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How to Start a Nonprofit in 8 Steps

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By Jess Woloszyn

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Published July 27, 2022 Reading Time: 9 minutes

You’ve likely arrived on this page because you’re an ambitious leader with a goal to create meaningful change in your community. These eight steps will be the most important to start a nonprofit foundation.

We’re honored to guide you as you prepare to serve your community in new and creative ways. Below, you’ll find insights from our experience working with over 5,000 nonprofits who’ve collectively raised more than $4 billion for good on our platform.

Our goal is simple. We help nonprofits raise more, so they can do more. Each of the nonprofits we partner with started right where you are now. We applaud you for your passion and can’t wait to help you get started. 

Step 1: Research Your Cause Category

The first step to start a nonprofit is to know who, what, or where you’ll serve. Begin by understanding which cause category you’ll be joining within the larger social sector.

What are the different categories of nonprofits?

Nonprofits can be categorized in many ways. Start by looking at the major groups identified through the National Taxonomy of Exempt Entities (NTEE) Classification System. We’ve listed them here for easy access.

  • Arts, Culture, and Humanities – A
  • Education – B
  • Environment and Animals – C, D
  • Health – E, F, G, H
  • Human Services – I, J, K, L, M, N, O, P
  • International, Foreign Affairs – Q
  • Public, Societal Benefit – R, S, T, U, V, W
  • Religion-Related – X
  • Mutual/Membership Benefit – Y
  • Unknown, Unclassified – Z

How can I find my NTEE code?

The National Center for Charitable Statistics developed the NTEE Classification System as a keyword searching criteria to classify nonprofits. You can visit this comprehensive list of all NTEE codes to identify which feels like the right fit for your nonprofit’s work and mission.

Understanding where your nonprofit will fall in the system will help you get more targeted in your category research. You’ll also need to know your NTEE code to complete appropriate paperwork with the IRS.

Is there a need for my nonprofit’s mission?

The formula for a successful nonprofit is an inspired idea and a need for the help it provides. Before continuing in the following steps, determine where your nonprofit will serve a particular purpose and niche within the cause category you’re entering.

Start by conducting a needs analysis to clarify who your beneficiaries are and how you can support this specific demographic or population.

How can I learn from other nonprofits in my category?

Like any other business, there’s value in learning from those in your cause category. Look at other nonprofits succeeding in your space to identify a list of organizations you’ll look to for inspiration. It’s also beneficial to create a network of other new nonprofits to connect with as you’re all starting together.

Step 2: Incorporate Your Nonprofit Based on Your State

The state in which you start your nonprofit will determine your next steps. Knowing your state’s process can help you better prepare and understand where everything needs to go. It also helps you establish ideal dates to prepare your paperwork that work backward from your target nonprofit incorporation date.

Where do I find my state’s incorporation requirements?

Google is your best resource for finding your state’s governing body for nonprofits. While we can’t list every state’s requirements, here’s an example of what you’d uncover if you were starting a nonprofit in California.

The California Association of Nonprofits guides those looking to start a nonprofit in California through state-specific steps, including:

  • Filing a Statement of Information with the California Secretary of State
  • Applying for California tax exemption with the California Franchise Tax Board (FTB)

What is usually required to incorporate a nonprofit in my state?

While your state will provide specific steps to incorporate your nonprofit, here are a few standard requirements to expect in any location.

  • File for an Employer identification number (EIN)
  • Complete registration forms 
  • Submit your articles of incorporation
  • Develop bylaws and conflict-of-interest policies
  • Complete federal tax exemptions with the Internal Revenue Service (IRS)
  • Establish your street and mailing address

It’s helpful to create a checklist of the appropriate paperwork and steps you’ll need to take. From there, build out a more realistic timeline to being a fully-operating and legal nonprofit organization.

Step 3: Apply for a 501(c)(3) Tax-Exempt Status

The next task you’ll need to complete is filing as a 501(c)(3). A 501(c)(3) organization is a corporation, trust, unincorporated association, or another type of organization exempt from federal income tax. Section 501(c)(3) of Title 26 of the United States Code is the legislation that this filing is built on.

How do I apply as a 501(c)(3)?

You’ll need to apply with the IRS to become a 501(c)(3) status organization. The only requirement is that the IRS considers your nonprofit charitable. Here are the categories you’ll need to fall into, which correspond to your NTEE code.

  • Religious
  • Charitable
  • Scientific
  • Testing for Public Safety
  • Literary
  • Educational
  • Fostering national or international amateur sports
  • Prevention of cruelty to animals and children

Step 4: Develop Your Unique Nonprofit Identity

Now that you’re grounded in how you serve a need in your community and larger cause sector, it’s time to tell the world. That starts with defining your nonprofit’s brand and determining how you’ll introduce your new organization to others.

What do I need to build my nonprofit’s identity?

Get started with the basics of your nonprofit brand. Determine your name, mission statement, purpose, and your founding story. Consider how these elements come together to tell your supporters and future board members exactly what you do and whom you serve.

This step can stretch out for a while if you try to make it all perfect. While you should be thoughtful about it, we suggest starting with a simple look and feel to get the ball rolling. You can always go back and make changes as you learn how your supporters interact with it. 

If you’re looking to test the waters as you workshop your ideas, consider creating a nonprofit overview on one page with your name, mission, statement, and founding story. Share that with a close group of friends or colleagues to get their honest feedback.

How do I stand out with visuals?

Your nonprofit’s identity isn’t complete without visuals. Here are a few considerations to get you thinking about how to achieve a consistent look and feel across your website and marketing materials.

  • Core brand colors
  • Designated fonts
  • 3 to 5 engaging images
  • Logo

If you want to take your visual identity up a notch, check out this advice from one of Classy’s designers. 

Step 5: Form Your Nonprofit Business Plan

Now it’s time to write out your first nonprofit business plan, describing how you intend to achieve your mission in detail. This exercise is a great way to organize your many ideas into a succinct outline of action.

What goes into a nonprofit business plan?

Get creative about the format you’d like to use for your business plan. Here’s a list of critical components to get you started.

  • Short and long-term goals
  • Specific milestones and when you plan to achieve them
  • Description of beneficiaries, partners, and other stakeholders
  • The financing model you plan to use
  • Funding sources
  • Products, programs, and services you’ll deliver
  • Your nonprofit’s position in the social sector
  • How you’ll measure success

Who will engage with my business plan?

Your business plan benefits you by putting your thoughts and ideas on paper. It also serves as a valuable asset to some key audiences as you start building your brand, including:

  • Donors: To effectively fundraise, you’ll want to map each campaign to your business plan and use language that excites people to support you. Think about the people most likely to donate to your cause, and what they’ll want to know about how their contributions fuel your mission.
  • Partners: If you plan on working with other nonprofits, corporate sponsors, or communities, consider what information they’d want to know before committing to the partnership. 
  • Board members and employees: As you build out your team, you’ll want to consider the value proposition of working for you and your nonprofit. How will your team members play a part in your organization’s success, and what will get your ideal board members to agree to join the journey?

Step 6: Build Your Nonprofit Board and Team

Remember that even if you start your nonprofit alone, you’ll eventually need some support. It’s essential to plan how you’ll attract those individuals to work with you.

Can I start a nonprofit by myself?

Of course, you can choose to operate your nonprofit alone. The trajectory of your nonprofit is entirely up to you. Still, recruiting board members and staff can decrease the time to impact significantly. You can decide whom you’d like to bring into your organization based on your fundraising goals for the first few years of operation.

Who should be on my nonprofit’s board?

 Your nonprofit board is intended to support your organization’s vision, planning, oversight, and execution. When you decide whom to bring in, consider who can fill in gaps in your expertise.  The following list of questions will be helpful in your decision-making. 

  • Who has the experience or expertise in the specific areas I need to bring my nonprofit’s business plan to life?
  • Who has leadership experience that can guide me as I expand the board and internal teams?
  • Who is committed to my cause and passionate about my work?

How many board members should my nonprofit have?

A good rule of thumb is to select an uneven number of board members to avoid tied votes. Start by choosing at least five. You want to know that there are enough members to make sound decisions but not so many that decisions get held up.

How do I build a team of employees?

Think about where you will bring in others to support you. Here’s a list of functions you might want to prioritize hiring first.

  • Development and fundraising
  • Database owners
  • Marketing and design 
  • Direct service 
  • Finance 
  • Information technology 

When should I lean on volunteers?

Volunteers will always add value to your nonprofit, but you can decide where you need support most. You might want to build out a network of volunteers to help you launch your first events, or gain marketing support before you’re ready to hire additional team members.

Reach out to people in your network and community first, and encourage them to recruit passionate supporters who can help spread the word and fuel your growth. Knowing exactly what you will need volunteers for, and regularly promoting that specific role description, can help you find a core group of loyal individuals to rely on.

Step 7: Build a Marketing Plan to Acquire Your First Donors

Once you’ve locked down your business plan and unique nonprofit identity, you’re ready to build a marketing strategy to fuel donor acquisition. 

How do I target the right donors?

Based on your business plan, choose who your target supporters will be as you start out and who will be most likely to support your nonprofit in its first year. Set specific goals around how many supporters you want to attract in your first three months, six months, and year of operation.

It could also be helpful to develop a basic donor persona that you can think about as you write promotional copy or develop messaging.

Which marketing channels should I use?

It’s time to get creative. Determine the first marketing channels you’ll focus on to launch your nonprofit to the world. Here’s a list of beginning places and associated resources to help you.

Where can I get ideas for marketing my nonprofit?

Inspiration is everywhere. Log on to any social media platform. You can see how other nonprofits are posting content to reach their desired audiences. You can also visit their websites to see what messages appear at the top of each page, as well as the visuals that pull in readers to take action. 

Step 8: Collect Donations for Your Nonprofit

A strong fundraising strategy is critical to securing donations for your nonprofit. The last step to execute on starting your nonprofit is to identify sources of income that will get you to your goals and desired outcomes.

Can I start a nonprofit with no money?

You can lean on fundraising to build revenue for your nonprofit, but it’s a good idea to have a foundational fund to pull from in your initial stages. In time, you’ll be able to raise money in increments to invest back into logistics, leading to more revenue to achieve your mission.

How do I set realistic fundraising goals?

Start by looking at your annual fundraising goals outlined in your business plan. Determine what’s possible by evaluating what you’ll need to raise to offset any costs you accrue and be able to deliver on your mission. From there, look at how you can work backward to identify what you’ll need to raise each quarter and what that requires in monthly donations. 

To remain realistic about your goals, give yourself a simple starting point in your first few months. Look at the first campaign you run or the donation page you put up as an opportunity to set benchmarks for what you can predict you will raise in the future. Start by testing the waters and gaining a more predictable revenue path with each additional campaign you host.

Which type of fundraising campaign should I launch first?

We recommend starting with your main donation page on your website as a year-round campaign that can bring in a steady stream of gifts. 

New nonprofits can also be successful by adding the following campaign types to their strategy.

  • Crowdfunding campaign page: Raise small amounts of money from many people to fund a specific project, collect general donations, or drive support to reach your first fundraising goals
  • Peer-to-peer fundraising campaigns: Let supporters fundraise on your new nonprofit’s behalf through their own personal fundraising pages to attract new donors and raise more than they might be able to personally give
  • Fundraising events: Invite your community to a live or online event to learn about your new nonprofit and build relationships with people who can become your supporters for future campaigns

13 Free Resources for Starting a Nonprofit

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