A nonprofit organization (NPO) is a company or organization that is established for public purposes and the organizations property or income cannot be shared among to its office bearers or members, with the exceptions for services provided. Establishing a nonprofit organization can be a difficult task, and requires full understanding of key characteristics that can be funded in the future. Clear mission, adequate facilities and contingency plans are ideal to assure longevity. Initial compliance for each state differs from one another because each state in the United States of America has it own requirements and rules that nonprofit organizations must follow.
Things you will need to become a nonprofit organization in the United States of America:
Certificate of Incorporation
Board of Directors
Vision and Mission Statements
Employer Identification Number (EIN)
Develop vision and mission statements that clarify the organizations goal and reason for existence and to provide an overview of plans to realize the vision by identifying target audience and goals. Establish bylaws and board policies, they are important to define how the nonprofit organization will be managed and run, allocating authority and decision making responsibilities to board members.
Select the Board of Directors, which would be the governing body of the nonprofit organization. Board of Directors has multiple responsibilities including attending all board and committee meetings, functions, review agenda and supporting materials prior to meetings.
File the certificate of incorporation, which is a legal document to be filed within the state government. State incorporation can be completed within weeks, although multiple agency reviews can extend this period considerably. To complete this step, organization name, location, and details of its overall purpose will be required.
Employer Identification Number (EIN) is required to open one or more accounts in the organization. SS-4 form available at Internal Revenue Service can be filled to obtain this number, which is also necessary to withhold employee income tax at a later stage.
Open a bank account and establish a secure system of checking balances. Ideally, financial work for the organization should be allocated to multiple personnel in order to nullify any opportunities for fraud. In order to assure appropriation of funds, banks statements can be directly sent to the executive director.
File for the Federal tax exemption with the Internal Revenue Service under Section 501(c)(3). Tax exemption status can usually be procured within 3-6 months of the application, which allows the contributions deductible by donors for Income tax purposes. It is advisable to secure assistance from an attorney or legal counsel to smoothen this process.
Nonprofit organizations exempt under Section 501(c)(3) can be exempted from state sales, property tax and bulk-mailing permit. These can be applied at the main office of state’s local post office and tax assessor’s office. Along with this, measures can be put in place to obtain office space and furniture.
Recruiting staff and preparing a personnel manual will be the next step, assuring reliability over continued progress of the organization. It would also be necessary to create a payroll system to pay permanent and temporary staff.
Look towards securing funding through contributions and pledges, door-to-door canvassing etc. depending on the principles and reach-ability of the organization.
Visit your respected states department of treasury or office that works with nonprofit organizations. You can also visit their website to research information and download forms required for nonprofit organizations to operate in that state.
1. Foundation Center: Establishing a nonprofit organization
2. IRS: Form SS-4, Application for Employer Identification number (EIN)
3. Running Your Non-Profit Corporation
4. Starting a Non Profit Organization
5. IRS: Tax Information for Charities & Other Non-Profits