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How to Start a Nonprofit Organization

How to Start a Nonprofit Organization


hi I’m Tim CEO founder of Aplos software
I’ve helped start a number of nonprofits and worked at a church for a number of
years so I’ve gone through this startup process a bunch of times it’s not as
difficult as it seems when you do your first one it’s challenging when you do
the second one it’s like oh I remember how to do all this stuff and after
you’ve done a few of them you realize it if I just know the steps and the
checklist then it’s it’s pretty easy to do all right so how to start a
non-profit I think there’s a lot of steps and there’s a lot that you need to
do and you ought to do it in a certain order when you’re starting a non-profit
so I think the first place to start this may be silly as it sounds is starting to
think of a name a lot of times you’ll think of a name or want to start a
non-profit and then that name is already registered or there’s no website that
you can get with the name in it that kind of thing and so you can start to
brainstorm the type of name that you want and then do domain check to see if
the name is available you want to submit an application that has the name filled
out if the names taken it gets spit back to you so a lot of times you’ll want to
check to see if this names available before you turn in your application that
way it’s just it’s easy you know it’s going to go through so you’ve got the
name of the entity that you’d like to start the first thing is to kind of
bring that name or that thing that nonprofit into existence so how you do
that is with the secretary of state it’s a state agency there’s one in every
state and you basically file what is called Articles of Incorporation with
the Secretary of State essentially what you’re doing is you’re creating a
corporation and then you’re gonna make it nonprofit later but you form a
corporation so these Articles of Incorporation its
articles it’s a one-page for the most part I think each each state may have
its own regulations on this but it’s a document in a state of California
one-page document and it has very specific information that needs to be in
the Articles of Incorporation things like your name and address but there’s
some specific language you have to use and so you can look up online and look
for Articles of Incorporation templates you know that kind of thing and so you
draft this thing and this one-page document has the name the address and
some other specifics in it you go to the secretary of state and you turn it in
they look up make sure the name is available assuming it is you give them
their filing fee and then BOOM it’s a corporation so now it exists they give
you a stamped copy of your Articles of Incorporation you’re going to need that
later to do things like open a bank account and they give you a state ID
number basically some cities won’t have a Secretary of State office and so you’d
want to reach out the either got a drive to an office that does exist or you can
reach out to these companies who have an office across the street from the
Secretary of State and that’s what they do you ask them to walk it across the
street for you so there’s companies out there that do that once you have the
corporation created then I you’re really kind of on the track then to turning the
corporation into a nonprofit entity it exists at the state at this point it’s
in the state’s records you have an ID number it doesn’t exist at the federal
kind of land yet so you need an employer identification number or an EIN number
and so you can do that on the internet there’s there’s forms that you can fill
out and mail in there’s also even an 800 number you can call the IRS dial through
this thing give them the information and then you get your EIN number on the
phone and then they’ll email to you so it’s super easy to get your EIN so at
that point the entity exists with the federal government as well and the next
step is to try and take this corporation and turn it into a
tax-exempt corporation this is called filing a tax-exempt application with the
IRS and the application is the form 10:23 which is available on the IRS
website this application basically walks you through getting tax-exempt status
the tax-exempt status a lot of times is interchangeable with 501c3 status if you
go to the IRS website or google IRS form 10:23 you’ll get a PDF document if you
scroll the very bottom of that document the last page of the document is a 10:23
checklist and that basically includes everything that you need to complete in
order to send in your application to then try and get tax-exempt status for
your corporation tax exempt status basically means that your corporation
doesn’t have to pay taxes on its net income it does not exempt you from sales
tax property tax all of the other kinds of taxes it is an exemption from income
tax if you get this 501c3 status and then it also means that the donations
made to this entity are tax-deductible so that means the donor can write those
donations off as a deduction on their personal taxes separate from that is I
got the income as a nonprofit and I didn’t spend any money out of a net
income I don’t have to pay tax on that so that’s I’m tax exempt and they get a
tax deduction so that’s kind of what that is so when you have your your
corporation formed with the Secretary of State and you need to turn it into a
nonprofit corporation that basically what you do is you submit a 10:23 with
the IRS that is the tax exempt application with the IRS there’s some
steps you have to do before you submit it so basically when you for
the corporation with the Secretary of State it was you the individual that
signed the document saying this nonprofit ought to exist now when I’m
submitting a 10:23 to the IRS that’s on behalf of the corporation or the entity
so you have to draw a link there between the two saying yes I’m a part of this
thing and I deserve to be able to file and it’s a thing and so there’s some
steps that have to take place one of the first steps that you do when you after
you form the corporation with the Secretary of State is you draft what’s
called incorporate or minutes and that’s where you’ll basically draft minutes
Board minutes which just think of a word document the word document outlines this
is what we talked about so there’s nothing special about minutes it’s just
notes of a meeting and so you’ll draft incorporator minutes these incorporate
our minutes are you as the incorporator you incorporated this thing you draft
minutes and you say I’m signing over basically ownership of this corporation
to these people and that’s basically where you can outline the beginnings of
a board and you’ll say here’s here that are the people now in control and so you
basically hand over I no longer can just sign on behalf of this thing as a person
now I’m giving over control to the nonprofit itself and it has a board so
you want to make sure that you have the right people on your board you want to
make sure that you don’t sign that over to somebody that you are not going to
want in the long run because you’re giving control this thing over they now
basically own it as soon as you do that incorporate our minutes and you sign
that now they have control and then the thing you want to do immediately after
that is have your first board meeting in your first board minutes and so a lot of
times this all happens at the same time you basically draft your board minutes
you draft your corporator minutes you sit with your board and you all talk
about it and you all sign all these documents and so what it looks like on
the board is these our guys now I have control
this thing and they assign who are the officers they assigned any other
directors that they want to or appoint any other directors that they want on
the board with them and they basically in the first minutes also adopt the
bylaws so bylaws it our governing documents bylaws think of a word doc
that’s you know 10 pages long or longer however long and it basically outlines
this is how this entity is going to run these are the rules by which we’re going
to run the sanity so there’s four people on the board three of them want to buy a
building and one of them doesn’t can you do it or not so that that’s what the
board the the bylaws talk about they say you know this is what the president
officers role is this is the vice-president this is the treasurer’s
role and this is what they do and their responsibilities and then here’s how
we’re gonna make decisions these things require unanimous vote these things
require supermajority vote these things require simple majority vote these
things don’t require you vote the executive director the nonprofit can can
just make these decisions so the bylaws outlined a lot of that kind of stuff how
meetings will be held and how often and how many people can be on the board you
know and that kind of deal so the bylaws are a lot of work to draft there are a
lot of good examples on the internet that you can pull down and and use this
kind of guideline and then you want to make sure that you tweak it to make it
kind of yours or how you want to operate it’s probably not bad also with the
bylaws to have an attorney or someone look over them you could have them draft
them if you’re looking to save money you can kind of draft what you think and
have them look it over and they’ll tell you where you might be tripping up but
once the bylaws are drafted so to kind of go back I’ve got this corporation
that’s been formed with the Secretary of State
I used articles of incorporation I filed those with the Secretary of State now
this thing exists so now I’m gonna go find who do I want on the board I’m
gonna draft my bylaws I’m gonna draft incorporator minutes in my first board
minutes we’re all gonna meet together and the incorporator minutes are where I
basically sign over the entity and I say I’m no longer gonna be the sole decision
maker for this thing these people are now in control then the board now has
its first meeting now that I’ve given them control and relinquish control and
then they have these minutes minutes are just the notes of what happened in a
meeting and in the first board minutes the newly appointed board basically
adopts bylaws the bylaws they’ll they’ll basically put in the minutes we the
board adopt the bylaws dated whatever there’s a sentence in there and then you
attach the bylaws of the minutes they all sign the minutes and you put them in
a file cabinet never to be seen again so that’s the first board minutes the
bylaws now are drafted now you know the rules of operating the attorney all of
that’s required in filing your 10:23 kind of fast forward I filed articles
incorporation with the Secretary of State to key my to bring the entity into
existence I called the IRS and got an EIN not exist there I drafted and signed
in corporator minutes relinquishing control to the board that I’ve decided
if you will the board then had board minutes where they adopted the rules by
which they’re going to operate which are the bylaws then what we do is we draft
the we fill out the form 10 23 which is the tax exempt application with the
application you attach all these documents to it you mail it to the IRS
the documents you attach are things like an expedite request policies and
procedures that you’ve adopted the bylaws and that kind of thing you mail
all the IRS the IRS then if you’re approved gives you what’s
called an tax determination letter that letter comes in the mail it’s one or two
pages and it basically says you are approved this entity is approved to be a
tax-exempt entity under you know 501 C 3 and so with that letter now that’s your
proof that you’ve gone through this application process with the IRS and the
IRS is okay with you being not paying taxes income taxes so you’re not quite
done yet the next thing you need to do is get exemption from your state agency
so just because you know companies pay taxes or people in most states to the
state as well as the federal government so now you’re exempt from the IRS
doesn’t mean you’re exempt from the state most states just want to know that
you’re exempt with the IRS and then they’ll say okay you’re good with us too
but you have to go through that process and so in California I believe it’s the
FTB 3500 is the form kind of like the IRS form is the 10:23 so you’re gonna
want to Google your state agency and figure out what the application is with
the state and then read the instructions for that and for many of them it’s you
fill out the first page or name an address everything and then include your
tackk your tax determination letter that you got from the IRS so you want to go
through the federal process first all the way get the approval attach it now
send it off to the state now you’re good with the state so that’s the typical
path there so it’s possible that you would not be approved the first time you
submit your form 10:23 to get your tax exempt status that’s not terribly
uncommon I’ve a couple of nonprofits that I’ve helped get started actually
madam kickback and most of the time they’re just looking for more
information or you filled something out incorrectly a lot of nonprofits sell
things like a thrift store or sells things so if they fill out and say hey
we’re gonna have a retail store it’s like well why
should that be tax-free so a lot of times they’re just looking for more
information or they’re pushing on a should this really be tax exempt what’s
goes on there with that there’s actually a ruling that
takes place the IRS will give you what’s called an advance ruling and the advance
ruling is a basically a five-year grace period to prove that your tax exempt and
so what that is is they basically each year when you turn in your 990 your
informational tax return there’s a schedule that you have to fill out which
is how you outline this is where all of our money came from and you basically
say the public is supporting this charity the IRS basically gives you five
years worth of data to accumulate to prove that it’s not just a tax shelter
all the money is coming from this one individual that’s trying to you know
pass their money through you or something and so five years of that
you’re allowed to go and be an entity try and figure it out try and get your
grassroots movement go and raise money and then at the end of five years each
year you’re turning in this document Bay this is I think it’s the Schedule A in
the 990 and so at the end of the five years they’ll give a definitive ruling I
think is what it’s called and that’s where they basically say okay it’s no
more no more basically double checking you’re good to go so once you’ve gotten
your tax exempt status from the IRS and from your state agency then there’s a
handful of things that you still need to do this is very dependent on what state
you’re in and what those rules are so in a lot of states you have to register for
licenses or permits at this point a business license for instance may be
with your county or city so you still need to do all those things and in many
states you have to register with the Attorney General
or an agency like that in order to be able to fundraise so before you can
start soliciting money you need to register in order to do that once you
have your entity all formed you’re ready to start fundraising and a lot of times
the very next thing people are looking to do is open a bank account I got this
check maybe someone’s willing to donate money to cover the filing fees with the
IRS and so they donate them do they give it to me and then I pay it or do they
write the IRS or how do I get them tax deduction so they want to write it to
the entity but I can’t there’s no Bank so I got a deposit in my bank account
it’s the first check you get you want to put in the bank account opening the bank
account can be a little tricky it’s it’s not as easy as I go in and open a bank
account cuz I’ve my driver’s license the Gotcha is the bank needs to know that
you the person are authorized on behalf of the entity to open a bank account so
are you the proper person to open a bank account and so you go to Bank America or
one of these big banks they’re gonna have the their person as the script of
like oh they say they want to open a non-profit account this is what I’m
gonna need from them and so the things they need a lot of times are the
Articles of Incorporation the bylaws and then maybe even some minutes saying hey
you’re authorized to do it sometimes I’ve even seen it in the bylaws that
this person is the one that will be of opening the bank account for us and so
you just bring that in all these people sign this thing I’m able then to show
that my ID I am the person that’s in these things that these people sign
saying that this is the nonprofit’s name I’m able to open the bank account
so you basically just have to draw the link between who you are and your
connection to the entity knowing that these people the board now the signers
on this thing and so you need to just basically have all those ducks snorter
have all those documents ready before you go to the bank or call the bank and
ask them for the the hit list and they’ll give you the
list of everything you need to bring in some other pitfalls that you may run
into when you’re first getting started that we revolve around money our
fundraising too soon I think if for the tax-exempt
application example if you raise money before you get your tax-exempt status
and then you end up not getting approved then now what you told all these people
that you were raising money they’re assuming in a good faith that it’s
tax-deductible they may even claim it on their taxes which you may not even know
about so that’s where a lot of these state agencies will require you to
register with them before you can start fundraising so you’ve got to make sure
that before you start asking for money that you check with your state agency to
see what steps do we need to start doing before we start fundraising before we
start asking for money just don’t get ahead of yourself with the tax deduction
and assume you’re gonna get through and all this that kind of thing you know
I’ve talked to a lot of folks that are wanting to start a non-profit and in
asking them like how do you get going and a lot of them have talked about
raising money or finding grants first checking to see where what grants are
funding and what’s available from a financial standpoint and you know that’s
a I just I think it’s a really bad idea yeah I think a lot of times these
nonprofits these these grants come with strings and so basically if you’re in
your beginning stages of forming a non-profit you don’t even know exactly
what it what it’s going to be yet it’s very influenceable that’s a word and so
I think these grants can end up shaping it and shaping it in a way that you
don’t want you know and so I certainly would not advise chasing the money first
I would advise figure out what you want to do what your passion is and go pursue
it and find people that are willing to donate
and come alongside what you’re doing instead of asking them hey what do we
need to do in order for you to give us money because it’ll end up being
something you didn’t you

  • Good information. I would like to sell my nonprofit of 7 years. Do you know how I would do that? I support animal foster homes.

  • Thank you, Tim that information was the best I heard step by step really really helpful now I can get my non-profit going.

  • I am having serious writers block. I'm trying to write a cover letter for A non profit organization intended on helping Young family's and elderly with the associated cost of home repairs and volunteer base worker's to do the work. But I keep drawing a blank no matter how many videos I watch. I continue to draw a blank when trying to express how much it will do and how much it is truly needed.

  • I'm in the process of getting my Nonprofit. How do I go about getting Organization to become partnership with me?

  • I dream of moving to Estonia one day and starting an organization that brings the gaming community of Estonia together. This organization will be used to research statistics regarding the gaming community of Estonia. Statistics such as how many Estonians are gamers, how many of those gamers are men and/or women, most popular genre etc. With this community, I plan to bring the IT Center of Europe a gateway into the culture of gaming through gaming competitions. The organization could hold fundraisers in which the money would go towards the gaming industry, social research, the IT industry, health care, and multicultural organizations. This organization could work as an after school activity for the children of Estonia. Not only that, but this organization could even push for the introduction of Baltic influence into video games. Estonia is known to be a very introverted country, and this could be a way of bringing these peoples together. Heck, since Estonians love music so much, why not hold DDR and/or Guitar Hero competitions? Competitions involving rhythm games? I don't know if this plan will work out, but in my opinion, it is totally worth a shot.

  • Thank you for doing this video, I have to listen to you few times to get all that you are teaching us
    about this very important topic, nonprofit. I am starting my first one, my mother was bleeding I went to the hospital of Sierra Leone, Freetown no diagnostic machines. I am a Registered Nurse in Los Angeles. I cannot see another person go to the hospitals of Sierra Leone and be sent home to die. I am advocating for medical screening and diagnostic machines, I need your guidance. Thank you very much

  • Ok I think I missed a step? I’m writing my bylaws and started my biz plan. I registered online with the Secretary of State and received my ein# from the irs. I don’t believe I wrote a letter of articles of incorporation… if I didn’t how did I get an ein? Is it possible to fill the articles of incorporation out online? I’m in TN if that is relevant.

  • Aplos, Thank you for posting this information for community leaders to utilize! The concept of creating a non-profit sounds marvelous till you actually try to complete the business requirements to create one. You have to be willing to navigate a sea of paper work and policies.

  • What is the application we would need to register or reserve our name, and where would we find that application?

  • Thank you for taking the time and making this video. It was helpful and I now feel I have a better understanding of what is required to start a Non-Profit Organization. Thanks again!

  • Some communities its hard to convince the ,that the organization is nonprofitable . they keep saying your getting a profit somewhere else so how can I convince them.?

  • so the non profit i am starting i went through legal zoom. there will be no employees. and as it stands no donations unless during a fundraiser which will not be any time in the near future. do i need to be considered a corporation if it is only me? legal zoom did ask me alot of these questions and my name is the only name on everything.

  • Concise. Well stated and informative. I am starting a Veteran nonprofit and had not a clue. Your presentation here was spot on with getting me started. Thank you very much.

  • Great video .. thank you Tim .. Im stariting one in Mexico, I know its a whole diferent process but still this info helped me alot .. blessings

  • Is it possible to be the sole board member when filing for tax exemption? That is to say, I don't want to relinquish control and don't have anyone else that wished to be on the board?

  • I’ve started the first step and chose the domain. I’ve created my website via wix. What if I don’t have any money? Will the next steps cost me a lot?

  • To answer all the people asking if their nonprofit organization can have just 1 person on your Board of Directors. The IRS requires a nonprofit organization to have a minimum of 3 board members if you're applying for tax-exempt status. You also need to check with your state to see what they determine makes a legitimate board of directors. It doesn't look credible to the IRS or possible benefactors if a nonprofit only has one employee/one member of it's BOD. Especially if that one person is the founder of the nonprofit.

  • I want to start NGO to link American universities or other departments with Middle East and North African universities/departments to bring US experiences to mentioned countries in fields like health,education and agriculture.
    I will come to USA to get my Master degree but I think I need mentors.
    Any Ideas? Thanks for the videos..

  • I am a Canadian citizen and want to start my not for profit but run it in the usa and the board of directors that follow in alignment with my vision are globally located. Does one need to be a usa citizen? florida is where I want to start this incorporation

  • Thanks for doing this video. I really need to have some knowledge on this topic ( non-profit organization). I am a second year student of saint Monica University which has a branch in Sierra Leone. I want to start up a foundation of helping kids in our country. But I don't have much idea and income in starting it. So I need your help.
    This is my email address: [email protected]

  • AARE YOU AWARE THAT THE 501C3 IS A LIE THE CHURCH IS ALREADY COVERED IN OUR USA COSTITUTION. IF YOU ARE INCORPORATED GOD IS NO LONGER THE HEAD OF YOUR CHURCH. NO THE FEDS AND THE STATE IS THE HEAD OF YOUR CHURCH.. PLEASE LOOK INTO THIS YOU PASTORS WILL BE HELD ACCOUNTABLE FOR LEADING YOUR FLOCK INTO FEMA CAMPS. READ THE 501C3 ALL OF IT. THIS IS PART OF THE CORRUPT SYSTEM THAT IS IN PLACE NOW EITH OUR OWN GOVERNMENT LIKE BABYLON IN OUR BIBLE.. 501C3 IS TO INC. A FICTIOUS NAME A FAKE NAME THINK ABOUT THIS BECAUSE THIS IS SERIOUS.. LISTEN TO MARK TAYLOR THE PROPHET.. GOD WANTS US OUT OF THIS SYSTEM

  • I think I might start a non profit organization for women and kids with abusive fathers although I do have a while to go I'm still a kid.

  • What if I already have a EIN for another business? Would I still have to get another one for a non profit?

  • So I dont understand? I went and gave you my email address so I could get your kit and down loaded it unzipped it and there wasn't anything in there?!? Does it not work on android? Can I get a little assistance here? Thank you kindly

  • Great Video, I was let go of my full tile job where i worked for over 20 years and i have owned a farm for the past six years . I would like to make my farm a non profit so i can get help to expand. The USDA doesn't give out grants or the fsa loans to white woman farmers unless i was a nonprofit. this is the first year the farm is really making any money , and I would like to see it triple in the next 3 months . I am in the city of St Louis Mo And have a great farmers market where I sell every week 4 days a month and I make $4,000 a month in sales . would you think this would be a good plan, Thanks Angie [email protected]

  • My sister and I planning on starting a non-profit to help kids in our area. We aren't planning on it being super large right now. Will we still need to do all the board steps?

  • im kind of confused. Do I NEED a board right off the bat like you are suggesting? i have heard of non profits that dont have boards until 5-10 years in

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