How to Start a Nonprofit

Starting a successful nonprofit requires a clear mission, doing your research, and preparing a solid business plan.

Jane Haskins, Esq.

Starting a nonprofit is no different from starting any other business. You need to do research, write a business plan, and file business-formation documents with your state. But nonprofits face an additional hurdle—they must get approval from the Internal Revenue Service (IRS) to be exempt from taxes.

Following the steps below will help you create a nonprofit business plan and start your new venture on a solid legal and financial footing.

Form Your Nonprofit

You’ll need to set up a board of directors and file documents with your state to start a nonprofit business entity. Most states have a special business classification for nonprofit corporations.

For more information and to learn how much it costs to start a nonprofit in your state, visit the agency’s website that handles business filings in your state. And if you’re trying to start a nonprofit organization with no money, government grants and loans may be available to help with startup costs.

Apply for Tax-Exempt Status

Each of the many types of nonprofit organizations has rules for tax-exempt eligibility, tax-deductibility of contributions, and whether the organization can lobby legislators or support candidates.

Most nonprofits are 501(c)(3) charitable organizations. Of those, most are public charities—a category that includes animal welfare organizations, food banks, and museums. Private foundations are also 501(c)(3) organizations. Donations to 501(c)(3) organizations are tax-deductible, and income that fulfills their mission is exempt from taxes.