How to Establish a Not-For-Profit Organization

Establishing a not-for-profit organization can be an exciting and rewarding experience. However, in order to be successful you will need all of the information and help you can get. No matter what your cause, starting a not-for-profit organization takes a lot of time, energy and patience. Here are a few important steps to help get you started.

Instructions

Difficulty: Challenging

1. Determine your organization's purpose. What are your goals? What group of people will your organization target? These are the types of questions you need to answer to determine your not-for-profit organization's purpose and vision.
2. Choose a name. Incorporate your organization's focus and vision into the name if possible. Check the names of other not-for-profit organizations in your state to avoid duplication. The name you choose should not only reflect your purpose, but it should also be as unique as possible.
3. Develop your constitution and bylaws. Your constitution states your group’s purpose, and the bylaws help your group conduct business in an orderly way. Some not-for-profit organizations hire an attorney to help develop their constitution and bylaws, but this is not necessary.
4. Elect a board of directors. In order to incorporate, you must have at least three people on your board. However, it's advisable to have a few more. The Internal Revenue Service usually expects non-profit organizations to have more members than the minimum requirement of the state.
5. Incorporate with your state. This is a fairly easy and inexpensive process. Articles of Incorporation establish the existence of a corporation, and set forth basic information about the new not-for-profit organization.
6. Obtain an Employer Identification Number. An Employer Identification Number (EIN) is used to identify a business entity. You will need an EIN to open a bank account for your not-for-profit organization. The application is easy to fill out, and can be downloaded from the Internal Revenue Service website.
7. Obtain a State Sales Tax number. To receive a State Sales Tax number, file an application with your State Department of Revenue. Your State Sales Tax number will exempt your not-for-profit organization from state sales tax.
8. Apply for your 501(c)3 or letter of exemption. As a not-for-profit organization most of your financial support will come from donations or grants. Having a letter of exemption will allow contributors to receive tax credit from the Internal Revenue Service.

Tips & Warnings

• Most of the information you filled out for your constitution and bylaws can be duplicated in your Articles of Incorporation.
• Obtaining your 501(c)3 or letter of exemption is a fairly difficult process. Although many organizations exist that will help you fill out your forms, it's advisable to hire an attorney to oversee the process if possible.