How To Start A Nonprofit: Step-by-Step Guide

There are 1.92 million registered nonprofits in the U.S. as of December 2025, encompassing hundreds of different types of sectors, from hospitals and health research to youth sports and universities.  

These organizations serve a purpose. As potential nonprofit founders weigh starting an organization, they should weigh the need for their mission, long-term financial sustainability, and the time and compliance responsibilities required to operate as a nonprofit.   

Disclaimer: Every effort was made to source up-to-date information, but before you undertake starting a nonprofit, ensure you have verified legal and filing requirements.  

Why Start a Nonprofit Organization? 

These founders may have had many reasons to start their nonprofits. Whether they carried a deeply personal connection to tangible, unmet needs, identified a service gap, or wanted to honor or remember a loved one, nonprofit founders often feel called to invest significant time and energy in something that will never financially benefit them. 

There are tangible benefits to formally starting a nonprofit. Registered nonprofits are eligible for:  

• Tax exemption: Organizations classified as 501(c) don’t have to pay corporate income tax, alongside state and local taxes. Individual and corporate donors also benefit, as gifts, sponsorships, and in-kind donations to 501(c) organizations are tax-deductible.   

• Grant funding: Public and private grants can have hyper-niche eligibility requirements set by grantors. Registered 501(c) organizations, by design, check one of the bigger eligibility boxes.   

• Liability protections for stakeholders: Employees and board members have a responsibility to operate in the nonprofit organization’s best interests. Aside from willful negligence or fraud, courts can only rule on an organization’s debts, and there is no personal liability for those debts on the part of members, employees, or board members, whether governing or advisory.   

Starting an organization has multiple regulatory requirements, you must consider. Let’s explore the regulatory requirements behind starting a nonprofit.  

Should You Start a Nonprofit? 

While there are benefits to formally starting a nonprofit, there are drawbacks, too. It is costly and time-consuming to get all the paperwork reviewed, submitted, and maintained in compliance. Keeping up support from donors and volunteers, and the control dynamic that can coincide with those relationships, you may wish to consider some alternatives to starting a nonprofit, such as:  

• Becoming a high-level volunteer: Nonprofits are clamoring for dedicated committee members, board members, weekly volunteers, program owners, and more. You can make a significant impact in an existing organization and learn some ins and outs, so you can leap to being a nonprofit founder in the future.   

• Give/Get sponsorship: Connect with an organization and leverage your current company or your network to evaluate sponsorship proposals. Being on the genuine receiving end of these asks can also prime you to put together proposals in the future. 

• Peer-to-peer fundraising: Consider being a team captain for a walk/run fundraising team, joining a corporate challenge, voting fundraiser, or championing other peer-to-peer campaigns for an aligned organization.  

• Advocacy: There are many regulatory considerations for 501(c) organizations that limit or prohibit advocacy and lobbying efforts. It can be prohibitive, especially for a startup organization. If advocacy is of interest to you, consider instead partnering with an established 501(c) organization that has gone through those steps and become an advocate. Many organizations need voices at the local, state, and federal levels. 

If you choose to pursue starting a nonprofit, there are some steps you need to take to get your organization on strong footing for long-term success. 

Steps to Start a Nonprofit 

Step 1: Define Your Mission, Goals, and Objectives  

What is a Nonprofit Mission Statement? 

A mission statement describes an organization’s unique purpose in a compelling way while setting essential boundaries. It reflects core values and beliefs, serving as a critical foundation for a nonprofit’s goals and programs. 

How to Create a Nonprofit Mission Statement 

An excellent mission statement is concise, memorable, and inspirational. It helps staff and volunteers understand and own their purpose. Here are key tips: 

• Be clear and concise: Keep it short enough to remember—aim for under 100 words. Your mission statement should provide a snapshot of your organization that people can repeat from memory. 

• Keep it simple and specific: Use straightforward language at an 8th-grade reading level. Avoid jargon and buzzwords. Get to the heart of what makes your nonprofit unique, clearly stating what you do and how you’ll achieve your goals. 

• Stay open-minded: Be specific about current goals while leaving room for future growth. Seek feedback from partners, staff, and volunteers. They’re invested in your mission and can offer valuable perspectives on the organization’s direction. 

Questions to Get Started

If you need help getting started with your nonprofit mission statement, ask the right questions. Consider collaborating with partners and staff for multiple perspectives. Answering the following questions will assist you in developing a picture of your organization’s mission: 

• What does your nonprofit do? Summarize what your organization stands for and the services you offer. Does it address prominent needs such as homelessness or hunger, or does your nonprofit build solid foundations for people through education and career readiness? Is your primary goal to raise awareness of a problem? 

• Who do you serve? Consider your audience as a whole—partners, staff, volunteers, potential donors, and supporters. Your mission statement should inspire everyone involved and demonstrate concern for all parties’ needs. Consider creating target audience personas for clarity. 

• What are your core values? Identify the essential, constant values guiding your organization. These represent your nonprofit’s beliefs and guide future decisions. Work with your team to see how they affect every aspect of your operation, from external programs to organizational culture. 

Nonprofit Mission Statement Examples  

• United Way 

Mission statement: This NPO wants to improve people’s lives by harnessing the caring power of communities worldwide to advance the common good.  

What we love: The United Way mission statement is truly inspiring. This strong sentence conveys the organization’s mission, the people it serves, and the solution it provides. The language is simple, memorable, and inspiring. 

• The Solomon Schechter Day School of Greater Hartford 

Mission statement: Their mission is to foster and inspire the next generation of innovators and thinkers to create good change worldwide through innovative educational practices driven by Jewish beliefs and values. 

What we love: The Solomon Schechter Day School of Greater Hartford created a moving and compelling mission statement. The phrase “next generation of innovators” emphasizes the significance of their mission. 

• Over The Rainbow Housing 

Mission statement: They envision an America where all people with disabilities who want to live independently and have the necessary skills may locate accessible, inexpensive housing. 

What we love: Over The Rainbow Housing goes straight to the heart of its cause. The nonprofit explains its mission in simple terms that anyone can understand in just a few words.  

• Sav-A-Life 

Mission statement: They state that they assist men and women in accepting their religious truth and making life-affirming decisions for their unborn children. 

What we love: Sav-A-Life created a brilliantly short and easily understandable mission statement. You know what they do and who they serve. 

Step 2: Build a Strong Foundation 

You should be consulting with high-level volunteers as you finesse and finalize your mission statement. Governance from a board of directors, either advisory or governing, is often required to maintain legal nonprofit status, aside from being a best practice.  

How to Start a Nonprofit Board of Directors 

Depending on compliance expectations, a board can be governing or advisory. A Governing Board holds legal liability and responsibility for oversight, including approving budgets, executive staffing, and day-to-day management. An Advisory Board guides strategy without legal responsibility or voting power, though they may review financials. Both types should be engaged volunteers, sponsors, advocates, and donors who can leverage their networks. 

Define the Board’s Purpose and Set Clear Expectations From Day One 

One of the biggest mistakes nonprofits make is recruiting initial board members without defining the role. When starting a nonprofit, ensure alignment before anyone joins by:  

• Creating formal board job descriptions that tie to broader expectations and the professional expertise (finance, legal, marketing) that you’re seeking 

• Clearly stating expectations around fundraising involvement, individual giving, network connections, and time commitment  

• Requiring a signed board agreement 

Establish Fundraising as a Shared Responsibility 

Fundraising is a board’s duty. Establishing give/get expectations early on. They should be making an annual general donation, offering themselves, or opening doors to people and companies in their network who will start walk/run teams, sponsor your gala, and purchase golf foursomes.   

Train Your Board  

They’re likely established leaders in the corporate world, but board members, especially at a startup nonprofit, are likely new to volunteering, nonprofit governance, or fundraising. Effective board training is essential for building confidence and competence.  

Your board training should cover governance basics, fundraising fundamentals, and how to articulate the mission confidently. Provide clear processes and scripts for outreach to help board members feel prepared and empowered in their roles. 

Like all volunteer training, a thoughtful approach builds relationships and fosters community. By investing in comprehensive board training, you create a foundation for engagement and help board members feel connected to your organization’s mission. 

Create Systems to Measure Success 

Boards should not only be measured on budget attainment, but also on their individual and collective impact on dollars raised, donors engaged, volunteer hours, and other organizational metrics.   

Create a regular check-in cadence throughout the year, as well as a year-end wrap-up meeting and report-out, so your founders, managing staff, and board are aware of expectations and progress.   

Build a Culture of Appreciation Alongside Accountability 

Strong boards are not only held accountable but also supported and recognized. Ensure you thank and celebrate your board collectively and individually.   

Develop a cadence and process for regularly sharing concrete examples of board impact. Engaged boards stay committed when they feel valued and effective. 

Step 3: Draft Nonprofit Bylaws and Policies 

Bylaws outline the internal procedures, roles, and accounting periods, as well as the legal and compliance steps for your nonprofit. They serve as the binding operating model for your nonprofit, and the Board of Directors is an integral part of their creation.   

Nonprofit Bylaws Checklist  

Strong nonprofit bylaws are the foundation of a legally compliant, well-governed organization. They clarify how your nonprofit operates, how decisions are made, and how leaders are structured and held accountable. 

Use this Nonprofit Bylaws Checklist to ensure your governing document includes essential elements and maintains transparency for long-term sustainability. 

• Organization’s legally registered name 

• Mission statement and IRS exempt purpose   

• Board of Directors election policies, guidelines, structure, term limits, and liabilities 

• Chief Officer roles and board membership expectations 

• Amendment procedures for the bylaws  

• Dissolution clause that states what happens with funds if your nonprofit dissolves 

Nonprofit Policies 

Your nonprofit policies should include plain-language explanations, who they apply to, where they apply to the law and other third-party standards, and when they are reviewed and updated.  

Ensure your policies align with the spirit of your mission. You should support your employees and volunteers in their leave, health benefits, and other policies in the same ways you are trying to improve the lives of your constituents.  

For example, if you are an organization dedicated to curing an acute disease or illness, you should probably have strong short-term and long-term disability benefits, so as not be viewed as hypocritical. Your organization wants to make sure to have these policies on record:  

• Code of conduct and ethics   

• Conflict of interest: The government requires nonprofit boards have a conflict of interest policy to ensure objective decision-making.   

• Document retention and destruction: The government asks on IRS Form 990 whether nonprofits have adopted a written record retention policy. It is best practice for donor privacy, too, to have a written policy in place. Record retention policies are also required for receiving grants from state or federal governments, typically requiring records to be securely filed for a minimum of 3 years.   

• Employee anti-discrimination, compensation, benefits, PTO, sick time, and more 

• Gift acceptance: This policy applies to gifts of money, but you also need to spell out what you will accept or not accept as non-monetary gifts, such as property, cars, food, fine goods and jewelry, in-kind services, and more. The process for accepting some of these things, coupled with the legal ins and outs, should make you consider what you have the capacity to accept. The government also asks about this policy on IRS Form 990. 

• Whistleblower  

• Workplace health and safety  

Step 4: Register for Local, State, and Federal Compliance 

Due to tax implications, as well as to protect donors and constituents, there is a great deal of paperwork you will need lawyers to review and file. You also need to complete all of these steps to be able to open a bank account to receive donations and get insurance.   

Tips for Nonprofit Compliance with Your State 

In addition to establishing bylaws and policies, there are a lot of nonprofit compliance requirements your organization needs to consider at the state level. 

• File State Charitable Solicitation Registration – Nonprofits need to register and annually renew with the Attorney General or Secretary of State to be eligible to solicit donations in most states. Failure to register may result in fines and/or the loss of tax-exempt status.  

• Incorporate Your Nonprofit at the State Level – Organizations must submit nonprofit Articles of Incorporation or a Certificate of Incorporation.  The specifics vary by state, but generally must include: 
  • Your organization’s unique, legal name 
  • A registered agent and/or office with an address in the state 
  • Your purpose, as it ties to an Act or set of bylaws in the state 
  • Listed director(s) 
  • An incorporator, the person responsible for signing and filing the Articles of Incorporation   
  • Paid fees  

How to Apply for 501(c)(3) Federal Tax-Exempt Status 

Some state paperwork is contingent on IRS applications. Gaining tax-exempt status for your nonprofit should be a top priority. The IRS offers comprehensive guides and courses to support nonprofits at the federal level, including a list of all the necessary forms your organization needs to file. 

Here’s a list of the main things you will need to do for federal compliance:  

• Obtain Employer Identification Number (EIN) (Form SS-4) 

• Confirm your organization’s exemption category: trust, corporation, or association  

• File IRS Form 990, IRS Form 990-EX, or IRS Form 990-N, depending on your nonprofit’s assets and gross receipts. This affirms your eligibility for tax-exempt status. Don’t forget to make your IRS Form 990s for at least the most recent three years publicly available.  

• File IRS Form 5768 if you intend to do legislative advocacy at your organization 

• File IRS Form 1023 or 1023-EZ, the form that ultimately designates your organization as a 501(c)3 organization. Nearly all the filings, policies, financial reporting, and other administrative work your board, founder(s), and lawyers have completed to date tie to IRS Form 1023. To see if your organization is eligible for EZ filing, review the IRS requirements. 

• Pay fees 

Insert Pro Tip! 501(c)3 nonprofit organizations, as designated public charities, must receive more than 33% of their funding from government sources or public donations over a rolling 5-year period. This distinguishes them from family foundations.  

Once you receive a determinization letter from the IRS on your filing of Form 1023, which may take weeks to months and follow-up work, you can finalize any dependent state requirements and begin raising mission-critical funds.  

Step 6: Create a Fundraising and Revenue Plan 

Once all of the administrative and legal work is complete and you can open a bank account, you can start accepting donations. Before you receive your letter of determination, make sure you and your board are creating a startup budget, building relationships, and researching nonprofit fundraising strategies.  

A few funding methods your leadership and volunteers should explore include:  

• Days of Giving: A day of giving is a designated fundraising event—such as Giving Tuesday, anniversaries, or national awareness days—where nonprofits concentrate their fundraising efforts within a specific, short timeframe. These events create urgency and excitement around giving, allowing organizations to engage donors.   

• Fundraising events: Events range from distinguished galas and auctions to family-friendly activities, fitness challenges, sales, social gatherings, and voting competitions. When selecting a fundraising event, organizations should consider net fundraising potential, costs, workload, and alignment with their mission to ensure both financial success and meaningful donor connections. 

• Grants:  Funds awarded to nonprofits by federal, state, local, or private entities to support budgets and programs. The grant process involves pre-award preparation, post-award management, compliance, proper accounting and reporting, and potential audits. Understanding grant development and management—including where to search for grants, roles and responsibilities, and proper record-keeping—is critical for successfully securing and maintaining this vital funding source. 

• Matching Gifts: Donations made by a company to match an employee’s contribution to a nonprofit, effectively doubling or even tripling the original donation. Many corporations offer matching gift programs that match employee donations at various ratios (typically 1:1, but some offer 2:1 or even 3:1), often with annual limits. These programs represent a significant untapped fundraising opportunity for nonprofits. 

• Peer-to-peer fundraising: This social fundraising strategy leverages volunteer ambassadors, such as supporters, families, volunteers, and community partners, to raise money on behalf of a nonprofit by creating personalized donation pages and reaching out to their own networks. Peer-to-peer campaigns can be standalone initiatives, such as walkathons or runs, or added to existing events, such as galas.   

As you consider these and other ways to raise money for a nonprofit, consider what your fundraising growth and programming goals are. After you have funds, you are ready to launch your nonprofit’s programs and services, which is the reason you started your nonprofit in the first place.  

Administrative work is part of being a nonprofit founder, though, and to remain compliant, you will have to ensure your financials and reporting are tracked and reported.  

Step 7: Set Up Recordkeeping and Financial Controls 

Your organization needs reliable systems to track every dollar, maintain compliance, and build donor trust. Proper recordkeeping and financial controls protect your mission from fraud, keep you audit-ready year-round, and provide the transparency stakeholders expect. These essential processes work together to ensure your nonprofit operates with integrity and efficiency.  

To remain compliant, there are some nonprofit accounting best practices your organization needs to keep in mind:  

• Smart Budget Planning: Budget reviews should occur mid-year and year-end to analyze variances between projections and actuals, identify missed expenses, and assess external impacts. A solid budget establishes benchmarks and measures mission delivery through cross-department collaboration, expense projections, and funding stress tests.  

• Internal Controls and Fraud Prevention: Fraud can seriously impact your mission, services, and donor confidence, and nonprofits are particularly vulnerable due to limited resources and less oversight. Strong internal controls prevent fraud through real-time budget alerts, ghost employee tracking, secured data with selective access, and thorough audit trails.  

• Closing the Books: Closing the books is essential for accurate annual reporting and involves reconciling accounts, performing break-even analysis, and matching actuals to budget for grants. Proper year-end closing prepares auditor schedules and gives stakeholders a transparent view of financial performance.  

• Preparing Your Annual Report: Your annual report shows donors, board members, and the community what you’ve accomplished and your financial standing. Focus on the executive letter, donor recognition, photo captions, and financial snapshots presented through creative visuals, such as graphs and infographics.  

• Compliance Essentials: Nonprofits must remain compliant with FASB standards, Form 990 filing requirements, and state requirements to avoid losing tax-exempt status or failing audits. You’ll need written policies on conflict of interest and a calendar tracking all filing deadlines.  

• Successful Audits: Audits examine financial statements and internal processes, with success depending on audit-readiness through organized documentation and timely book closing. The three stages—pre-audit, fieldwork, and wrap-up—require clear team roles, responsive communication, and key documents like journals and grant contracts.  

• Strategic Planning: Successful nonprofits develop long-term strategic plans early in their fiscal year that align budgets with growth goals. Strategic planning should diversify revenue streams, prepare staff for growth, leverage scalable technology, secure board buy-in, and plan for contingencies. 

Step 8: Promote and Grow Your Nonprofit 

You need the right people supporting your mission, whether that’s volunteers giving their time, donors contributing funds, or community members spreading the word. Take the next step using these tested approaches to turn interest into action and one-time supporters into long-term advocates. 

Recruiting Volunteers 

Getting the right volunteers starts with knowing what motivates people and how to reach them. These strategies work whether you’re just starting out or looking to grow your existing program. 

• Know Your Audience: Students want resume experience or service hours. Retirees are looking for community and purpose. Corporate partners need team-building tied to social responsibility. When you understand what drives different groups, you can create opportunities that actually appeal to them.  

Once you know your audience, consider what might stop people from volunteering—transportation issues, childcare, time constraints, or simply not knowing what you need. Address these barriers head-on in your recruitment materials.  

• Create clear opportunities: Skip the vague “help out” requests. Be specific: “Greet visitors at the front desk, two hours per week” or “Assist with our after-school program, Tuesdays 3-5pm.” People respond when they know exactly what you’re asking and can picture themselves doing it.  

To further increase engagement, offer different levels of commitment: one-time events, ongoing roles, remote work, and in-person shifts. The more flexible you are, the more people you’ll attract.  

• Craft compelling recruitment messages: Lead with impact, not need. “Every hour you give provides three meals to families in need” works better than “We need help.” Be specific about the role and honest about time commitments and requirements, such as background checks. Include volunteer stories and testimonials—people connect with real experiences.  

• Make applying easy: Simplify the application process so people can follow through. Use online forms that take just minutes. Collect only essential information—contact details, interests, availability, relevant skills. Avoid overwhelming people with lengthy questionnaires, unless the role needs extensive vetting.  

• Stay proactive with recruitment. Don’t wait until you’re desperate for volunteers to start recruiting. Make it an ongoing effort by regularly promoting opportunities through your newsletter, social media, and community events. Update your volunteer page often and keep messaging fresh so people know there are always ways to get involved. 

The organizations that excel at volunteer recruitment know their audience, craft compelling messages, use multiple channels, and make it ridiculously easy for people to say yes. 

Attracting Donors to Your Nonprofit 

Successfully attracting and retaining donors starts with understanding who they are and what motivates them to give.  

• Meet Donors Where They Are: Show up both online and in your community. Build your social media presence—more than half the people who engage with nonprofits on social media will look you up later. Make it easy for people to support you with mobile giving, text-to-donate, and online giving. 

• Make Giving Simple and Fast: Your website should look professional and be easy to use. Make your donation buttons obvious and simple to click. Keep your forms short, suggest donation amounts, and give people the option to give monthly. The less friction you create, the more people will actually donate. 

• Build Trust Through Transparency: Be upfront about your security measures. Tell donors exactly what their money does—show them the real impact of a $25 gift versus a $100 gift. Consistently share stories from the people you’ve helped so donors can see their donations at work. 

Nonprofit Marketing Strategies 

A strong marketing strategy connects you with supporters, builds your mission’s reach, and increases fundraising impact. Effective storytelling builds trust, loyalty, and visibility. 

To succeed with nonprofit marketing, focus on these three strategies: 

1. Consistent Messaging and Branding 

• Define your elevator pitch  

• Maintain consistent visuals (colors, fonts, logos) across all platforms 

• Ensure your tone stays uniform whether via e-mail, text, website, or ads 

Insert!Pro Tip! Google Ad Grants provide eligible nonprofits with up to $10,000 per month in free online advertising through Google Search to help raise awareness and drive traffic. 

2. Audience Research 

• Identify your target groups (donors, volunteers, stakeholders) 

• Understand demographics, preferred channels, and giving motivations 

• Create audience personas to guide your content creation 

• Seek opportunities to cross-promote your content across e-mail, social media, and text messaging  

3. Clear Goals 

• Set specific, measurable objectives 

• Track key performance indicators (KPIs) 

• Regularly review and adjust strategies based on results 

Turning Your Vision into Impact 

Each step you took to start your nonprofit—from crafting your mission to setting up your finances—builds on the last. Together, they form a foundation strong enough to make a lasting impact.  

As you grow, come back to these basics. Is your mission still driving your decisions? Are your policies keeping up with your expansion? Are your systems helping your team or getting in the way? The best nonprofits don’t just set things up once—they keep refining what works to continue mission impact. 

FAQ