You want to change the world, but where do you start? Helping others in need, reversing climate change, protecting the environment and wildlife, empowering your community- there are a lot of ways to help, but you might not be sure where or how to start.
That is exactly why we have prepared this article for you! In the following lines, you will find extensive information about how to start a nonprofit. We will start with definitions, legalities, and more practical problems and solutions this journey might throw your way. Make sure to keep reading for more!
What is a nonprofit organization?
Let’s start with the legal definition of a nonprofit organization: they are an organization that operates without the primary purpose of earning money. They are built to serve the interest of the public or a specific group of people within the public. As such, many governments give nonprofit organizations a tax-exempt status as long as they provide the necessary paperwork.
In the US, for example, these organizations most often fall under the category of 501(c)(3), also called charities. More specifically, this category consists of these types of organizations:
- Testing for Public Safety
- Foster National or International Amateur Sports Competition
- Prevention of Cruelty to Children
- Prevention of Cruelty to Animals
There are other forms of nonprofit organizations in the US, under the category of 501(c). Here are some more popular ones:
- 501(c)(4): Civic Leagues, Social Welfare Organizations, and Local Associations of Employees
- 501(c)(5): Labor, Agricultural and Horticultural Organizations
- 501(c)(6): Business Leagues, Chambers of Commerce, Real Estate Boards
- 501(c)(7): Social and Recreational Clubs
- 501(c)(11): Teachers’ Retirement Fund Associations
- 501(c)(23): Veterans Organizations
In order to qualify for a tax-exempt status, you will need to apply to the IRS and register your organization. As a nonprofit organization, you will need to fill out this form to apply.
However, before acquiring legal status, there is much more to do! Now that you know what a nonprofit organization is and what types of organizations there are, let’s talk about some of the steps you need to take before filling out paperwork.
8 Steps to How to Start a Nonprofit
1. Purpose: What is your goal?
One of the most important steps on your way to establishing your nonprofit organization is to have a clear goal and a mission statement.
In the United States alone, there are 1.5 million nonprofit organizations. What makes your goal different from others? What will you focus on? Are you set out to solve a specific problem in your own community? Or will you focus on a more global issue? Have you done research on similar organizations to pinpoint what’s missing in their approach?
Research, research, research! Laying solid groundwork at the beginning will make everything much easier as you progress in your journey. Vague goals such as “helping the environment” or “lending a helping hand to those in need” are admirable, but you need to figure out the specifics of how you’re going to achieve your goals and what exactly you’ll be focusing on.
2. Identity: Find a Name
While it might seem unimportant in the grand scheme of things, researchers have found that a memorable name will do a lot to help your organization move forward. The name you pick should be telling of your mission statement, easy to remember, and unique to your organization. It might seem like a huge challenge at first, but don’t worry! As you figure out the other steps before applying for legal status, you can ponder upon it as long as you like.
One piece of advice we can give is to make sure to talk about it with your friends and family. If you already have a group of people that will work with you, that’s even better! Teamwork makes the dream work, so don’t hesitate to brainstorm with them and throw ideas around.
3. Team: Build Your Core Team
Continuing from the topic of teammates, another important aspect on your way to starting a nonprofit is to build your core team. Think about what you will need, and start dividing it into categories. Define titles for different positions, leaderships, smaller roles, etc.
You might be a one-person team at this point, but it’s still important to have an idea about who you’ll need with which types of experience. It is also a good idea to start working on job descriptors so you can roll them out when you have legal status.
Also, consider sharing and talking about your nonprofit in order to find supporters. It is never too early to start sharing your vision to others, and it will be even better if they want to start working with you as you learn how to start a nonprofit.
4. Paperwork: Get Legal Status
As we have written above, you’ll need to register your nonprofit in order to start operating. It depends on every country, so we recommend you look up the details on your government’s website! For the US example, you will need to fill out this form to apply.
Besides applying for a nonprofit organization status, you will need to write an organization manual that is called bylaws. Since the primary goal of nonprofit organizations is not to make a profit but serve the public good, transparency is very important.
These bylaws are different for different types of organizations, so our top recommendation is to look up similar organizations and see how they operate. You will learn a lot from their experiences and what’s crucial in your own field. The city of Austin, Texas, has put up this example for nonprofit bylaws.
5. Starting Out: Begin Planning and Hiring
Once you have obtained legal status, it is the best time to start planning for what’s to come. Set up your website, write detailed information about what you do, and what you want to accomplish. Make it personal, touching and honest, so that any potential supporters will believe in your words. Creating an “About Us” page is a great idea, as it adds a personal touch. Consider creating videos where you talk and explain why you have set out on this path. Convincing the audience will be a challenge at first, but as long as you remain honest, sincere, and work hard, everything is possible.
As we have talked about before, it’s also a good idea to start sharing job announcements so that you can continue building your team. Be honest about your budget and goals, and try to use as many platforms as possible, such as LinkedIn, Indeed, Glassdoor, etc.
6. Sponsorships: Funding Options
Let’s talk about one of the most important, yet challenging parts of nonprofit organizations. You’ll need to get donations regularly in order to achieve your goals. The specifics on what you’ll do with your budget depends on the type of nonprofit you are leading, but it’s the same across the board that you’ll need money in order to do so. Now, how do you convince people to invest in your goal?
One of the most valuable tools at this point would be to find investors that support your organization. If they believe in your goal and trust your plans to help others, they will fund your organization from the very beginning.
We have written a lot of articles for nonprofits about how to get sponsorships, and you can find them below:
- Getting a Nonprofit Sponsorship 101: Make Them Say YES!
- How To Get a Corporate Sponsorship for Your Nonprofit [4 Easy Steps]
- Guaranteeing an Event Sponsorship in Just 3 Steps
- Top 10 Nonprofit Fundraising Ideas to Generate Sustainable Revenue
7. Events: Spread Out Your Wings
Now that you both have legal status, employees and funds, it is time for action. One of the great ways to get traction is through fundraising events. These could be online or in person, but for the first few events, it is always a good idea to make them in person so that you can connect with people much better.
There are a lot of different types of fundraising events, and the safest approach is to make sure it falls in line with your goal and mission statement. In the first few events, your primary goal should be to introduce your nonprofit to more people, and convince them that you will achieve your goals with their help.
We have more articles about nonprofit events, both physical and virtual, and you can check them out below:
- 10 Quick and Easy Virtual Fundraising Ideas
- Successful Fundraising Ideas for Nonprofits
- Using a Free Fundraising Thermometer for Your Nonprofit (Ideas & Resources)
8. Organization: Consider Getting a Nonprofit CRM
You have set your organization, started accepting donations, are planning fundraising events, and more. Maybe you’ll start with excel sheets or Facebook Groups, or other types of various platforms at the same time. Keeping in touch with your donors and supporters all the time is a challenging task, yet it is absolutely crucial on your way to achieving your goals.
This is exactly why you need an all-in-one platform where you can take care of everything from one single location. If you have no idea about CRM platforms and where to start, we have created an in-depth guide for you right here.
Let’s talk about some of the most important nonprofit CRM features. The initial one is undoubtedly the database. Through this type of database, you can collect all sorts of information about your supporters, donors, and team members. You can create membership profiles, update them, segment them into different groups, and reach out accordingly.
As we have mentioned before, keeping in touch with your supporters, volunteers, and donors are of utmost importance. Through a good CRM platform, you will be able to send emails, newsletters, share announcements, and so much more. This is especially important since you’ll be needing recurring donations, and donors would appreciate being on top of the latest developments of your organization.
Other types of features include being able to collect payments online. Both recurring donations and one-time donations can be processed through these platforms, which saves a lot of time and helps with your reports. Keeping track of donations is undoubtedly a key part of optimizing your reach for the future.
Event modules, digital cards, and various integrations are also valuable features you might like to look out for. Check out our “What is the Best Software for Nonprofits?” article for more information.
Raklet’s an all-in-one nonprofit management software that helps nonprofits all around the world! Our robust contacts database, fundraising tools, event organization options and so much more will help you on your way to achieving your goals.
For non-profit organizations, we also offer a 50% discount! For eligibility requirements please reach out to us at [email protected].
To read more about nonprofit management, check out these articles below: