Prospective nonprofit founders are often classic entrepreneurs with a large vision in which they have enormous faith. Get a group of such people together and you have an incipient nonprofit. But not necessarily. There is always a plethora of very small nonprofits, not doing much, operating out of people’s living rooms with no real backers or traction. Don’t add to those ranks!
Step 1: Are we really ready for this?
Before we tell you HOW to start a nonprofit organization, we really must ask you WHY you want to do so. Separately incorporating as a nonprofit is not a prerequisite to starting an initiative, which can be done under someone else’s aegis or—these days—can work in a looser fashion unencumbered by that type of formal structure.
If you develop the structure, you must feed it, in terms of filing reports and meeting nonprofit accountability guidelines set out at the state and federal levels for the type of nonprofit you have chosen to be. You must develop an understanding of nonprofit financing (try making sense, for instance, of the various notions around overhead), nonprofit fundraising strategies, and nonprofit ethics in an increasingly more complex environment. Never mind establishing a board and understanding the requirements for effective and ethical nonprofit governance, which includes special requirements for transparency.
If you already have experience in these kinds of things, maybe the learning curve is not so intense and you can manage and prioritize such stuff easily, but if you are new to running a nonprofit, it could very well be better for your project to consider not incorporating as a 501(c) anything—progressing instead without a corporate umbrella or with the shared umbrella of a fiscal sponsor. And even then, you have not yet begun to consider the challenges of nonprofit fundraising, the challenges of donor retention disciplines, the frustrations of grant research and grant getting, and how to establish a culture of philanthropy in your own organization.
In other words, a good portion of the important work required to start a nonprofit organization begins before the nonprofit is even born.