So you’re considering creating a nonprofit organization. Maybe you’re enthusiastic about a certain cause or seeking a long-term solution to aid a specific neighborhood. Obviously, the first thing that comes to mind is: how can I form a nonprofit?
It’s a major step, and you’ll need to be well-versed in a variety of legal, financial, and program-related startup details.
But first and foremost… Congratulations! You will be contributing to the welfare of the planet as a result of your efforts! Some claim it’s difficult, but others believe it’s straightforward. It all hinges on the founder’s commitment to the startup process, structure, and focus. It’s all about forethought.
It will be much more difficult to start your nonprofit as a side gig if you don’t have all of your ducks in a row in terms of what you want to do and who will be involved. This may not be as difficult for you if you have the luxury of devoting substantial time and have a clear vision of who will be engaged and how.
Whatever the case may be, it’s feasible!
Creating a Nonprofit Organization
To be clear from the start, we are not attorneys or accountants. While we are knowledgeable about the nonprofit creation process and principles, we urge that you consult with an attorney and an accountant to assure compliance.
There are tools and templates available to assist you with this process on your own, but you’d be taking a risk if you didn’t seek competent legal advice or guidance to ensure your organization complies with your state’s nonprofit laws.
It’s crucial to know where to look for all of the materials and assistance you’ll require as you launch your nonprofit, and this article is a fantastic place to start. We’ll go over everything you should do before and during the nonprofit organization process step by step.
How Long Does It Take to Form a Nonprofit Organization?
Forming a nonprofit will take at least six months from a legal standpoint. If you’re starting from scratch, it could take anything from 12 to 18 months (for example, you have no clue who could possibly be a member of your board yet).
Carry out your research
Make a point of saving any qualitative and quantitative data you collect throughout the study process. It will undoubtedly come in helpful as “base data” when you begin monitoring and assessing the activities of your business in the future.
After all, you need to know what the playing field was like when you first started to quantify your influence!
Determine the Demand
Before you begin your plans and activities, make sure that what you’re doing is a viable solution to the problem you’ve identified.
If you’re considering founding a new nonprofit, make sure the work you’ll be doing meets an existing need before you put your time and money into it. As humans, we have a natural desire to help others, but it is vital to use this inclination wisely, determining what needs people have and how those needs might be effectively met.
Let’s look at some statistics from the nonprofit industry. In the Philippines, there are 60 thousand NGOs registered, 45,000 of which help veterans and 3,500 of which are animal shelters.
It’s critical to consider how your activity complements that of other organizations currently in existence. After all, collaborating rather than starting from scratch may be the best option.
You don’t want to waste time, money, or effort trying to recreate the wheel.
It’s also a good idea to check what other nonprofits are registered in your county, state, or region to see whether any of them compete directly with the job you want to accomplish. While it may seem strange to consider NGOs competing, it is a reality and a necessary step.
Remember that competition isn’t always a negative thing partnering with an existing organization or structuring your nonprofit to provide complementary services to those that currently exist could help you make a bigger impact on the topic you care about. Identifying where your nonprofit fits into the existing ecosystem will only increase the likelihood of your effect being successful.
Organizations that are not for profit vs. those that are for profit
Any nonprofit organization should approach its work as if it were a company. They also have a lot in common in terms of operations.
At the same time, you should be aware of the key differences and advantages that come with being a nonprofit organization rather than a for-profit corporation.
Nonprofits are granted tax-exempt status by the federal government. Nonprofits that are recognized as public charities with a 501(c)(3) status (rather than simply incorporated in their state…more on that later) are exempt from paying federal income taxes.
Annual tax documentation, such as Form 990, will still be necessary.
Profits are reinvested in the organization. Any additional revenues in a for-profit business usually go back to the proprietors and for cashback.
A nonprofit, on the other hand, is compelled by law to reinvest any surplus funds back into the organization and its programs. If you want to make money, try starting a small business or joining a mission-driven organization that gives back to the community.
Grants and charitable funds are available to you. One of the main benefits of forming a charity is that you’ll be eligible for special funding! When applying for grants or requesting donations, public and private funders will inquire about your 501(c)(3) status.
Keep it up!
While we wouldn’t call the process of forming a nonprofit corporation simple, it has been done hundreds of times before. We are convinced that with this information, you will be able to start a nonprofit organization and make a positive difference in the world. After all, when has anything worthwhile ever been easy.
One of the most satisfying experiences of your career will be completing our checklist on how to form a nonprofit organization and coming out on the other side. Take these checklists with you as you go through each phase, and remember to keep your head up; it will all be worth it in the end! We’d love to hear about your experiences as you start your nonprofit!