Ways & How

how to form a non profit organization

how to form a non profit organization

If you are planning on learning how to form a non profit organization, you’re in the right place. Like forming any other corporation, you need to consider several factors, starting from the mission of the group down to the application for tax exemption. A non-profit organization is legally understood as a business corporation although it does not distribute surplus profits or excess income to its shareholders and members. Any income the organization earns is not to be shared by the members but rather, it is to be used as means in providing services to the community. Usually, non-profit corporations derive their funding in the form of corporate sponsorships, endowments, and sometimes government grants. Bear in mind that starting a non-profit group requires not only the passion to help others, but also a lot of work and investment so that the organization can be fully operational. To know more, read the following guidelines.

  1. Know the mission of your non-profit organization. If your purpose is to make money, then you are in the wrong place.

    What you may be interested in is a regular business corporation. Take time to identify the role that the organization will play in the community and try to figure out how it will benefit, either directly or indirectly, the rest of society. Put into writing a short, succinct mission statement.

  2. Think of a name for the organization. The name should reflect the purpose and mission of the organization. In choosing a name, make it appropriate and memorable. Once you have decided on the name, verify that it is not yet in use in the federal catalogue of business names and trademarks.

  3. Determine if your group can qualify as a non-profit organization. According to Section 501 (c) 3 of the Internal Revenue Code, a non-profit association operates mainly for charitable works and neither to enrich the members nor anyone else. Not even the board of trustees can monetarily benefit from the organization.

  4. Identify the board of trustees. You cannot simply have just anyone join your organization. It is a real advantage if your board of trustees is composed of experienced professionals who agree with the missions, objectives, and purpose of the organization. The number of trustees you can get largely depends on the requirements of the state you live in. Usually, the group of trustees is composed of at least three individuals. The board will primarily act as the governing body of the organization. They will be mainly responsible for drafting the organization’s by-laws and articles of incorporation. Also, they will be in charge of the decision-making for the corporation.

  5. File the group’s articles of incorporation. They will allow your organization to serve the community regardless of the degree of your personal involvement in the group.

  6. Request tax exemption. There are two offices you need to visit for tax exemption purposes. For state taxes, you need to do it with the state’s revenue department. For federal and property taxes, you need to file your request with the Internal Revenue Service (IRS). Before you do this, it is advisable that you secure a copy of the IRS Publication No. 557 so you will know exactly how to go about the process of becoming tax exempt.

After you have completed the process on how to form a non profit organization, you can finally make the missions and objectives of your corporation come into fruition.


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