The Crucial Steps to Starting a Charitable Nonprofit

Many entrepreneurs enter the field of business hoping to make a profit. For some, their end goal is to make a difference. If you’re an entrepreneur with a passion for a cause, starting your own charitable nonprofit is an incredible opportunity to make a lasting difference in the lives of those who need it most. Instead of just donating to charitable organizations, you could do more good by starting your own. It might seem like a daunting experience at first, but it’s manageable once you know where to begin. Here’s how you can get started.

Conduct in-depth research

Don’t be quick to dismiss a charitable nonprofit as nothing more than a passion project. At the end of the day, a nonprofit is still a business, and you need to be extremely realistic and level-headed when planning out the logistics of starting one. Make sure you know what exactly a nonprofit organization is and if it truly is the best business structure for your advocacy. Do some serious reflection and ask yourself if starting a nonprofit for this social mission is really necessary and if you’re mentally, physically, and financially prepared to pursue the endeavor.

Craft your business plan

This is where your entrepreneurial side should take over. Nonprofits are quite similar to for-profit businesses in certain ways. Developing your business plan will help you avoid mismanagement and help you succeed in your mission. The first thing you’ll need to do is to figure out a fundraising plan and how to actually generate and properly handle the money that goes into the organization. For this, you might want to consult with accountants for charities to guide you through the complex processes involved when it comes to nonprofit money. Ultimately, all that matters is that you’re able to cultivate a strategic and forward-thinking business plan for your nonprofit to ensure its success.

Pen your mission statement

A clear and compelling mission statement should be at the heart of your charity. It’s usually a one- or two-sentence declaration of the essence and purpose of your organization. Take your time crafting one, but don’t forget that it should be able to explain the purpose of your charity’s existence, describe who it serves and how, assist in the solicitation of donations, and describe the purpose of the charity in your IRS and state filings.

Make sure your charity qualifies as tax-exempt

Charitable nonprofits are strictly regulated by the states where they reside and by the federal government. Under IRC §501(c)(3), organizations will only be considered tax-exempt if they are organized and operated exclusively for “exempt purposes” and not for the benefit of private interests. You’ll need to prove that your nonprofit serves the public good and that you won’t be abusing your tax-exempt status.

Assemble an efficient board

Female volunteer talking on the phone

Your board will be responsible for making sure everything is aligned with your mission and you’re able to secure the funds to accomplish your objectives. Make sure that you find responsible and highly qualified people who can guarantee your charity’s success.

Once you’ve secured the above requirements, the fundraising begins. The ultimate reward for entrepreneurs who run a charitable organization isn’t profit, but progress.

Scroll to Top