10 Steps to Starting Your Nonprofit from Scratch

Do you find yourself with a desire to help those in your community?

Do you want to venture into an entrepreneurial journey for a good social cause?

Then, starting a nonprofit might be something worth considering. 

Before you begin you should consider the reasons why you are starting a  nonprofit.

Starting a nonprofit is like starting a business. Although your business won’t be “making a profit” you will still want to register with the state and file tax reports and other forms.

The difference is that you will be putting your revenue or donations back into the organization with the goal of fulfilling its mission. 

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10 Steps to Starting Your Nonprofit: 

  1. Identify a Problem Your Nonprofit Can Tackle
  2. Research & Collect Data 
  3. Create a Nonprofit Business Plan 
  4. Draft Your Bylaws
  5. Recruit Your Board of Directors 
  6. Board’s First Meeting
  7. Complete & File Articles of Incorporation
  8. Get your EIN & Apply for Tax Exemption 
  9. Choose Your Donor Management Software Program & Other Daily Operations
  10. Set Up Your Website & Social Media Accounts

1. Identify a Problem Your Nonprofit Can Tackle

Starting a nonprofit is much like starting a business, and it all begins with a problem to solve.

Most nonprofits started out in an attempt to overcome the challenges their communities face. If you have a desire to help those around you, but still haven’t identified how to do so, start by training your mind to be resourceful and curious. Exercise this while constantly analyzing everyday problems that you encounter and see if these have solutions. Eventually, you will be able to recognize a problem in your community and come up with a creative and sustainable solution. 

Kevin Welch shared in our 2019 Nonprofit Bootcamp the keys to running an effective nonprofit, emphasizing first on having a clear mission and vision you want to fulfill.

He explains,

For your mission and vision, think about scoping it in the context of what you can do. Most nonprofits that I see, their mission and vision is too large, and great organizations typically don’t start that way.” 

Once you have narrowed down exactly what you can do and how to accomplish your purpose within your context, there are still more aspects to consider.  

2. Research & Collect Data 

This is the equivalent of doing your market research for a business.

You will want to collect data about the problem and look into any organizations that are trying to solve it and how they are doing it.

In addition, you will want to look into financial and operational data in order to adjust future projections for your nonprofit.

Check out these free market research tools to get started 

3. Create a Business Plan 

You have identified a solution to a problem in your community, you’ve done your research, now the next step is to create a killer business plan for your nonprofit.

This will look slightly different from a regular business plan, but it should still answer the basic questions about your nonprofit including:

  • Mission Statement
  • Products
  • Programs or Services you offer
  • Impact Plan
  • Marketing Plan
  • Operational Plan

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4. Draft your Bylaws

Your bylaws are the rules that will govern your organization. These will serve as the guide to making decisions regarding your board members/directors and how long they will serve, voting rights, frequency of meetings, and overall governance. While drafting your bylaws consider adding the following sections: 

  • Governing structure: board driven vs. member driven
  • Role of Directors: include how many and how long they will serve for
  • Officers: include how you appoint your officers, who they are, their role and how long they will serve for
  • Voting Rules: votes needed to make decisions
  • Committee Formation: how a committee can be formed and abolished
  • Amendment Rules: if the bylaws require changing, list the requirements for it

5. Recruit Your Board of Directors 

Start contacting anyone you would be interested to have as part of your board members or board of directors.

This is a very important step as the board of directors will hold the responsibility of overseeing your nonprofits’ overall activities, strategic planning, and the ultimate fulfillment of its mission.

Learn more about how to choose your board of directors

6. Board’s First Meeting

The first official meeting is important as your board of directors/members will make crucial decisions regarding the approval of bylaws, appoint officials and committees, as well as determining tax periods and first transactions. Like every official meeting make sure to record your minutes, as these are part of the official documents you should have at hand for your nonprofit.  

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7. Complete & File your Articles of Incorporation

To actually make your nonprofit a legal entity, you will have to file the Articles of Incorporation in your state of operation.

For this you will need to name your organization, state its purpose, provide a mailing address, appoint a registered agent who will receive official notices, and an incorporator who signs the formation documents. Depending on the state requirements, you may be asked to submit additional information.

Costs to file articles of incorporation also depend on state requirements but can range from $100- $1,000. 

8. Get your EIN & Apply for Tax Exemption 

Once you file your Articles of Incorporation, you will register your nonprofit with the IRS and get your EIN number.

Depending on what organizational structure and purpose you decide to go with, you will have to apply for tax exempt status under 501(c) with the Internal Revenue Code.

Applying for tax exemption will require you to have your bylaws and other financial documents ready at hand. Once this is ready you can proceed to opening your nonprofit’s bank account. 

9. Choose your Donor Management Software Programs & Other Daily Operations

An excel spreadsheet of your donor and volunteer contact information is not a CRM, donor management tool. 

Many organizations mistakenly try to save money in donor management programs by only using Excel spreadsheets to keep track of their communications, which often results in losing valuable contact information that ends up costing valuable time and money to the organization. 

Although it may be expensive, this is an investment that you won’t regret.

An integrated CRM program allows you to send out mass emails to donors and volunteers, integrate a donation form that works with your website, and create volunteer registration forms.  It also allows you to see details about who donated when and the amount of their donation. Overall, this is a great tool that helps you stay organized and keep track of your interactions with donors and volunteers.

Most small nonprofits with smaller budgets decide to pay for different programs instead of integrated ones. It may be cheaper to implement different programs but your data will be stored in multiple locations.

TechSoup is a great resource for nonprofits to get discounted rates on software. 

Here are some free tools to help you get started:

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10. Set Up Your Website & Social Media Accounts

Although we live in a world where social media has become a major point of contact and reference for many businesses, it is imperative to have a proper business email address and a working website. 

As a nonprofit, you can get a free email provider from GSuite.

There are also a number of website domains you can use. If you are just starting, you might not want to invest in web development and design just yet, but consider doing it in the future as it will add credibility to your nonprofit and it will generate more donations and volunteers. 

In the meantime you can learn more about website design

Social media channels will become your way to stay connected with your audience in their everyday lives. Start by researching username availabilities and building a content strategy. Depending on who your target audience is, focus your energy on the platforms that are most relevant to them and start expanding as you grow. 

Conclusion

There is no magic formula to start a nonprofit, but after completing all these steps your organization will be set up to start operations.

There are many moving parts to a nonprofit so don’t expect everything to run smoothly at first. Make sure you keep track of what is and isn’t working for you and make adjustments as you see fit.

Focus on these 5 qualities to help you run an effective nonprofit organization.

Join the CoLab INC community to learn more about how to run an effective nonprofit. 

Join the CoLab INC community to learn how to start and run a successful nonprofit