Can You Start a Nonprofit by Yourself?
Yes, you can start a nonprofit by yourself. The journey to start a nonprofit alone is undeniably ambitious. You can start an NPO with no money, or at least a small amount to cover registration costs and legal fees.
Tax-exempt nonprofits often make money as a result of their activities and use it to cover expenses. As long as a nonprofit’s activities are associated with the nonprofit’s purpose, any profit made from them isn’t taxable as "income."
The purpose of a 501(c)(3) includes charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.
Key Considerations and Steps
When starting a nonprofit, it is important to have a clear scope and purpose. There are already over 10 million nonprofits in the world. The founder of a new nonprofit typically starts as the board president. Eventually, as the nonprofit grows, the founder might want to become the executive director and be paid. For a nonprofit, you generally need at least three board members.
Generally, you need an investment of at least $500 at a bare minimum, but costs can be as high as $1,000 or more. Nonprofits, also referred to as non-stock corporations or 501(c)(3) organizations, have various funding options available.
Nonprofit corporations are not designed to make money for owners or shareholders. Instead, they are governed by a board of directors that ensures the organization stays true to its mission and operates in the public interest.
Legal Framework and Tax-Exemption
Starting a 501(c)(3) involves:
- Incorporating a Nonprofit Organization: You create a corporation at the state-level by filing a formation document, often called Articles of Incorporation.
- Applying to the IRS for Tax-Exemption: After incorporation, you apply for recognition of tax exemption from the IRS.
It is possible to skip the incorporation process, but it is not advisable.
The titles "President" and "Executive Director" are often interchangeable in smaller nonprofits, with both being commonly used for the founder.
All nonprofits are governed by a board of directors, a group of volunteers that is legally responsible for making sure the organization remains true to its mission, safeguards its assets, and operates in the public interest. Nonprofit corporations usually have officers, often appointed by the board of directors; positions commonly include a president, secretary, treasurer, and, depending on the organization’s needs, a vice-president or assistant secretary.
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