The Basics of Forming a Nonprofit - dummies

By Jill Gilbert Welytok, Daniel S. Welytok, U.S. Senator Chuck Grassley

Part of Nonprofit Law & Governance For Dummies Cheat Sheet

To ensure the success of your nonprofit organization, you need to start with a solid foundation. Take a look at the following fundamentals checklist so your nonprofit is set up properly and legal issues are covered right from the beginning.

  • Clearly define your mission and its scope: Every nonprofit has a mission. Make sure your nonprofit’s mission is clearly defined and concisely written. It should reflect the shared goals of everyone involved in establishing the organization.

  • Put together a business plan and system: The organization should identify the sources and uses of its funds. It should also figure out whether it can be viable in the long run.

  • Adopt a set of bylaws: Bylaws serve as the constitution of your organization. You might start by using standard forms, but do make sure that issues of major importance to your organization are clearly addressed.

  • Recruit a board: Nonprofit organizations are run by boards of directors or trustees. Recruiting the right board can mean the difference between success and failure of a nonprofit’s mission.

  • Hold an organizational meeting and define duties and responsibilities: This step is important to do early on because it allows you to make sure that formalities are dealt with before the organization becomes engrossed in fulfilling its mission.

  • File for tax-exempt status with the IRS: Tax-exempt status is not automatic; it must be awarded by the IRS. Your organization must file the necessary paperwork and qualify under the law for exempt status.

  • Register with your state: State requirements vary, but most require you to follow a certain registration process so that the states can track which nonprofits exist within their borders. Most states also require a separate registration process if funds will be solicited within their borders.

  • Get staff and volunteers in place: If your organization has day-to-day operations to perform, it’s important to figure out who will do the actual work. More importantly, you have to figure out who will supervise operations and be held accountable.