How to Start a Nonprofit

Starting a nonprofit business can be a gratifying experience, both personally and professionally. However, it's essential to understand the process and what is involved to ensure your new venture is successful. According to Forbes, nearly half of all nonprofits are established without a solid strategic plan in place, setting them up for failure.


For-profit businesses are driven by a profit motive, while nonprofit organizations are established to pursue a mission. The profit from a for-profit business can go back to the owners or investors; nonprofit profits must go back to the mission in order to maintain their nonprofit status. The following guide will show you everything you need to know about starting a nonprofit business.



Starting a Nonprofit


There are a few key things to keep in mind when starting a nonprofit business; the first thing to consider is your nonprofit's purpose. Your new business must have a charitable, religious, educational, scientific or literary purpose to be considered a nonprofit.


After narrowing down the scope of your nonprofit, you should do extensive research to see if any other nonprofit organizations are focusing on your same passion. If other nonprofit businesses have the same mission, you may be better served by joining forces with them. Diluting the mission with multiple nonprofits can hamper progress.


Once you've established your mission, the next step is to form a board of directors and establish bylaws. This is an important step to keep in mind. To be a true nonprofit, you must have a board of directors who follow written bylaws. This board of directors is truly the operating power behind your organization. It is up to them to hold your mission to its statement and direct the focus to where growth is needed.


Registering a Nonprofit


The majority of nonprofit organizations are registered as IRS 503(c)(3) exempt organizations. This means that the tax status of nonprofits is much different than that of for-profit corporations. The IRS has a handy guide for newly organized nonprofits on steps to take before registering. You'll need to contact your state's Franchise Tax Board to apply for tax-exempt status in your individual state.


You'll also need to apply for an Employee Identification Number, or an EIN. The IRS assigns this nine-digit number to identify your nonprofit for tax purposes and will be used in all filings in the future. This is one of the last steps before you're fully registered!



Marketing a Nonprofit Organization


You've defined your mission, named a board of directors, and even registered with the IRS. Now what? Marketing your nonprofit will be one of the most important parts of your journey. This is how you'll get the word out about your brand-new organization.


Branding is a necessary part of your marketing strategy. How do you want to communicate your mission? Is your focus on community fun, or is it on harm reduction in communities? This will frame the way you present your organization. Remember to keep the tone of your message consistent and clear.


A website is a must-have for any new business, and nonprofit organizations are no exception! A well-crafted and unique website speaks volumes about an organization. Hubspot also recommends starting with email marketing right off the bat. Email marketing is well-written content sent to your audience. It often includes a call to action, which could be a donation request or an ask for volunteers. Never underestimate the power of email marketing!



Fundraising for a Nonprofit


Now comes what may be the scariest step - raising funds for a nonprofit. There are a lot of great ideas out there about how to set up fundraising. Donor Box suggests setting up a donation page right on your website. Make sure it's easily found and explains where their donation is going.


Another suggestion from Donor Box is a fundraising event. This is a great way to kick off your nonprofit! A large fundraising event can be anything from a dinner party to a sporting event. Use your imagination and tie in the event with your mission. Fundraising can initially seem daunting, but once you find your footing, you'll be on your way.


Now that you know the basics of starting a nonprofit business, it's time to get started! For more detailed information, please consult an attorney or accountant specializing in nonprofits. They can help you navigate the process and ensure that your new business complies with all regulations. Do you have any experience with nonprofits? Let us know in the comments!