We live in a world where people suffer unfathomable tragedies as well as living circumstances that make sustaining a normal existence almost impossible. It’s understandable that people need charity groups to step up and provide whatever’s necessary, whether that might be food, shelter or medical care. Charities don’t just appear out of thin air. Instead, they must be born out of the hearts and minds of regular people who simply want to make a difference. As with any other business venture, starting a nonprofit organization checklist is a good place to begin.
About Charitable Organizations
The ability of a well run charity to accumulate resources for the benefit of others goes without parallel if done properly. Whether it’s dealing with a disease epidemic, fighting poverty or assisting with the recovery from a natural disaster, charitable organizations have often been the difference between living and dying for the people who are targeted by a given cause. With that in mind and if you are interested in setting up a charity of your own, it might be helpful for you to begin by starting a nonprofit organization checklist related to setting up a nonprofit 501(c)(3) charitable organization.
Starting a Nonprofit Organization Checklist – 9 Steps
Step 1 – Choosing a Cause
The need for help throughout the world is absolute. When starting a nonprofit organization checklist, the first step should be choosing a cause to support. The best way to select a cause for your charity is to find something that is near and dear to your heart. For example: if you find it heartbreaking that children throughout the world are dying from malnutrition, you might want to direct your efforts to a local, regional or international feeding organization.
Step 2 – Choosing a Name
The process of choosing a name for your organization is not as easy as you might think. Generally, charities need to be incorporated within the state where the home office is expected to be located. Each state has a specific set of guidelines that must be followed in the naming of a nonprofit 501(c)(3) organization. For the most part, the name must be unique, end with a “corporation” designation and not indicate an affiliation with any type of a government organization.
Step 3 – Secure the Name
The process of actually securing the name you have chosen requires that you start by filling out the appropriate application that has been provided by the state of incorporation either through a branch office or online, if available. After confirming the name is available, you can pay a small fee and make the name your very own.
Step 4 – Develop Your Organization’s Mission Statement
Your organization’s mission statement is a sentence or two that describes what your charity does, who/what the beneficiaries are intended to be and where you expect to carry out your mission. It should be well constructed and easy to understand since it will often be included in public relations materials you will be handing out to potential donors and government organizations.
Step 5 – Setting Up the Corporation
As part of starting a nonprofit organization checklist, setting up the actual legal entity should be high on the list. Depending on state and federal requirements, you will want to hire an attorney to set up the legal aspects of your organization. This will include your Articles of Incorporation and the bylaws. These will need to be filed with the state along with the appropriate filing fees. The purpose of these Articles of Incorporation and the bylaws is to provide protection for the stockholders and establish how the organization is expected to function.
Step 6 – Securing the Organization’s Federal Identification Number
Once the legal entity has been established and recorded with the state, it’s time to notify the federal government of the existence of your organization. As part of this process, the organization will be assigned a federal Employer Identification Number (EIN), which will be used to identify the charity when filing the required tax returns and documents.
Step 7 – Hire an Accountant or Enlist the Services of a C.P.A.
In exchange for having the privilege of raising donations without having to pay taxes, it’s critical that you hire some type of a professional accounting person, who will be designated as the individual who looks after the finances and accounting system of the charity. It would beneficial to hire someone who has experience dealing with both the Internal Revenue Service (IRS) and 501(c)(3) designated corporations.
Step 8 – Setup Accounting System and Reporting Process
Due to the Internal Revenue Service’s reporting requirements and donor requests, it is going to be crucial that clean and detailed records are being kept for every single transaction that carries the charity’s name. You will need to develop an annual budget to guide the organization’s fundraising efforts and expenditures. You will also want to develop a set of financial reports for the benefit of management and outside entities that have an interest in the charity’s performance. Remember: profitability is not the goal, carrying out the mission statement will determine success or failure.
Step 9 – Obtaining Your Charity’s (501(c)(3) Filing Status
The last step in the process is securing permission from the IRS to operate as a nonprofit 501(c)(3). Without this designation, your charity would be subject to the same tax laws as normal corporations. Your tax-exempt filing status will allow you to secure donations without paying taxes based on the assumption you will be spending every cent to run the organization carry out the charity’s stated mission.
If you have been successful at starting a nonprofit organization checklist and following the steps provided above, you should officially be in the business of helping those people, places and things that need your help the most. You should take great pride in your desire to make a difference and do everything in your power to make sure everything is handled by the book in order that your charity can operate without impunity. Starting a nonprofit organization checklist is definitely the best way to begin.
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