Nonprofit Business Resources: How to Start and Run a Nonprofit
Starting and running a nonprofit organization can be a rewarding venture. These organizations play a significant societal role by addressing social issues, advocating for underserved communities, and providing essential services. However, establishing and managing a nonprofit requires careful planning, compliance with legal requirements, and a commitment to fulfilling the organization's mission. Here's a comprehensive guide to starting and running a nonprofit, from understanding the need for nonprofits to learning the practical steps involved in setting up and maintaining one.
The Need for Nonprofits in the United States
Nonprofits serve a critical role in addressing a variety of societal needs. Whether providing shelter to the homeless, supporting education initiatives, or promoting environmental sustainability, nonprofits step in where government agencies or businesses cannot. According to the National Philanthropic Trust, nonprofits contribute more than $1 trillion annually to the U.S. economy, making them a vital part of the nation’s social fabric.
The need for nonprofits has grown as communities face more complex challenges. These organizations often fill gaps in healthcare, education, and social services. They also offer a platform for individuals to give back to their communities, with many nonprofits relying on volunteers to help meet their goals. They are also a substantial employer of professionals, including market research analysts, executive assistants, office administrators, and other positions for online bachelor of business administration degree holders.
Benefits of Running a Nonprofit
Operating a nonprofit offers several advantages. Tax-exempt status under 501(c)(3) allows the organization to avoid federal income tax and may grant exemptions from state sales and property taxes.
Nonprofits can also receive tax-deductible donations, encouraging contributions from individuals and businesses. Nonprofits are also eligible for grants from foundations, corporations, and government agencies, often unavailable to for-profit companies. This designation fosters trust and credibility, as nonprofits are seen as working for the common good rather than for profit.
How to Start a Nonprofit – Step by Step Organization
Starting a nonprofit involves several steps, each of which is crucial in ensuring the organization is legally compliant and ready to make an impact.
Step 1: Choose a Mission and Vision
Define the organization's purpose and goals through a mission statement. The vision statement should outline the long-term impact the nonprofit hopes to achieve, providing direction for all activities.
Step 2: Form a Board of Directors
A nonprofit must have a board of directors to oversee and guide the organization. Choose passionate individuals who bring diverse skills to the table. Be sure to check state requirements for the number of board members.
Step 3: Register the Organization
Incorporate the nonprofit by filing articles of incorporation with the state. This legal step provides protection and limits personal liability for the organization's members.
Step 4: Apply for 501(c)(3) Status
Apply to the IRS for tax-exempt status, allowing the nonprofit to avoid federal income tax and offer tax deductions to donors. This process can be complex, so follow the IRS instructions carefully or seek professional help.
Step 5: Create Bylaws
Draft bylaws that outline the nonprofit's operational procedures, including board member selection, meeting frequency, and decision-making processes.
Step 6: Develop a Fundraising Plan
To sustain the organization, create a fundraising strategy that includes donor campaigns, grant applications, and events.
Step 7: Open a Bank Account
Open a separate bank account for the nonprofit to manage finances and separate personal and organizational funds.
Step 8: Comply with State and Local Regulations
Be aware of state-specific regulations, such as business licenses and charitable solicitation permits, and know about ongoing compliance with annual reporting requirements.
Running a Nonprofit: Key Operational Aspects
Once your nonprofit is up and running, maintaining smooth operations is vital to its success.
- Program Development: The core of any nonprofit is its programs. Ensure that your nonprofit’s services or initiatives align with the mission and meet the community’s needs.
- Financial Management: Proper financial oversight is critical. Create a budget, track donations and expenses, and make all financial reporting transparent. Many states require nonprofits to submit annual financial statements.
- Volunteer and Staff Management: Nonprofits often rely on volunteers, but it's important also to have a solid staff structure. Recruiting and retaining passionate staff and volunteers is essential for program delivery.
- Marketing and Outreach: Promoting the nonprofit's mission and programs through digital marketing, social media, and traditional methods helps raise awareness and increase support.
Challenges in Running a Nonprofit
Running a nonprofit is not without its challenges. Securing consistent funding can be a significant obstacle, as many nonprofits depend on donations and grants, which fluctuate. Volunteer management is another common challenge, as volunteers may come and go depending on their availability and commitment. Staying compliant with federal and state regulations can also be demanding.
Resources for Nonprofits
For further guidance, there are numerous resources available:
IRS – Apply for 501(c)(3) Status – IRS.gov
The IRS website provides comprehensive instructions on how to apply for 501(c)(3) status, which is crucial for securing tax-exempt status for your nonprofit organization. It includes forms, guides, and eligibility requirements.
National Council of Nonprofits – CouncilOfNonprofits.org
This website offers a wealth of resources for nonprofit leaders, including information on legal requirements, governance, and best practices. It's an excellent place to find articles, reports, and tools for both new and established nonprofits.
Foundation Center by Candid – FoundationCenter.org
The Foundation Center (now part of Candid) provides an extensive database of foundations and grant opportunities. This resource is invaluable for nonprofits seeking funding, as it helps match organizations with grantmakers.
Nonprofit Hub – NonprofitHub.org
Nonprofit Hub offers educational resources, articles, and guides on nonprofit management, fundraising, marketing, and more. Their blog features insights from industry experts to help nonprofits succeed.
GuideStar by Candid – GuideStar.org
GuideStar is a leading source of information about nonprofit organizations. It allows nonprofits to list their profiles, access best practices, and research other organizations to benchmark their efforts. It's a great way to build credibility and transparency.
Nonprofit Leadership Alliance – NonprofitLeadershipAlliance.org
The Nonprofit Leadership Alliance provides nonprofit professionals with training, certification, and resources. It's ideal for those who want to enhance their skills and network with other nonprofit leaders.
National Philanthropic Trust – NPTrust.org
This organization offers resources on philanthropy and nonprofit management, including reports on trends in charitable giving. It can be a helpful tool for nonprofits looking to understand the broader giving landscape.
Charity Navigator – CharityNavigator.org
Charity Navigator evaluates nonprofit organizations based on financial health, accountability, and transparency. It's a helpful tool for nonprofits to improve their public trust and donor confidence.
Social Impact Exchange – SocialImpactExchange.org
This platform connects social investors with nonprofits, providing tools and resources to scale up social impact initiatives. It's a valuable resource for nonprofits looking to grow and attract funding.
The Nonprofit Quarterly – NonprofitQuarterly.org
Nonprofit Quarterly offers in-depth analysis, news, and commentary on nonprofit management, policy, and strategy. It's an excellent resource for keeping up-to-date with trends and insights affecting the nonprofit sector.
Starting a Nonprofit
Learn the ins and outs of starting a nonprofit from the National Council of Nonprofits, including tax-exempt status and how to keep your organization compliant.
How to Start a Nonprofit: Complete 9-Step Guide for Success
Discover nine simple steps that will help you get a nonprofit organization off the ground, such as researching your idea, incorporating your concept, and applying for an EIN.
11 Must-Dos for Starting a Nonprofit
Greg McRay goes over the 11 things that any nonprofit must do when they start, including defining their purpose and programs, choosing a structure, and setting up a board of directors.
Are You Considering Starting a Nonprofit?
From BoardSource, this article goes over what you need to consider before starting a nonprofit, such as finding out if other organizations do the same thing and finding suppliers willing to work with you.
8 Steps to Start a Nonprofit Organization
Determining your purpose, choosing a name, and writing the bylaws are just a few of the nine steps this article outlines for anyone who wants to start a new nonprofit.
Organizations for Helping Nonprofits Run
Nonprofit Association of Oregon
Visit the Nonprofit Association of Oregon to learn how to become a member or to learn about the resources it offers, including events and training sessions that only members can attend.
The Library of Congress maintains a list of associations that help nonprofits succeed and links to each one, making it easy to find one in your city or state.
Gain inspiration from the successful organizations that made this list of top-rated charities, including Born Free USA, Drug Policy Alliance, Child Find of America, and many more.
As part of the Cornerstone OnDemand Foundation, Nonprofit Ready offers a range of courses for organizations that cover topics like finding volunteers and getting financial help.
Funding Sources for Nonprofits
Discover many grants you can apply for to get your nonprofit off the ground or find future success through this site, which shows you available grants and how to apply for them.
Grants, Sponsorships, and Employee Opportunities
The Bank of America launched this site to help nonprofits gain the funding they need through special programs like grants and sponsorships.
Grants.gov is a government website that helps nonprofits in need find financial help and funding. It shows them who is eligible for different programs and how to apply.
Discover more than 9.7 million grants from the government and other sources on this website, which also offers tips on applying and getting started.
Grants for Nonprofits: How to Get Free Funding in 2025
Nerd Wallet helps organizations find funding through grants and special programs designed for nonprofits and has information on how to apply.
Financial Information
6 Types of Loans for Nonprofit Businesses
In this article, you’ll learn more about nonprofits loans, which go beyond traditional loans to include community development financial institutions, nonprofit loans, and other options.
Also known as the NFF, this fund provides multiple loans to nonprofits in need, including term loans and predevelopment loans designed to help you every step of the way.
Towne Bank knows that nonprofits have difficulty finding and obtaining loans, which is why it offers tax-exempt financing that allows your nonprofit to borrow money without paying taxes.
Tax-Exempt Bond Financing for Nonprofit Organizations and Industries
Schools, housing companies, and other organizations that believe in helping others can use this site to learn about bond financing and how to get help.
The Low Income Housing Tax Credit for Nonprofits Developing Rural Rental Housing
This PDF goes over the low-income housing tax credit (LIHTC), what it means, and the risks and benefits the credit has for nonprofits.
Research On Nonprofits
Nonprofits: A Public Policy Tool for the Promotion of Community Subjective Well-being
This article looks at Twitter and other sites to discuss how nonprofits can advertise and promote their ideas to gain more traction and which methods are the most effective.
This article examines different disciplines and reviews the current data to discover how nonprofits operate and which methods are the most successful.
Nonprofit Capacity and Social Performance: Mapping the Field and Future Directions
This article looks at the resources available to nonprofits and how they use them as a way to discuss what it means for the industry now and in the future, as well as how things might change.
The Harvard Business Review offers a variety of free articles about and for nonprofit organizations, including how to make a difference and the need for social change.
Nonprofits in Good Times and Bad Times
Researchers surveyed nonprofit organizations and shared their results to show the profits and losses that those in the industry experience.
Data
Research, Reports, and Data on the Nonprofit Sector
Available from the National Council of Nonprofits, this page links to recent nonprofit research, such as one finding that 75% of nonprofits reported job vacancies.
The Bureau of Labor Statistics shares data about nonprofit employment, including how jobs in this sector represented approximately 12.8 million or nearly 10% of all available jobs.
The Nonprofit Sector in the United States: A Resource Guide
Get free access to data and research from the Library of Congress, such as the report that found nonprofits received more than $550 billion in contributions in a year.
National Center for Charitable Statistics
This website offers free access to datasets from the IRS and other organizations, including one that found 97% of nonprofits have an annual budget of $5 million or less.
Videos for Starting a Nonprofit
How to Start a Nonprofit: A Step-by-Step Guide
From Boss on a Budget, this video goes over the steps you need to follow to launch a nonprofit organization and get the attention of others while sticking to a tight budget.
How to Start a Nonprofit with No Money
You don’t need a lot of financial resources right off the bat to launch a new nonprofit, which is the focus of this video from a woman with years of experience in the nonprofit sector.
How to Start a Nonprofit in the USA 501(c)(3)
The steps in this video help anyone understand how a nonprofit works and what they need to do to start a nonprofit with tax-exempt status in the United States.
Starting a Nonprofit with the 12-Week Year Framework
Amber Melanie Smith takes concepts from the book "The 12-Week Year" to create a framework to help anyone open a new nonprofit in as little as 12 weeks.
Starting a Successful Nonprofit Video Series
The Foundation Group offers several free videos that help viewers learn how to start a successful nonprofit series with guides on picking the proper structure and identifying the appropriate board of directors.
Want to Change the World? Let's Start with Your Nonprofit!
If you’re ready to take the first step to starting your nonprofit, we’re here to help! Visit our website for more resources, step-by-step guides, BBA career overviews, and expert advice to get your organization off the ground. Have questions or need personalized assistance? Don't hesitate to contact us; we're here to support you on your nonprofit journey. Let us help you turn your vision into a reality!
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