation process so confusing? Do you know how long the 1023 is??? Well, guess what, the IRS has actually made it easier to file your paperwork if you’re a fairly standard non-profit organization. However, you still want to engage a lawyer at this stage because you want to make absolutely sure you are doing things the right way. I once heard of a non-profit that accidentally filed as a for-profit business and it took them a while to unravel that mess.

pro tip 2On this site, I will not give legal advice.  Here are the things I engaged a lawyer to help me with:

  • Articles of Incorporation: This is filed at the state level. Lawyers who do this regularly can be incredibly helpful as they will know exactly what the state is looking for from this document.
  • Bylaws: This is what governs your organization. Your state may have guidelines so a local lawyer will be useful in making sure you comply with your state regulations.
  • Filing with the IRS: Many non-profits are 501c3s in the eyes of the federal government. Your lawyer can help you make the determination of what kind of non-profit you are and help you file the paperwork to obtain federal recognition. Be sure to ask if you qualify to apply using the 1023EZ form.
  • Applying for state tax exemption: One of the benefits to being a non-profit is sales tax exemption. A lawyer can help you prepare the paperwork for obtaining this recognition within your state.

As an added bonus, our lawyers helped us with paperwork we wouldn’t have known about otherwise, like conflict of interest policies, records retention policies and whistleblower policies.

Step Four: Constant Vigilance

Even after you’ve done all this planning and paperwork, you’ll continue to do planning and paperwork until the end of time! Well, at least as long as your non-profit is running. Pay particular attention to all state and federal regulations as they each come with their own yearly paperwork.

It’s easy to get overwhelmed by ALL THE THINGS you have to do in order to start your non-profit. Fortunately, there are so many resources available to you and I’ve curated a list of my favorites below:

GrantSpace: How do I start a nonprofit organization?

Council for Nonprofits: How to Start a Nonprofit

Idealist: Nuts and bolts of starting a nonprofit organization in the U.S.

NOLO: Nonprofit Formation Documents: Articles of Incorporation, Bylaws, and Organizational Minutes

IRS: Frequently Asked Questions About Applying for Tax Exemption

Minnesota Council of Nonprofits: Start a Nonprofit (some info is MN-specific, but this org has great info for the overall process)

Have you already started a non-profit? Share your thoughts on the process and any resources you found along the way!

Author: Carolyn

Carolyn Noe is the owner of Noe Ideas as well as the Founder & Executive Director of Super Heroines, Etc. It is her personal mission to help dreamers and do-gooders turn their fantastic ideas into implementable, goal-oriented non-profits and businesses.