Charity Guide: What Is a Nonprofit Organization?

There are 1.5 million nonprofit organizations operating in the United States. They serve as public charities, private foundations, civic leagues, and such.

Still, many people often ask, what is a nonprofit organization.

Starting a nonprofit organization affords you protections not usually granted to businesses. There’s the limited personal liability advantage and the 501(c)(3) tax exemption.

You get personal asset protection in the event you get sued. Plus, your nonprofit gets to solicit money from private and public grants. In return, donators get the benefit of claiming the donation on their taxes as a deduction.

If you’re needing to select a We Charity, or wanting to become one, you’ll need to know the basics. Keep reading and learn the basics right here.

What Is a Nonprofit Organization?

Let’s first look at what the term nonprofit refers to. Nonprofit references public organizations that address social purposes. These include churches, charities, foundations, and fraternal groups.

Your local chamber of commerce is included in this reference as well.

Nonprofit organizations are also NGOs—Non-governmental organizations. They advocate for big issues like breast cancer awareness, equality, and education. The success of any nonprofit relies on the amount of funding they raise.

How to Start a Nonprofit

Before you jump headfirst into starting a nonprofit, there are a few things you need to do. These are the basics of getting started:

1. Do Your Research

Passion isn’t enough. Do your research first. Verify the need concerning the social purpose you’re passionate about. Collect quantitative and qualitative data about the issue.

Make sure the need is a critically increasing concern. That means the issue worsens if others don’t address the problem and step in to stop the bleeding.

2. Choose the Type of Nonprofit Your Want to Start

Non all nonprofits automatically fall into tax-exempt organizations. If you want 501(c)(3) tax-exemption, look into serving at one of the following:

• Religious organization
• Charitable cause
• Educational or Scientific organization
• Literary organization

Steer clear of political campaigns or using a nonprofit for personal financial gain. Nonprofits are for helping others. Not yourself. Creative Community For Peace is one great example if you’re looking for ideas.

3. Clarify Your Purpose and Build Your Team

A nonprofit is a business, so make sure you have a clear mission and vision statement. Make it clear what type of programs and services you plan to offer. Set up active marketing, operational, and financial plans particularly what percentage of donations go to the cause.

Don’t neglect to build a solid team. Start building your governing board. Decide if your staff gets paid or sign on as volunteers only.

4. Register Your Nonprofit

You can’t operate if you don’t register with your state and the IRS. Pick a name for your nonprofit, fill out the articles of incorporation, and pay your fees.

Fees vary by state but shouldn’t be more than a few hundred dollars. File paperwork for an EIN and 501(c)(3) status with the IRS.

These basics get you started, but the process varies a bit by state. Again, research the rules of your state to familiarize yourself with the process.

All Things Considered

What is a nonprofit organization? It’s a smart way to do business while serving those in need. Don’t wait. Start that charity today.

We have more to offer. Check out our lifestyle guide for the latest tips and ideas on how to serve your community.