This is Part 3 of How to Start a Non-Profit and you can view Part 1 ~ where we talked about the importance of defining your mission, vision, and values & Part 2 ~ explaining in depth what vision, mission, values, and differentiators are! Now we move on to the nitty-gritty administrative legalities for starting a non-profit!
The steps below are for the state of California. Many of these steps can be broken down into their own blog posts, but here’s enough info to get you headed in the right direction!
1. Secure organization name
- Consider a name that accurately represents your brand. Inc.com and Entrepreneur.com have good articles on this.
- Search with the state to see if anyone else has the name. Do a google search of the name to see if an organization outside the state has the name.
- Consider your Domain Name/URL for Website
- Creating a Logo for your Non-Profit as you develop is an important part of your new organization.
2. Select board members The government requires at least 3 members (Director, CFO, and Secretary). Some non-profits have as many as 25. Many articles suggest 5-10.
- The most important trait of a board member is their passion for the cause. Also consider the interpersonal skills, business skills, network, personal experience, and reputation each board member brings to the team.
- Provide in writing what will be expected as a board member. I like to also spell out what the board will receive as members.
3. File Articles of Incorporation with Secretary of State for the state you’re incorporated.
4. Obtain tax ID number or EIN with the IRS.
5. Open a business bank account. Bring all the legal documents for your non-profit when you set up the account. Wells Fargo was able to set me up with fee-free accounts.
- Find an accountant
- Year-end statements of giving are required for donors who have given $500 or more.
- Tax returns are required for organizations who bring in $40K or more that year.
6. Write bylaws. We used a template I found online and tweaked it accordingly.
7. Apply for 501c3 status with the IRS by completing Form 1023. Budget and board members are required for the application. We got our tax exemption letter less than 3 months after we submitted the application.
8. Apply for state tax exemption by completing Form 3500 with the CA Franchise Tax Board. This form is short as long as you can provide a copy of your Federal tax exemption info. I recall California took longer that the IRS to send us a letter.
9. Register as a charity with the state Attorney general before soliciting donations.
- Also consider registering with other charity accountability sites like Charity Navigator, Guidestar, and Better Giving.
10. Continue changing the world! But now with tax exemption privileges! Record board meeting minutes, maintain a record of expenses, and file your statement of information with California annually.
Here are some resources that have helped me along the way:
- NOLO’s How to Form A Nonprofit Corporation book
- Forces for Good: The Six Practices of High-impact Non-profits book
- Blue Avocado
- Non Profit Hub
- Foundation Center
San Diego resources:
- Alms Productions
- Fordable Freelance. Here’s a presentation she did about fundraising.
- Young Nonprofits Professionals Network
- San Diego Social Start-up Weekend
- 1 Million Cups San Diego
- SCORE San Diego