Non-Profit Organizations are organizations which work for the purpose of assisting other individuals, groups or different causes rather than accumulating profits for themselves. These organizations for other have no shareholders, they do not distribute profits in a way that welfare members, directors different individuals in their capacity. They also receive a various exemption from different taxes in recognition of their contribution to improving the social structure of the community.
Starting a Non-profit can be an inspirational way to give back to your community and to assist those who are in need. Still, it is important to understand all of the steps which are involved in the process before you move forward. Following are the steps which you should follow to start a non-profit organization.
Step 1: Do your Homework
Carry out a needs analysis
You should find out if other organizations are doing the same work in your community. It will be very difficult to get support if you are just duplicating existing services rather than bettering or adding to them. You should find out what service your community needs and you should be able to explain how these needs are not being met so that you can start working on them.
Know the Alternatives
Forming a new non-profit may be the most complex way to work on your passion to help your community. The biggest difficulty for most new non-profits is to establish and maintain sustainable income streams. An estimate may differ but most experts agree that less than half of nonprofit startups survive more than five years. Of those who survive, most of them are in financial difficulty.
Step 2: Build a Solid Foundation
Create a mission statement
Creating a mission statement is a critical first step. It tells people about the purpose of your organization, what groups it serves and how it is going to serve them. Every decision and action you take should back and improve your mission.
Write a Business Plan
A business plan can help a non-profit as it describes how it tends to work to achieve its mission in more distinct details. It can also be utilized to outline a new venture or task.
Develop your board
As your organizations governing body, your board carries out a variety of roles and several legal responsibilities. In order to carry out these duties efficiently, the board will change as your organization expands and matures. Even though recruitment is an essential step in this process, a systematic approach to board expansion, which consists of orientation, training, evaluation and the nurturing of prospective board members, is pivotal to make sure of its long-term success.
Step 3: Organize Your NonProfit
Now that you have reached this phase, it’s time for you to search for resources which are specific to your location.
Why you should organize?
– To have a formal structure will give validity to your programs and services.
– The corporate structure will limit the burden on the organizations’ officers and directors.
– The IRS needs organizing documents and governance policies and processes that are generally associated with corporations.
Step 4: File for tax-exempt status
You should apply for tax-exempt status with the internal revenue service. You should be aware of the user fees which will be charged on you depending on your application method. It can take about 1 to 3 months before you hear a decision, depending on how many questions the tax department has about your application.
Step 5: Continuous Compliance
Register with your state’s agency
Each state has an office which is charged to overlook charitable organizations and charitable solicitations. If you are planning to solicit contributions to other states, you might need to register there too.
You should prepare for annual reporting requirements:
In several cases, an exempt organization must file some version of form 990 with the IRS, relying on its financial activity. This shows your finances, activities governance processes, directors, and key staff, and it can also be open to public inspection. States have their reporting and renewal requirements, too, and these may vary with each state. Therefore, you need to consider tracking your nonprofit organization’s finances and different activities in such a way that it will assist in these annual reporting requirements and will occur smoothly.