How to Start a Nonprofit: 13 Essential Steps for Success

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Do you have an idea for an organization that will bring good to the world and serve a charitable purpose? You might be inspired to bring your idea to life by starting a nonprofit. There are over 1.8 million registered nonprofits in the United States, making these charitable organizations a staple of modern society.

However, any new nonprofit needs a strong foundation to thrive. Around 30% of nonprofits cease to exist within 10 years of their founding. Further, a Concord Group Study found that 49% of nonprofits don’t have a strategic plan. These statistics underscore the importance of establishing a clear purpose and solid plan for your organization to ensure its longevity.

This guide will teach you what you need to know to get your new organization up and running. We’ll cover:

• Starting a Nonprofit: Basic FAQs
• How to Start a Nonprofit in 13 Steps

No matter what type of nonprofit you’re looking to start, this guide will provide you with the common steps you need to get your new organization up and running.

Starting a Nonprofit: Basic FAQs

What is a nonprofit?

In the U.S., the IRS defines nonprofits as “Organizations that are organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, educational or other specified purposes.” In contrast to for-profit organizations, nonprofits rely on donations, usually a combination of individual donations, grants, sponsorships, and corporate donations, to fund their operations and further their charitable missions.

What are the different types of nonprofits?

In addition to charitable organizations, the IRS distinguishes many other types of tax-exempt organizations with the 501(c) designation. Here’s a quick overview of some of the organization types that fall under 501(c):

• 501(c)(3): Charitable organizations, churches and religious organizations, private foundations
• 501(c)(4): Social advocacy or lobbying organizations
• 501(c)(5): Labor, agriculture, and horticulture organizations
• 501(c)(6): Business leagues, chambers of commerce, and trade/professional associations
• 501(c)(7): Social and recreational clubs

There are many other distinctions in this category—read the full list of other tax-exempt organizations here. However, most individuals looking to start a charitable organization create 501(c)(3) organizations. That’s because donations to these organizations are usually tax-deductible for the donor, making it easier to raise funds.

How much does it cost to start a nonprofit organization?

Starting a nonprofit organization does require some investment up front to cover startup costs. Overall, the total baseline cost to get a bare-bones nonprofit off the ground typically ranges from $300 to $3,000, though this can scale significantly higher depending on your location and operational scale. Some of the fees involved include:

• Legal fees
• Accounting costs
• Incorporation fees
• Form 1023 fees to apply for tax exemption
• Office rental/purchase
• Staff salaries
• Other office-related overhead, like equipment and supplies
• Fundraising startup costs, such as fundraising software or event planning costs

These fees can range from several hundred dollars to a few thousand dollars, depending on the type of investments you choose to make.

How long does it take to start a nonprofit?

It can take several months to a full year to complete each step of the startup process, but a rough estimate for some of the key steps is as follows:

Phase 1: Foundations & Governance

• Recruiting a board and drafting bylaws: weeks to months
  Before filing paperwork, you must recruit initial board members and draft your internal operating rules or bylaws. This timeline varies depending on how quickly your founding team can align on your mission and structure.
• Filing Articles of Incorporation: days to weeks
  You must officially register your entity with your state’s Secretary of State. Standard processing averages 7 to 10 business days, though some states take up to 4 weeks. Many states offer expedited 24-hour processing for an extra fee.
• Securing an EIN (Employer Identification Number): instant
  Once incorporated, you can apply for an EIN online through the IRS website. The number is generated immediately upon completing the 10-minute application.

Phase 2: IRS Tax-Exempt Status

Your final timeline hinges almost entirely on which IRS exemption application you are eligible to file:

Don't let a long waiting period stall your operations entirely. As long as you file your 1023 application within 27 months of incorporation, your tax-exempt status will be retroactive back to your official date of formation. This means you can legally solicit and accept tax-deductible donations while your application is still pending.

What questions should you ask before starting a nonprofit?

Starting a nonprofit requires a decent amount of time and energy. Before you start a new organization, it’s worth it to fully think through the problem you’re hoping to address and whether a nonprofit is the right way to solve the issue.

Before taking the steps to start a nonprofit, ask yourself these questions:

• What need or problem will the nonprofit address? Can you clearly articulate the issue you’re hoping to solve? Is it one distinct problem or multiple issues? Nonprofits are most successful when they’re focused on one primary issue because it makes it easier to communicate the organization’s purpose to potential donors. You can always expand your operations later on as your organization and donor base grows.
• Does the community have a strong need for this nonprofit? Are there other nonprofits in the area already focusing on the issue you’ve identified? Make sure that by starting a new nonprofit, you’ll be able to fulfill an unmet need in the community.
• Is there a long-term need for your nonprofit, or could the issue be solved with a smaller-scale fundraising campaign or project? The answer could be “both.” For example, perhaps your idea to create a nonprofit focused on raising funds for children fighting cancer began with one family’s need for support during a challenging time. However, if your idea isn’t very large in scope, a one-time crowdfunding campaign or peer-to-peer fundraising event could achieve the results you’re hoping for.
• Does the community seem excited about your nonprofit idea? Do you receive enthusiastic responses when you tell family, peers, and community members about your new nonprofit idea? If community members seem confused about the nonprofit’s mission, it could be a sign to go back to the drawing board.
• Where will we turn to for financial support? Consider whether your community has a wide range of potential sources of funding willing to help, including individual donors, corporate sponsors, foundations, and government agencies.
• What potential challenges or risks will the nonprofit face? Challenging economic conditions, finding reliable funding sources, local or federal regulations, and staffing challenges are all potential obstacles your new nonprofit could face on the road to getting up and running. Carefully think through these risks and consider how you plan to mitigate them or whether they’d be too challenging to overcome.

If, after thinking through these questions, you determine a clear justification for a new nonprofit, you’re ready to move forward with the steps of getting your new organization in motion.

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How to start a nonprofit in 13 steps

Starting a nonprofit requires a combination of strategic planning, financial investment, and regulatory approval. Follow these steps to start your organization on the right foot.

1. Conduct initial research.

Before taking any steps to formally establish your nonprofit, conduct background research into the people and groups who will help you get your new organization off the ground. You must demonstrate a genuine, unmet gap in the ecosystem to ensure your organization is viable and attractive to future funders.

Gathering community data

To build a compelling case for your nonprofit, you need to collect both quantitative and qualitative data directly from your target community using three primary methods:

• Community surveys: Best for gathering high-volume, measurable data. Use simple, accessible digital tools to ask community members about their biggest unaddressed challenges, how often they experience them, and what barriers keep them from getting help.
• Stakeholder interviews: Conduct one-on-one deep dives with local leaders, social workers, educators, or experts in the field. These individuals have boots-on-the-ground experience and can provide critical insight into structural gaps in current local services.
• Focus groups: Bring together a small, diverse group of individuals from your target demographic for a guided discussion. This allows you to observe how community members talk about their needs in their own words, revealing nuances that multiple-choice surveys often miss.

Checking for overlapping organizations

You must explicitly investigate who else is already working in your space. The IRS and major foundation donors look critically at whether a market is already saturated. Evaluate the existing nonprofit landscape using these strategies:

• Landscape mapping: Research national databases or your state's charity registry to find every organization operating within your geographic radius or mission sector.
• Analyzing the gaps: Look closely at their programs. Are they failing to reach a specific neighborhood? Is there a massive waitlist for their services? Do they approach the issue from a different angle?
• Collaboration vs. competition: If you find an organization doing exactly what you envisioned, consider whether your energy would be better spent partnering with them or starting a localized chapter, rather than building a brand-new administrative infrastructure from scratch.

2. Choose a board of directors.

A nonprofit’s board of directors is a governing body typically made up of unpaid volunteers who set policies, determine strategic priorities, and provide oversight.

To form a legal nonprofit corporation, you must assemble an initial board of directors. Your board serves as the governing body responsible for the organization's financial oversight, strategic planning, and legal compliance.

When selecting your initial board members, you must adhere to strict state and federal regulatory guardrails:

• Minimum of three members: Most states and the IRS require a minimum of three distinct board positions to incorporate: a president, a secretary, and a treasurer.
• The majority-unrelated rule: To qualify for 501(c)(3) tax-exempt status, the majority of your board members must be independent and unrelated by blood, marriage, or shared business ownership. This ensures decisions are made in the public interest rather than for private benefit.
• Paid staff recusal: If the founder or executive director is a voting member of the board, they must recuse themselves from any votes regarding their own compensation, benefits, or performance reviews to prevent conflicts of interest.

3. Write a mission and vision statement.

Your nonprofit’s mission and vision statements are guiding principles that justify your organization’s purpose.

Your nonprofit mission statement is the foundation of everything your organization does. It should clearly communicate what your organization does, who it serves, and why it matters.

A good mission statement is:

• Clear and concise
• Focused on outcomes, not activities
• Inspiring and memorable

4. File for incorporation.

Incorporating your organization creates a legal entity that is separate from its founders. This protects the founders from personal liability for the organization's debts and obligations. In most states, you incorporate by filing articles of incorporation with your state's Secretary of State office and paying a filing fee.

Keep in mind that while incorporation protects your personal assets, it does not automatically make your organization a tax-exempt charity. It simply establishes you as a state-level nonprofit corporation. To unlock tax-deductible donations and exemption from federal income tax, you must still complete the separate, rigorous process of applying for 501(c)(3) status with the IRS.

5. Secure an Employer Identification Number (EIN).

An Employer Identification Number (EIN) is a unique nine-digit number assigned by the IRS to identify your organization for tax purposes. You'll need an EIN to open a bank account, apply for tax-exempt status, and file tax returns. You can apply for your EIN online through the IRS website.

6. Create bylaws

Your bylaws are the rules that govern your organization. They should address things like:

• The purpose and structure of the organization
• How the board of directors is elected and how long members serve
• How meetings are conducted and how decisions are made
• How the bylaws can be amended

Bloomerang has a sample bylaws template you can use as a starting point.

7. Develop a conflict of interest policy.

A conflict of interest is any circumstance where an individual’s personal relationships or financial situation could influence their ability to make unbiased decisions on behalf of your nonprofit.

8. Apply for tax exemption at the federal level.

Next, you’ll file with the IRS as a 501(c)(3) nonprofit organization to apply for tax-exempt status. To receive tax-exempt status from the federal government, you'll need to apply to the IRS for 501(c)(3) status. This allows donors to deduct their contributions to your organization on their federal income tax returns. You can apply using IRS Form 1023 (or the simpler Form 1023-EZ if your organization qualifies).

9. Register to fundraise where applicable.

According to the National Council of Nonprofits, the majority of states require charitable nonprofits to register before soliciting donations. This legal framework ensures transparency, allowing the public to verify that your organization is a legitimate, tax-exempt operation before they hand over their hard-earned money.

Failing to register before asking for money can lead to steep state-level fines, cease-and-desist orders, and severe damage to your organization's reputation. To stay compliant, make sure to:

• Know your state rules: Currently, about 40 states and Washington, D.C., enforce mandatory charitable solicitation registration. If you live in one of the handful of states that do not require it (such as Delaware, Idaho, Indiana, or Iowa), you only need to worry about compliance if you begin asking for donations outside your home state.
• Understand what triggers registration: It is a common myth that registration is only required for massive campaigns. In reality, virtually any form of active revenue generation can trigger the requirement, including hosting a local charity gala, selling branded merchandise, collecting participation fees for a fundraising event, or explicitly asking for money on your website.
• Navigate the "donate button" gray area: If your website simply has a passive "donate" button, you are generally safe just registering in your home state. However, the moment you send targeted emails, run localized social media ads, or specifically ask residents of another state to click that link, you may legally be required to register in those additional states as well.
• File before you solicit: You must submit your initial application to the state's Attorney General or Secretary of State before you launch your first official fundraising campaign. This process typically requires submitting your IRS determination letter, your articles of incorporation, and your bylaws, alongside a state-specific filing fee.

10. Hire staff members.

Nonprofit employees are the lifeblood of charitable organizations, ensuring that the necessary work is completed to advance their missions.

As your organization grows, you'll need to build a team to help you fulfill your mission. This might include paid staff, volunteers, and contractors. Be clear about the roles you need, the skills and experience required, and whether you can afford to pay someone or need to rely on volunteers.

The foundation of a strong team is a shared commitment to your mission. Make sure everyone who joins your team understands and is passionate about what you're trying to accomplish.

11. Invest in nonprofit software.

Nonprofit software solutions digital tools that help organizations manage all aspects of their operations, streamline administrative tasks, and keep data secure.

A prime example is Bloomerang Fundraising, a comprehensive system that equips your organization with the robust tools needed to launch digital campaigns, build optimized donation forms, manage peer-to-peer fundraising events, and process recurring transactions safely.

Additionally, the Bloomerang Giving Platform includes Penny AI, an intelligent fundraising strategist that allows teams to bypass manual reports entirely. By conversing with Penny using natural language, you can quickly identify high-impact giving opportunities, predict donor risks, and surface actionable insights directly from your engagement history.

12. Start fundraising.

Your new nonprofit might start with minimal funding, and that’s perfectly normal! However, to transition from a passionate idea to an active operation, you need an intentional, multi-channel fundraising campaign.

Instead of relying on a single source of revenue, diversify your initial strategy to build long-term financial resilience:

• Individual donations and crowdfunding: Launch a digital kickoff campaign. Craft a compelling narrative that focuses on the problem your nonprofit solves, rather than just asking for money.
• Corporate sponsorships: Approach local businesses that align with your mission. Offer them visibility, such as logo placement on your website or shoutouts at events, in exchange for founding grants or in-kind donations like supplies, printing, or space.
• Founding board contributions: It is standard practice for a new nonprofit's board members to make a meaningful personal contribution or pledge to raise a specific amount (often called a "give or get" policy) to demonstrate financial commitment to external donors.
• Micro-grants: While large federal grants are rarely awarded to brand-new organizations, look for local community foundation grants or corporate giving programs that specifically fund grassroots startups.

13. Maintain compliance

After going through all the hard work of setting up your nonprofit, make sure it isn’t derailed by compliance issues. Tax-exempt status is a privilege, not a permanent right, and maintaining it requires ongoing vigilance.

To keep your organization legally compliant and financially transparent, ensure you actively manage the following:

• Annual IRS reporting (Form 990): Even if your nonprofit makes zero dollars this year, you must file a version of Form 990 with the IRS every single year. Small nonprofits with gross receipts less than $50,000 can usually file the quick, electronic Form 990-N (e-Postcard). Failing to file for three consecutive years results in automatic revocation of your tax-exempt status.
• State-level renewals: Most states require nonprofits to file an annual report with the Secretary of State to maintain their status. Additionally, you must renew your charitable solicitation permit annually in every state where you actively solicit funds.
• Board governance and minutes: Hold regular board meetings (at least quarterly) and document everything via official meeting minutes. Keep a strict separation between personal finances and nonprofit funds, and ensure your conflict-of-interest policy is signed annually by every board member.
• Donor substantiation: Protect your donors by issuing compliant tax receipts for all contributions over $250, explicitly stating whether any goods or services were provided in exchange for their gifts.

Additional FAQs about starting a nonprofit

Can I get paid if I start a nonprofit?

Yes, you can earn a salary as a nonprofit founder or executive director. However, the IRS strictly requires that your compensation be "reasonable" and approved by an independent board of directors. Your pay must align with market rates for similar roles at similarly sized organizations to maintain your organization’s tax-exempt status.

Can I start a nonprofit by myself?

Legally, no. While you can initiate the process alone, the IRS and almost all states require a formal board of directors to incorporate and secure tax-exempt status. At a minimum, you will need at least three separate, majority-unrelated individuals to fill the core leadership roles of president, secretary, and treasurer.

What is the 80/20 rule for nonprofits?

Based on the Pareto principle, this fundraising guideline states that roughly 80% of a nonprofit's total donations come from just 20% of its donor base. It highlights why organizations must prioritize building deep, personalized relationships with major donors and core supporters who perform the heaviest financial lifting.

How can I tell if my nonprofit will succeed?

Test your idea at professional networking events outside your immediate circle of friends and family. Share your mission statement confidently. Good signs include listeners wishing the service existed sooner, asking how to volunteer, offering to introduce you to helpful connections, or validating that the gap you are filling is deeply needed.

In conclusion

Starting a nonprofit is a big commitment, but it can also be one of the most rewarding experiences of your life. By following these steps, you'll be well on your way to building a successful organization that makes a real difference in the world.