How to Start a Non-Profit Organization

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Make your dream of running a nonprofit organization a reality. Learn how now.
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It's Monday. Your alarm clock goes off. You don't want to get out of bed. It's the same story in the shower, in the car and in your office lobby. As the elevator doors ping open, your eyes land on the cubicle farm you've been working in for as long as you can remember. And as your annoying coworker flies past you in a flurry of Monday morning madness, it dawns on you -- you just can't take it anymore. You're ready to quit corporate America. It's time to chase your dream.

Starting your own nonprofit organization may be the perfect way to be your own boss without facing the trials and tribulations of a traditional for-profit company. The exact definition of "nonprofit" (also known as not-for-profit) is hazy at best because there are so many versions of nonprofit organizations. These groups can be educational, scientific, religious or charitable [source: IRS]. Roughly half of these groups are 501(c)(3) tax-exempt charities [source: NCCS]. Basically, a nonprofit takes the money it makes and puts it directly back into its causes and missions instead of sharing profits among its employees or stockholders.


The key to calling your group a nonprofit organization is quite simple -- don't make a profit. You can still receive a salary in exchange for your work and hire employees, but the overall goal of a nonprofit organization is to keep administrative and fundraising costs to a minimum. So think about that dream. Would you like to start an animal shelter? Raise money for medical research? Beautify your city? You can go ahead and start working toward that goal right now. Say goodbye to Hawaiian-shirt Friday and hello to your future.

In this article, we'll discuss the requirements for starting and maintaining a nonprofit organization, fundraising ideas to help your project thrive and available grants for the nonprofit sector. Read on to learn about the basic requirements for starting your own nonprofit.


Non-Profit Organization Requirements

Taking the leap into running your own nonprofit can be overwhelming. There are plans to draw up, funds to find and partners to build solid, trust-based relationships with. And there's going to be some paperwork -- maybe a lot of paperwork. But when your life goals and dreams are pointing you in the direction of an exciting, nonprofit adventure, a little time spent getting the process rolling will be easily trumped by the benefits. When you start to feel a little freaked out by the idea of setting up the organization, remember that more than 1.4 million nonprofits are alive and well in the United States -- and they all had to start somewhere [source: Blackwood, Wing, & Pollack]. You can do it, too.

Here are the steps you need to take to get started:


  • Write a mission statement for your chosen organization.
  • Find a group of trusted individuals to form a board of directors.
  • File an article of incorporation with your state. You can find this document on your state's government Web site. There may be a small fee when you send in the form.
  • Write a list of bylaws for the organization.
  • Write to the IRS to request nonprofit status. Once you've been approved, you'll need to apply for the same status through your own state. You may have to fill out other forms or register with other state-run offices depending on where you live.
  • Formally register your nonprofit organization with your state and apply for sales tax exemption.
  • Contact your city government to find out if you need a solicitation license.
  • If you're going to be sending out a lot of mail, you can apply for a nonprofit bulk mail permit from your local post office.
  • Get insurance. There are many kinds of insurance for nonprofits, so do your research and shop around before you settle with one company.

[sources: SNPO, ISOS]

Now that you know how to get started, it's time to think about financial backing. Read on to learn about fundraising ideas for your nonprofit organization.


Fundraising Ideas for Non-Profit Organizations

Nonprofit organizations rely on money given by others to support their goals. The key to fundraising is to show these people exactly what they are giving money for and to make it fun for them. It helps to have some kind of "reward" for the donors. When money is tight, donors are more likely to pitch in if they're getting something in return.

You've probably seen groups of teenagers in swimsuits washing cars on a hot summer day to raise money for their high school sports team. You can build on this concept by coming up with simple ways to raise funds. You can sell a variety of products, including candy bars, cookie dough, magazine subscriptions, lottery scratch cards, restaurant gift cards and lollipops.


If you're looking to raise a large amount of funds for a particular project, you'll need more than a little candy. In this case, you can throw fundraising events to get the attention of large groups of donors. You can get local businesses to donate free items for an auction. You can host raffles, parties or sales. There are endless ideas for creative events, such as miniature golf tournaments, dance-a-thons, fashion shows and cook-offs. Brainstorm creative ways to get people's attention and have fun. Think about the needs and wants of your local community, and set your sights on what will make them pitch in for your cause.

If fundraisers aren't your thing, you can apply for local and national grants. Read on to learn about grants for nonprofit organizations.


Grants for Non-Profit Organizations

Grants are not a loan or "free money." Grants are amounts of money given to organizations or individuals for specific purposes. You can obtain grants from businesses, foundations and the government. You can obtain large sums of money for your projects or research if you tap the right resources. Think about your project's goals and mission, and then research groups that share similar interests.

Grants come large and small. It's easy to think that a giant organization such as the Bill and Melinda Gates Foundation might support only large projects. In 2009, it funded a grant for $9,950,000 to the International Crops Research Institute for the Semi-Arid Tropics in India [source: BMGF]. However, the same month it also awarded a grant of $306 to a small organization called Bike Works Seattle "for general operating support" [source: BMGF]. No matter what your needs are, there's most likely a grant you can apply for.


You can also look for grants from your state government -- start with the state's official government Web site. Some states even offer specialty Web sites that provide keyword or category searches, such as the TexasOnline eGrants Search site [source: TexasOnline].

Then there are the big dogs -- federal grants. The United States government has a plethora of grants to choose from. Go to the Web site to search by category, agency or keyword [source:]. Remember to read the fine print when applying for any grant to ensure you can fully comply with the agreement. Once you get started, you'll see it's easy to raise the money you need to fulfill your dreams.

Check out the links of the next page for more information.


Lots More Information

Related HowStuffWorks Articles


  • Blackwood, Amy, Wing, Kennard T., & Pollack, Thomas H. "The Nonprofit Sector in Brief." Nonprofit Almanac 2008." Urban Institute Press. 2008. (Accessed 05/05/09)
  • BMGF. "Grants 2009: Bike Works Seattle." 03/2009. (Accessed 05/06/09)
  • BMGF. "Grants 2009: International Crops Research Institute for the Semi-Arid Tropics." 03/2009. (Accessed 05/06/09)
  • Foundation Center. "Top 100 U.S. Foundations by Asset Size." 04/07/09. (Accessed 05/06/09)
  • Fundraiser Insight. "Fundraising Ideas." (Accessed 05/06/09)
  • IRS. "3. Section 501(c)(3) Organizations." Publication 557 (06/2008), Tax-Exempt Status for Your Organization. 06/2008. (Accessed 05/06/09)
  • ISOS. "Forms and Fees: Domestic Nonprofit Corporations (504)." (Accessed 05/06/09)
  • NCCS. "Frequently Asked Questions: General Nonprofit Information." (Accessed 05/05/09)
  • NCCS. "Frequently Asked Questions: Nonprofit Funding and Finances." (Accessed 05/05/09)
  • Penn Theatre. "About the Penn Theatre." (Accessed 05/06/09)
  • San Diego Blood Bank. "Barona's $1,000,000 Quacker Dash." (Accessed 05/06/09)
  • SNPO. "What Are the First Steps to Starting a Nonprofit?" (Accessed 05/06/09)
  • TexasOnline. "eGrant Search." (Accessed 05/06/09)
  • USA Fundraising. "Home & Gift Fundraiser: Products." (Accessed 05/06/09)