Start a Charity

While starting a charity may seem like a daunting task, anyone with dedication, patience, and the ability to follow directions can successfully incorporate a nonprofit organization. If you follow the steps below, you will be able to create your own charitable organization with less hassle than you might think.

Steps

Forming Your Charity

  1. Develop your vision. The creation of a charity comes from a passion for a cause. Ask yourself what you are passionate about. Find out if others are passionate about it. Imagine what sort of change you would like to bring about. Creating a non-profit organization is one way to bring it about. Your charity’s vision should be its ultimate goal.
    • If you want to start a non-profit organization as identified by Section 501(c)(3) of the Internal Revenue Code, your organization’s activities will have to be charitable and will have to fit within certain categories. In order to be considered for tax-exempt status, your purpose must be religious, scientific, educational, charitable (for example, providing relief to the poor), literary, or dedicated to public safety or the prevention of cruelty. Your organization cannot be operated for the benefit of private interests. Additionally, 501(c)(3) organizations have imposed restrictions on what lobbying activities they can conduct and what types of political engagement they can be involved in.[1]
    • Decide if a 501(c)(3) non-profit organization is best suited to serve your charitable goals. In addition to non-profit organizations, there are also charitable trusts. Trusts differ from non-profits in that they are centered more on the allocation of money than on the allocation of community services. These private foundations typically have only one donor and do not rely on public funding.
  2. Define your mission. What is your organization going to do? What service will it provide your community? Once you’ve figured out your mission, write it out in a formal mission statement. A good mission statement succinctly communicates to others--volunteers, community members, and potential funders--what you do and what you hope to do.
    • The mission statement should be short (ideally three to five sentences), clear, and free of jargon.
    • If you’re having trouble finding the words, visit established organizations’ web sites and study their mission statements.
    • Complement your statement with a set of goals that are both achievable and challenging.
  3. Name your charity. A charity’s title often refers to its function. Many charities are named for someone related to the function that the charity provides.
  4. Create articles of incorporation. These lay out the foundations of your organization. You can find sample articles on the Internet. Articles of incorporation state the purpose, name, duration of operation, structure, and other basics of your organization.
    • Most US states have forms online that you can fill out. Check your state’s Secretary of State website to find the required forms. Be aware that some states want at least two signatures on articles of incorporation.
  5. Write the bylaws for your organization. Bylaw templates can be found online. Bylaws are the rules that govern your charity. A set of bylaws will define how decisions are made, who makes the decisions, what type of governing structure will direct the charity, how the organization will be set up, and how conflicts will be resolved.
    • There is no legal language specifically required in bylaws. While not all states require non-profits to have written bylaws, they are useful in helping organizations to run smoothly.
  6. Set up a board of directors or an advisory board, and appoint a registered agent. A board of directors will help guide the charity and will make decisions. A registered agent is responsible for receiving official communications from the state.
    • The advisory board would ideally consist of unpaid consultants experienced in nonprofit work.
    • Add significant donors and fundraising partners to the board as the organization grows.

Filling Out the Paperwork

  1. File an application packet for a non-profit organization with your Secretary of State. A non-profit charity is considered a corporation, so application paperwork should be directed to the corporations division within the Secretary of State's office. There is usually a small fee associated with filing.
    • The packet will include the articles of incorporation that you filled out earlier.
  2. Get a Federal Employer Identification Number (EIN). This is the number the IRS will use to identify your organization for tax purposes. You’ll enter the EIN on just about every form you fill out, including IRS paperwork and grant submissions.
    • You can call the IRS at (800) 829-4933 or apply online to get an EIN assigned immediately, or you can apply by mail or fax. For this you will need IRS Form SS-4.
  3. File with the Internal Revenue Service for recognition as a charitable organization. There are charitable-organization application packets available online. The IRS reviews applications for recognition as a charitable organization on an ongoing basis, so you can apply for charitable status at any time.
    • The form for tax exemption is Form 1023.
    • The packet will ask for information on what your organization will do, whom it will benefit, and how it will administered.
    • You must complete your articles of incorporation and your bylaws, and they must be accepted by the Secretary of State before you apply for federal charitable status.

Getting Underway

  1. Start raising funds. Find ways of placing your name before the public. Meet with other organizations similar to yours. Contact grant-making entities supportive of your mission. Prepare presentations for potential donors.
    • Don’t be discouraged if a potential donor decides not to donate. Expect setbacks, but keep pushing for funds.
  2. Be professional. Professional conduct will go a long way in earning donor trust.
  3. Take advantage of social media. Spread your message using Twitter, Facebook, Blogger, Instagram, etc.. Keep a strong online presence including a professional website. Tell all people around you!!!!!
  4. Be active in your community. Advertise what you are doing, who is going to benefit, and how you are going to accomplish your goals. Try to get involved in partnerships with other charitable organizations. Even a small role in a larger project can build credibility and recognition for your fledgling organization.
    • Organise charity functions: sporting events, entertainment shows with local celebrities, etc.
  5. Begin your charity work. It is highly recommended that you raise at least a year’s worth of operating funds before you begin operations. Spend this money wisely.
  6. Try to keep operating and fundraising costs below 20% of your total spending. The rest should go directly to your cause.
    • Write grant requests, raise funds, create programs, hold events, and bring people together to solve problems and make the world a better place.

Tips

  • Familiarize yourself with legal requirements for starting a charitable organization.
  • Recognize the various organizational structures you can choose.
  • Check with all appropriate authorities to be sure you're going about this correctly. It's a lot easier to modify your course at the beginning than later when you've already begun operations.
  • Ask for help from other charitable organizations doing similar work. Some may even offer to be your "umbrella" until you receive charitable status.
  • Take the time to research what others put into their articles of incorporation and their bylaws. By clearly defining your organization’s purpose, how it will be governed, and how decisions will be made, you will avoid many potential problems.
  • Don’t be afraid to ask questions or to make mistakes. You are trying to make your community a better place, and many people will be willing to help you. Some with specific knowledge will be eager to help new organizations serve community needs.
  • Hold events like chili or pie-baking contests, and charge a modest admission fee.
  • As in any business, a charitable organization takes a lot of work and some luck. Don’t get discouraged if your charity doesn’t immediately raise huge sums of money. It takes time, business skills, and interest from stakeholders in the community to make your charity a success. If you focus your energy on what people need or what will improve the world we live in, demand for your services will increase.
  • Utilize the expertise and guidance of your Secretary of State's office and the Internal Revenue Service. Even though the IRS may seem intimidating, the staff serving charitable organizations is both professional and helpful.
  • Starting a charity requires a lot of paperwork. It's not too complicated, however, and if you have your mission clearly in mind, you should have little trouble explaining to the governing agencies why you deserve charitable status.
  • Make phone calls to potential donors. Keep at it, but be careful not to alienate anyone. One call a week might be the most you'd want to make to any given donor.
  • Confirm that all paperwork is completed in order to complete set 2 of the advice.

Warnings

  • Keep good records. You'll need to have all your paperwork organized from the very first day you incorporate, and there will be a lot of it. If you don't have your receipts readily available, for example, and the IRS wants to review your non-profit status, it may cause a problem.

Things You'll Need

  • Articles of incorporation
  • A name for your charity
  • Bylaws
  • Filing form for Secretary of State
  • IRS 501(c)(3) packet
  • Federal EIN (Employer Identification Number)
  • Filing fees

Related Articles

Sources and Citations

  1. ↑ https://www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-section-501-c-3-organizations
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