6 tips for starting a nonprofit business

By Samantha Higgins

Starting a nonprofit has many similarities to starting a regular business, but it has many distinct differences too. It comes with some additional responsibilities but can be among the most meaningful, fulfilling undertakings of your life. If you want to start a nonprofit business, here are some tips to get you started.

-Decide what your organization will do

The first and most important step is making the crucial decision of what your nonprofit will do. There are different types of nonprofits, each of which come with their own sets of benefits and requirements. Running a nonprofit consists of a lot of work and you want to be sure you are passionate about the cause you are starting this organization to support. You should also steer towards a more niche or original idea, as many nonprofits that are in operation work for the same causes. One of the best ways to formulate a great idea for a nonprofit is by noticing a need for charitable services among a certain population, usually in a specific area. Once you know what your organization will do, you can proceed from there.

-Apply for status as a registered nonprofit

Status as a nonprofit comes with many benefits that save costs to your organization, such as reduced postage, being exempt from taxes, eligibility for grants and more. It also increases your credibility as an organization, so others will view you as legitimate. To get nonprofit status, you must register your organization with both the federal Internal Revenue Service (IRS) and your state. Every state will have different requirements so it is important to reach out to the proper authorities in your state for any needed information. You will also need to obtain any necessary licenses or permits your operations might require.

-Prepare to stay a nonprofit

Nonprofits may exist in perpetuity but they also must maintain certain requirements to maintain their nonprofit status. When you start a nonprofit you are signing up for this and need to be prepared to make a continuing commitment to maintaining the standards of your organization. As mentioned in the previous section, the requirements for maintaining nonprofit status will vary from state to state and so it is important that you are clear on your responsibilities from the beginning. You must be prepared to offer proper legal disclosures regarding fundraising, hold certain regular activities like board meetings, file annual reports and more.

-Don’t think it’s easy

One misconception many people who want to start a nonprofit have is that it’s easy. This is not true. In fact, it’s more difficult to start up and run a nonprofit than a for-profit business because of the additional requirements placed on nonprofits to be awarded with and maintain their status. These requirements are in place to ensure only true nonprofits are able to access the special benefits granted to them, and the IRS will frequently ask for more information during the application process. Starting and running a nonprofit is a lot of work and you must be prepared to meet that challenge.

-Set up a way to receive payments

Your nonprofit will need the infrastructure to receive donations from supporters in a quick, secure way. Using a service that offers special nonprofit payment processing might be a good option as they offer features useful to nonprofits and may also have much lower payment processing fees than for-profit companies might pay. You will also need a payment processing system if your organization plans to make sales of tangible goods to raise funds for the cause. Depending on your local and state laws, remember that even as a nonprofit you may be required to collect and remit sales tax.

-Get the word out

Once your nonprofit is officially in operation, you will need to start gathering support in order to sustain it. This is achieved through visibility, which you can get by sponsoring events and attending events hosted by others. You can also use digital tools such as social media to share content regarding what you do, put out the call for volunteers, inform people of the services you offer and more. Local communities might have programs in place to match volunteers with organizations looking for them, so be sure to reach out to those if there are any near you. Be sure your nonprofit is listed in all the nonprofit directories you can find as well.

Even though starting a nonprofit is similar to starting a for-profit business, the goal is substantially different. Instead of wanting to make money, you want to make a difference. This incredibly noble goal can be achieved if you build your nonprofit from a strong foundation and go into the venture with a clear vision.


Samantha Higgins is a professional writer with a passion for research, observation, and innovation. She is nurturing a growing family of twin boys in Portland, Oregon, with her husband. She loves kayaking and reading creative non-fiction.

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