Steps To Launch a New Nonprofit

Starting a Nonprofit: Key Considerations

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1. Utilizing a Fiscal Agent:

• Efficient Start: Consider partnering with an existing nonprofit as a fiscal agent to streamline initial setup tasks.
• Benefit: Allows immediate fundraising and avoids the burden of handling incorporation, bookkeeping, payroll, taxes, and annual filings.
• Clear Agreements: Document the fiscal agent relationship to prevent misunderstandings. 

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2. Incorporation or Not:

• Legal Entity: A nonprofit can operate without incorporation, but incorporation offers personal liability protection for leadership.
• Grantor Requirements: Some grantors may mandate nonprofit incorporation.

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3. Incorporation Process:

• State Filing: If incorporating, visit the state's Secretary of State website and file Articles of Incorporation.
• Choosing a Name: Conduct thorough name searches to ensure uniqueness, avoiding trademark issues.
• Web Presence: Consider domain availability when selecting a name.
• Articles of Incorporation: Typically provided as state forms; samples can be found by searching your state’s Secretary of State.

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4. Bylaws:

• Operational Guidelines: Bylaws outline board size, meeting rules, officer positions, and election procedures.
• Robert’s Rules of Order Bylaws Template: Download the free guide.  https://www.boardeffect.com/roberts-rules-of-order-bylaws-template/

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5. Federal Tax Exemption:

• 501c3 Status: The most common and beneficial tax-exemption status for charitable, religious, scientific, educational, or public service missions.
• Tax Benefits: Nonprofits with 501c3 status are tax-exempt and can offer donors federal tax deductions.
• Nonexempt Work: Limited non-mission-related activities are allowed.
• Unrelated Business Income Tax (UBIT): Owed on non-mission income if gross receipts exceed $1,000.

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6. Applying for Tax-Exempt Status:

• IRS Form 1023: Required for 501c3 status application.
• Required Documents: Include the application, Articles of Incorporation, bylaws, and meeting minutes.
• State Tax Exemption: Federal exemption often covers state taxes.
• Form 1023-EZ: Suitable for nonprofits with annual gross income of $50,000 or less and assets under $250,000.

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7. Recordkeeping:

• Documentation: Maintain detailed records of each step in the application process, including printed and electronic copies.
• Backup Copies: Protect against data loss with backup copies of essential documents.

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8. Annual Filings:

• IRS Form 990 or 990-EZ: Annual requirement for nonprofits.
• State Sales Tax Exemption: Apply to save on taxable items purchased for the nonprofit.
• DUNS Number (Optional): Used for business credit reporting, often needed for federal grant applications.

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9. Ongoing Compliance:

• Regular Board Meetings: Maintain a record of meetings with minutes.
• Annual Filings: Stay compliant with state and federal requirements.

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10. Workforce:

• Consider Your Needs: Assess whether to hire in-house staff or outsource specific tasks.
• Self-Funded: Initially an organization may not be able to hire staff. Individuals may need to volunteer their time or self-fund the program. New nonprofits that succeed are often self-funded, led by volunteers, or have wealthy supporter(s). 

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11. Research and Planning:

• Learn from Others: Study existing nonprofits and their websites for inspiration and best practices.
• Long-Term Vision: Consider your nonprofit's future and where you want it to be in five or more years.

Websites

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• Fresh Expressions is a church planting that helps congregations reach people outside the church. Jesus made the mission really simple: go make disciples. Their goal is to inspire churches to take hold of that mission right where they are. https://freshexpressions.com/ 
• How to Start a New Kind of Church by Luke Edwards is a totally free e-book. Luke Edwards introduces you to Fresh Expressions: a method for starting, growing and multiplying new forms of Church. https://freshexpressions.com/howtostart 
• Fiscal Sponsors is a website that has guidelines and wise practices. www.fiscalsponsors.org
• Name Cheap is a helpful place to search for a name available for a website.  www.namecheap.com
• National Association of Secretaries has sample articles of incorporation for your state.  www.nass.org.
• Minnesota Council of Nonprofits has sample bylaws but make sure they reflect your state’s requirements. https://www.minnesotanonprofits.org/resources-tools/starting-a-nonprofit/incorporation-and-bylaws 
• For detailed tax-exempt status, reference IRS Publication 557 at www.irs.gov. 
• Federal EIN – Incorporation https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online 
• Steps for applying for tax exempt status https://www.irs.gov/charities-non-profits/applying-for-tax-exempt-status 
• Minnesota Council of Nonprofits has a guided process for starting a nonprofit. https://www.minnesotanonprofits.org/resources-tools/starting-a-nonprofit. 
• Prosper Strategies has articles on branding.

1. How to build a strong nonprofit brand.
2. How to choose a nonprofit name.
3. How to decide whether a rebrand is worth the risk.
4. How to make the branding process more effective.
5. How to develop key messages to support your nonprofit’s brand.

• IRS Publication 598 has more information on Unrelated Business Income Tax (UBIT). www.irs.gov
• Minnesota Council of Nonprofits has a list of the many steps with an outline of the process. https://www.minnesotanonprofits.org/resources-tools/starting-a-nonprofit/planning-stage 

Books

• Book:50-State Step by Step Guide to Forming a Nonprofit Charitable Organization: What forms to fill out, how and where to file, the exact cost for filing, what licenses and permits you need for each state. By Aaron Sanders