How to Start a Nonprofit: EIN, Incorporation, and Fundraising Guide

Establishing a nonprofit organization is a commendable endeavor that requires careful planning and adherence to specific legal procedures. Below is a comprehensive guide to help you navigate the process.

1. Determine the Appropriate Type of Nonprofit Organization

The Internal Revenue Code (IRC) classifies nonprofit organizations into various categories, each with distinct purposes and regulations. The most common types include:

• 501(c)(3) Organizations: These are established for religious, charitable, scientific, educational, or literary purposes. They are prohibited from engaging in political activities, and lobbying efforts are limited. Donations to these organizations are tax-deductible for donors.

• 501(c)(4) Organizations: Known as social welfare organizations, they can engage in lobbying and political activities, provided these are not their primary activities. Contributions are not tax-deductible for donors.

• 527 Organizations: These are political organizations primarily focused on influencing the selection, nomination, election, or appointment of individuals to public office.

For a detailed comparison of these organization types, refer to the Alliance for Justice's resource.

2. Incorporate Your Organization

Incorporation provides legal recognition to your organization and offers liability protection to its members. The steps include:

• Drafting Articles of Incorporation: This document outlines essential details such as the organization's name, purpose, and structure.

• Filing with State Authorities: Submit the articles of incorporation to the appropriate state agency, often the Secretary of State.

For guidance on incorporation, consult the National Council of Nonprofits.

3. Develop Bylaws

Bylaws serve as the internal governing document, detailing the organization's operational procedures, including:

• Board member roles and responsibilities
• Meeting protocols
• Voting procedures

Comprehensive information on creating bylaws is available at Alliance for Justice.

4. Obtain a Federal Tax Identification Number (TIN)

Also known as an Employer Identification Number (EIN), this unique identifier is required for tax filings and financial transactions.
You can apply directly through the IRS website.

5. Open a Bank Account

With your EIN and filed articles of incorporation, you can establish a bank account in the organization's name. This account will facilitate financial transactions, including receiving donations and paying expenses. We recommend Novo as a zero-cost checking account with a modern web interface and free basic accounting.

Additional Considerations

• Compliance with State and Federal Regulations: Ensure adherence to ongoing reporting and compliance requirements to maintain your organization's good standing.

• Understanding Funder Disclosure Requirements: If considering a 501(c)(4) status, familiarize yourself with funder disclosure obligations.

• Establishing Multiple Entities: Some organizations benefit from creating both 501(c)(3) and 501(c)(4) entities to separate charitable activities from advocacy efforts.

For further reading on these topics, explore the resources provided by the Alliance for Justice.

By following these steps and utilizing the linked resources, you can successfully establish a nonprofit organization that effectively serves your intended mission.