How to Start a Nonprofit Organization

How to Start a Nonprofit Organization – Overview

A nonprofit organization is a legally constituted entity operated for a public or social benefit rather than to generate profits for owners or shareholders. Surplus revenues are reinvested in the mission rather than distributed as profits.

They put all the money back into their services and projects or use it for future events.

Nonprofit Organization

How to Start a Nonprofit Organization

How to Start a Nonprofit Organization – What is Nonprofit Organization?

A nonprofit organization generally operates without the primary goal of making money. The IRS categorizes nonprofits as tax-exempt organizations that serve the public interest.

Most public charities come under 501(c)(3), with around one million registrations in the US.

However, some nonprofit organizations may not come under 501(c)(3). These organizations are classified into different categories, including 501(c)(4) social welfare groups, 501(c)(5) labor and agricultural organizations, 501(c)(6), 501(c)(7) recreational club, and many more.

General Reasons to Start a Nonprofit Organization

Here is a list of the most popular reasons for starting a nonprofit organization –

  • You can start a nonprofit organization to create a service, facility, agency, or program that may not exist otherwise in society.
  • Another purpose of creating such organizations is to come together to achieve a common goal that is difficult to achieve unaided.
  • Some organizations may develop to deliver education to everyone.
  • Nonprofit organizations can increase awareness about a social concern or issue.
  • You can start a nonprofit organization to offer a sense of belonging to individuals in a particular area.
  • Nonprofit organizations can be started to share expensive resources like property or equipment.

Here is How to Start a Nonprofit Organization in 10 Steps

Starting a nonprofit organization is not easy. You must follow a few steps to start a nonprofit organization.

1. Figure out your reason for starting a nonprofit organization

According to the National Center for Charitable Statistics (NCCS), there are over 1.5 million registered nonprofit organizations in the United States, encompassing a wide range of causes and missions. It is important to know why you want to start a nonprofit organization before you move forward with the execution.

There is no point in duplicating some existing services without any improvements or additions. If your organization is not able to make an exception and differentiate itself from other similar programs, it will not be easy to collect findings.

2. Research work

Detailed research is extremely important when starting a nonprofit organization. Studying the current market is necessary to understand the demand for the services you want to offer.

Here are a few things that you must have a clear idea about before starting a nonprofit organization –

  • What problems do you want to solve with your non-profit organization?
  • Which community do you want to serve with your organization?
  • How many similar nonprofit organizations in the current market serve the same needs?
  • Are these similar organizations serving the same community?
  • Are these similar nonprofit organizations financially stable?
  • What can make your nonprofit organization unique?
  • Is there anything that can make your nonprofit organization better equipped to offer solutions for these problems?

3. Develop a solid foundation

You must build your nonprofit organization on a solid foundation. To build a strong and successful organization, develop a clear vision and a set of values. Clarifying your goals is very important to move in the right direction.

Here are a few things that you must know-

  • Try to identify and state the problems or the requirements
  • Find a solution to these problems
  • Try to determine and understand your target population

4. Chose a name for your organization

You must be careful when choosing a name for your organization. Selecting a unique name that is somehow related to its activities is a safer choice.

Here are a few things that you must do before naming your organization –

  • Talk to your friends, team, and acquaintances about the name of your organization
  • Think about a name that is inspiring and memorable
  • Consider the purpose, location, and activities of your nonprofit organization
  • Try to give a name that is easy to pronounce and easy to remember
  • Avoid making the name too long or descriptive

5. Mission statement

Your mission statement must help your organization clarify its purpose. A good mission statement can inspire and motivate volunteers and staff.

You can send a strong message about your beliefs and what your organization stands for through your mission statement.

A good mission statement with a powerful message can help you develop a strong foundation for your organization and attract the appropriate individuals.

Here are a few things that you must consider while writing your mission statement –

  • Keep your mission statement simple, unambiguous, and easy to understand
  • Your mission statement should indicate what you are doing
  • Try to keep your mission statement brief and to the point
  • Your mission statement must be able to guide your stakeholders and team members about your purpose

6. A detailed business plan

A comprehensive business plan is crucial for your nonprofit organization, even before recruiting volunteers. This plan should outline estimated costs, potential revenue streams, and the necessary workforce, providing a strategic framework for your organization’s operations and financial sustainability.

Here are a few things that you must plan carefully –

  • Executive summary
  • Marketing Plan
  • Programs, products, and services
  • Impact plan
  • Operational plan
  • Financial plan

7. Develop a strong and motivated leadership team

A strong, honest, and motivated leadership team is required to run a nonprofit organization successfully. You need to find a partner with similar goals who can join you in your mission.

To run a nonprofit organization successfully, it is very important to create a structured team with reliable, passionate, and committed individuals.

8. Legally incorporate your organization

Legal incorporation is essential to establishing a nonprofit organization. This process involves selecting a unique name compliant with state laws, forming a board of directors, choosing a legal structure, completing incorporation paperwork, applying for IRS tax-exempt status, and obtaining necessary licenses and permits.

9. Secure funding

Nonprofit organizations must first identify different funding sources. One of the most challenging tasks here is to select a suitable funding model for your nonprofit organization.

Without appropriate funding, a nonprofit organization will not be able to sustain itself for very long.

10. Roadmap for the future

To run a successful nonprofit organization, you must plan every step before starting and executing them properly. You must create a roadmap to reach your goals with your organization.


Starting a nonprofit organization is a time-consuming and complex process. It requires a great deal of work and formalities to complete the entire process and start providing benefits to your target population.

See Also

Grant Writing for Nonprofits

Gradient Grant Community Outreach Support Program

Illinois Nonprofit Grants

DHHS Grant Program

Current Version
March 11, 2024
Updated By
Andrea Morales G.

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