A 501c3 nonprofit organization is a type of nonprofit that is exempt from paying federal income tax on most forms of income or revenue. In addition, donors can deduct their contributions to a 501c3 from their taxable income. To qualify for 501c3 status, an organization must meet a number of requirements, including being organized for specific purposes under 501c3 regulations and having a board of directors.
Below are the 11 steps to start building your very own 501c3 nonprofit organization.
11 Steps to Launching a New 501c3 Nonprofit Organization
1. Name Your 501c3 Nonprofit Organization
Give your nonprofit an identity so people will think of it as a well-known and respected nonprofit organization. A good name will make it easier for you to get donations and support from the public.
You can take the name of your nonprofit from your industry, focus on a geographical location, or use your own name among other options.
The main goal for naming your nonprofit is to make it sound appealing and trustworthy so that potential donors will want to support your cause.
2. Get a Board of Directors
Every nonprofit needs a board of directors to make high-level decisions about the organization and to help with fundraising. The board should be made up of individuals who are passionate about your cause and have the skills and experience to help guide the organization.
The size of your board will depend on the type of nonprofit you have and the state in which you incorporate. Most boards have between 5 and 10 members.
Be sure to include a mix of individuals with different backgrounds, skills, and perspectives to make the best decisions for your nonprofit.
Read our article to learn more about the Board of Directors.
3. Determine Your Nonprofit Business Model
There are 4 main types of business models for a nonprofit organization including:
- Direct services: This type of nonprofit provides services directly to those in need. Common examples of direct service nonprofits include food banks, homeless shelters, and after-school programs.
- Membership dues: Organizations that use this business model charge individuals or businesses to become a member. This gives them access to exclusive benefits or privileges. For instance, the American Association of Retired Persons (AARP) is a nonprofit with membership dues.
- Fundraising: Nonprofits that use this model generate revenue through different types of fundraising activities such as special events, grant writing, and crowdfunding campaigns.
- Social enterprises: These nonprofits operate like a regular business, but reinvest their profits back into the organization to achieve their social or charitable mission.
No matter which model you choose, make sure that it aligns with your goals and the products, services and/or programs you offer.
Read our article to learn more about choosing the right business model for your nonprofit organization.
4. Incorporate Your Nonprofit
In order to be recognized as a nonprofit organization, you will need to incorporate your business with the state in which you plan to operate. This will give you legal protection and make you eligible for certain benefits, such as the ability to apply for tax-exempt status.
By incorporating your nonprofit, you will also limit your liability.
You can incorporate as a Limited Liability Company (LLC), a C Corporation (C-Corp), or an S Corporation (S-Corp).
To form a nonprofit corporation you will need to:
- Select a name for your corporation
- Submit your Articles of Incorporation to the Secretary of State
- Develop corporate bylaws
- Apply for tax-exempt status
Registering with the federal government is also essential so you can properly pay taxes for your business. The first step is to get an Employer Identification Number (EIN), which you can apply for at the IRS website.
Read our article to learn more about the options for incorporating your nonprofit organization.
Read our article to learn more about how to apply for a federal EIN as a nonprofit organization.
5. Apply For 501(c)(3) Tax-Exempt Status
After you have incorporated your nonprofit, you will need to apply for tax-exempt status with the IRS. This will allow you to operate as a 501(c)(3) organization and exempt you from paying federal taxes.
To apply for tax-exempt status, you will need to file Form 1023 or Form 1024 with the IRS. Be sure to include all required documentation, such as your Articles of Incorporation and your 501(c)(3) determination letter.
Read our article to learn more about how to apply for tax-exempt status.
6. Create Bylaws
Bylaws are the rules and regulations that govern how your nonprofit will be run. They should include information about your board of directors, officers, members, and meetings.
Bylaws are not required by law, but they are a good way to establish the framework for your organization. Be sure to have your lawyer review your bylaws before you put them into effect.
Read our article to learn more about how to develop your nonprofit bylaws.
7. Write a Nonprofit Business Plan
Regardless of the type of nonprofit organization you run, all founders should write a business plan.
A business plan involves outlining your plans for your company in detail. It is a comprehensive document that explains not only your products, services and/or programs, but also your market and the competitive advantage you’ll have in your organization. You’ll create financial projections, fundraising strategies, and make plans for your growth. Your business plan will help you focus your organization and run efficiently from the start.
Read our article about how to write a nonprofit business plan.
8. Determine Your Budget, Apply for Grants, and Start Fundraising as Needed
After you’ve written your business plan, you should have a good idea of what your start up costs will be. You can then begin to look for grants or start fundraising campaigns to help offset the cost of getting your nonprofit organization off the ground.
Once you have a budget in place, you can start applying for grants. There are many different types of grants available for nonprofits, but you will need to meet certain criteria to be eligible.
Fundraising is another option for raising money for your nonprofit. There are many different types of fundraising campaigns you can launch, so be sure to choose one that best aligns with your organization’s goals.
Read our article about the costs associated with starting a nonprofit organization to help you determine if funding is needed.
Read our article about how to fund your nonprofit organization.
9. Get the Technology & Software Needed to Run Your Business Efficiently
When you start your nonprofit organization, it’s essential to have the right technology in place to maximize efficiency. You don’t need anything fancy or expensive, but you do need the basics. This includes a computer with Internet access, an accounting program for tracking expenses and donations coming in, and a customer relationship management (CRM) system to manage donors, volunteers and clients.
You might also need a website to help promote your organization and its mission.
You may also want to consider investing in software to help with volunteer management, grant writing, and event planning.
You can also invest in office space, but this isn’t required. Many nonprofits start out working from home to save on costs.
Read our article about the technology and software you need to run a nonprofit organization.
10. Develop a Marketing & Communications Strategy
Before you start offering your products, services and/or programs, you have to let the world know you exist. This includes developing a brand for your organization and creating marketing materials to promote your brand.
Your marketing strategy should focus on raising awareness of your nonprofit and its mission. You can do this through traditional marketing channels like print, radio, and television, or through digital channels like social media, email marketing, and content marketing.
Network with other people in the nonprofit sector through social media and blogs so they can help share your business.
One of the best tools for a nonprofit organization is a website. You need to create a website so people can learn more about the products, services and/or programs you offer and how they benefit them.
After you have a website up, start promoting it through social media channels like Facebook, LinkedIn and Twitter.
Content marketing is another great way to raise awareness of your nonprofit and its mission. You can do this by writing blog posts, creating infographics, and developing other types of content that educates people about the work you do and how it helps the community. You can also write articles for other print and digital publications or guest blog on others’ sites to help establish your organization as an expert in the field.
Don’t forget to include a call-to-action (CTA) on all of your marketing materials. This could be a link to donate to your organization, sign up for your newsletter, or volunteer for your cause.
You should also create a PR strategy to generate positive media coverage for your organization. This can be done by writing press releases, pitching story ideas to journalists, and hosting events.
You can also use communications to engage with your target audience and build relationships with potential donors, volunteers, and partners.
Read our article about nonprofit marketing and communications strategies.
11. Launch Your Nonprofit & Start Helping People
After you’ve completed all of the steps above, it’s time to launch your nonprofit organization! This is an exciting time, but it’s also important to remember that starting a nonprofit is a lot of work.
Be sure to celebrate your accomplishments along the way and keep moving forward.
And, most importantly, focus on helping people. The whole reason you started your nonprofit was to make a difference in the world, so don’t lose sight of that.
When you’re ready to grow your nonprofit, we have some great tips for scaling your operation.
Read our article about how to effectively grow your nonprofit organization to learn more.
Starting a Nonprofit Organization FAQs
Why Start a 501c3 Nonprofit Organization?
There are many reasons why you might want to start a nonprofit organization. Maybe you’re passionate about a cause and want to make a difference. Or maybe you’ve seen firsthand how a certain issue is affecting people in your community, and you want to do something about it.
Whatever the reason, starting a nonprofit can be a very rewarding experience. Not only will you be helping others, but you’ll also gain valuable skills and knowledge that can help you in your career.
What is Needed to Start a Successful Nonprofit Organization?
There are a few key things you need to do to start a successful nonprofit organization. First, you need to choose a cause or issue that you’re passionate about. Then, you need to build a strong team of like-minded individuals who can help you achieve your goals.
You also need to develop a marketing and communications strategy to raise awareness of your nonprofit and its mission. And finally, you need to focus on helping people.
How Can I Start a 501c3 Nonprofit Organization From Home?
Starting a nonprofit organization from home is as simple as following the steps provided in the article above. The article will guide you through the process of starting a nonprofit organization from home, including the necessary paperwork and licenses required. Additionally, the article provides tips on how to market your new nonprofit organization and attract donors.
How Can I Start a 501c3 Nonprofit Organization Online?
Starting a nonprofit organization online is as simple as following the steps provided in the article above. This article provides an overview of how to start a nonprofit organization, including the process of filing for 501(c)(3) status with the IRS, developing a marketing and communications strategy and much more.
What are Some Tips for Starting a Nonprofit Organization?
When you've got a great idea for a nonprofit organization, it's time to start putting your plans into action. But before you can get started, there are a few things you need to do to make sure your new nonprofit is set up for success.
Here are some tips for starting a nonprofit organization:
1. Do your research
Before you get started, it's important to do your research and make sure you understand the ins and outs of starting a nonprofit. There are a lot of moving parts to setting up a new organization, so you'll want to be as prepared as possible before getting started.
2. Create a business plan
Just like with any new business, you'll need to create a detailed business plan for your nonprofit. This will help you map out your goals, strategies, and budget.
3. Choose a catchy name and logo
Your nonprofit's name and logo are important branding elements that will help you stand out from the crowd. Choose something catchy and memorable that will help people easily identify your organization.
4. Incorporate your organization
In order to legally operate as a nonprofit, you'll need to incorporate your organization. This will require filing paperwork with the state and federal government.
5. Obtain 501(c)(3) status
One of the most important steps in starting a nonprofit is obtaining 501(c)(3) status from the IRS. This designation will allow you to operate as a tax-exempt organization and receive donations.
6. Build a board of directors
As you get your nonprofit off the ground, it's important to build a strong board of directors. These individuals will provide guidance and support as you work to achieve your goals.
Last, but not least, you'll need to start raising funds to support your new nonprofit. There are a variety of ways to do this, so be creative!
Where Can I Find a Simple Checklist for Starting a Nonprofit Organization?
A simple checklist to use when starting a nonprofit is as follows:
- Name Your Nonprofit Organization: Once you’ve chosen the type of nonprofit you would like to create, it’s time to name your organization. Keep in mind that this name will be used on all official documents, so choose something you’re happy with.
- Get a Board of Directors: A board of directors is a group of people who help make decisions for the organization. This group will provide support and guidance, so be sure to choose wisely.
- Determine Your Nonprofit Business Model: There are many different ways to run a nonprofit organization. Be sure to choose the model that best suits your needs.
- Incorporate Your Nonprofit: In order to legally operate as a nonprofit, you must incorporate your organization. This process will vary depending on the state in which you live, so be sure to do your research.
- Apply For 501(c)(3) Tax-Exempt Status: One of the most important steps in starting a nonprofit is to apply for 501(c)(3) tax-exempt status from the IRS. This designation will allow you to operate as a tax-exempt organization and receive donations.
- Create Bylaws: Bylaws are a set of rules that govern the operation of your nonprofit organization. Be sure to consult an attorney when creating these documents.
- Write a Nonprofit Business Plan: A business plan is a document that outlines the goals and strategies of your organization. This document will be used to guide your nonprofit as it grows and changes.
- Determine Your Budget, Apply for Grants, and Start Fundraising as Needed: Nonprofit organizations rely on donations and grants to fund their operations. Be sure to determine your budget and start fundraising as needed.
- Get the Technology & Software Needed to Run Your Organization Efficiently: In order to run your nonprofit effectively, you’ll need the right technology and software. Be sure to choose products that will help you meet your goals.
- Develop a Marketing & Communications Strategy: A strong marketing and communications strategy is essential for any nonprofit organization. Be sure to develop a plan that will help you reach your target audience.
- Launch Your Nonprofit & Start Helping People: Once you’ve completed all of the necessary steps, it’s time to launch your nonprofit organization. Be sure to let your community know about your new venture and start making a difference!
Other Helpful Articles
How To Start a Nonprofit Thrift Store
How To Start a Nonprofit Charity
How To Start a Nonprofit Foundation
How To Start a Nonprofit Animal Rescue
How to Start a Faith-Based Nonprofit Organization