3 Steps To Setting Up a Nonprofit Organization (Starting and Running NonProfit – NEW!)

3 Steps To Setting Up a Nonprofit Organization (Starting and Running NonProfit – NEW!)

– Hi, my name is Toby Mathis. I’m one of the partners at
Anderson Business Advisors, and today we’re going to
talk about how you can set up your own non profit. Now when I say non profit,
we’re really talking about charitable organizations. There’s about 30 of them
underneath the United States code that you’re able to get exemption for. But I’m going to zero in like
a laser beam on one of them. And that’s one that we all know and love. It’s called the 501c3. And a 501c3 is set up for charitable, religious, or educational purposes. There’s a few other
things like amateur sports and things like that, but the big ones are charitable,
education, and religious. If you’re doing something
that’s benefiting society, chances are, it’s going to
fit underneath this category. You’re providing assistance
to veterans, boom. If you’re advancing a religion, boom. If you’re a school or you’re educating, whatever does things are, boom. You’re under a 501c3. And the reason this is important is because somebody gives you money, they can write it off as
a charitable donation. It’s the only one where you can do that. So the 501c3 is where we tend to focus. You can set up your own. There’s literally over
1.7 million of these in the United States, and
they’re probably one of the most underutilized entities that exists. Now to set one up,
there’s only three steps. It’s actually very very
simple when you break it down into pieces. And the easiest way to look at this is we always have three categories
that entities fall into. No matter whether you’re for
profit or not for profit. And that is we have to
deal with the states, we have to deal with
third parties like judges, or any third party, a bank, whatever, and then we have to deal with the feds, and you know them as the IRS. What we care about is
that all three are happy with what we set up to
recognize it as a 501c3. So the first thing we
do is we say what form should it take. Do not listen to any of the
bad information out there. There’s only one form
you’re going to want to use to make this as easy as possible, and that’s because 501c3
starts off with the word, and that word is corporations. So that’s what we’re going to be. We’re going to be a non profit corporation in whatever state we decide to be in. Now if you can’t pick a
state, it’s real easy. We look and say how many
directors do you have to have in that state. If it’s just you, we may
pick a state that’s got one. If you’re doing everything in one state, we’re probably picking that one. These things, it’s not
going to be rocket science. We’re probably going to
be right in your backyard unless there’s a good reason not to be. So we pick the state. Now the third parties,
they want to know that this organization has a body. So you’re going to need
bylaws, which are the rules, by which the company is governed. Now here’s the biggest difference between a for profit, and a not for profit. In a for profit, it is for
the profit of an individual or shareholders. Easiest way to look at it is for owners. It is set up to give
its profits to owners. In a not for profit, there are no owners. You’re set up to benefit society, so there’s no shareholders
in a not for profit. That means that we have to
have some governing body. And I’m going to tell you the easiest way. And you’re talking to
a group that’s approved over 3,000 of these, the simplest
way so you don’t get guff, is to have a board of directors. And you’re going to have people say, you can be a board of
trustees, you can be regions, you can be all this. Uh huh, but if you want to get approved with the least amount of trouble and you want your own 501c3,
this is how you do it. Now the last step is
to deal with the feds. Now we use something called
the check the box regs in this country. Which means we tell the IRS
what we’re going to file. Here’s what this entity is. So we have a corporation, and we’re going to tell the
feds that it is a non profit, 501c3. We’re literally putting that on there. This is a 501c3, what section? It’s a non profit, it’s a 501c3. So now they know. And they’re going to issue you
a tax identification number. We have one other little piece of this, and that is we have to
apply for the exemption and that’s done on an
application called a 1023. This is the one that takes the most time. This is the one where we’re
applying for exemption. Now here’s the really cool part. This exemption relates back
to the date that you set up. So date of, date of formation. Excuse my handwriting,
see if you can read that. Whatever date you set the corporation up. It relates back. And that’s it. You go through those steps,
you will have an operating non profit set up for your purpose. Now the hardest part is figuring
out what your purpose is and what you’re going to do with it, but there’s so many cool
things I’ve seen clients do. Whether you’re trying to end homelessness, whether you’re trying to help veterans, when you try to help single moms, whether you’re trying to educate society, whether you’re trying to provide housing to low to moderate income households, which isn’t what you think. There’s folks down in the
Bay area that are families making over 100,000 dollars that qualify. You’re providing housing for
them, even rental properties, or assisting them in
any way, that qualifies. So there’s so many things that we think are not non profits that are. Setting it up, very easy. Last little step, once you
have this puppy set up, you get your EIN, you go down to the bank and you say I want to
set up a bank account for my non profit. What you’ll find is that
everybody reduces their fees for the non profits. In fact, most of the
states, the filing fees might be 10 bucks. And then of course is
exempt from taxation, so you can grow it. Now it’s really cool
once you have one set up, ’cause you have your own 501c3, they are not owned by
anybody, but you control it, so nobody can take it away from you, and they do not die. So they become a very very effective tool when you’re talking about
working with a family, of having people get together and actually have a common purpose, they’re just amazing tools
because you realistically unless you overtly decide
you’re going to exit it, it’s going to keep on going
on forever and ever and ever. If you want to case in point, read up on the Hershey non
profits that set up in Rand, the Hershey school, museum,
the hospital and everything. Milton Hershey and his wife
passed with no children, and they passed in the early 1900’s. That charity is worth over
12 billion dollars today, with no family. These things are really
tough to get rid of once you start going, and they tend to just keep
growing and growing and growing. So they’re very very
powerful and effective tool. Anything we can do to help you set it up. Again, we’ve done thousands of these. We love working with non profits. If you’re somebody who
wants to set up a 501c3, just give us a call. We can have you up and running and actually start that process
within a matter of days. It’s not nearly as hard as you think. Thanks for listening. (peaceful music)

Comments (24)

  1. What if your nonprofit is just you right now? How could I get s board of directors when I just started with my idea?

  2. @AndersonBusinessAdvisors I am currently building non profit social media accounts to start getting the message out their.. Thing is, my idea right now until i saw your video is i want to donate £1000 to each cause but i also want to be hand on i raise £1000 i take the money purchase £1000 worth of 'food bank' goods and then donate the food.. I also want to film the entire process and share it on my youtube channel as i want it to be a youtube community based non-profit in the sense that subscribers donate £1 to the current cause if its a cause they want to participate in..
    The idea is to have 1000 people donate £1.. Alone we can do so little but together we can do so much. is the message..
    for each £1000 the cause will change, £1000 and i create care packages for the homeless, it's christmas and we buy and donate £1000 worth of toys to a children's hospital and i film the process for our youtube channel.

    I'd love to hear what you think.

  3. Can you start a non profit if you personally owe the IRS?

  4. Very informational! Thank you so much ❤️ I will definitely be contacting you

  5. Thank you for the information. Do I want to be forming an S Corporation or a C Corporation?

  6. Can i get a loan for a non profit or does all the money need to be produced without a loans involved.

  7. I want to start NGO to link American universities or other departments with Middle East and North African universities/departments to bring US experiences to mentioned countries in fields like health,education and agriculture.
    I will come to USA to get my Master degree but I think I need mentors.
    Any Ideas? Thanks for the videos..

  8. thank you for sharing information. What is the different tax form 1023 and 990 ?
    Does a non profit corporation have to file two tax form on for fed and one for state ?

  9. Thanks for the information. I want to start one in TX but it's only me and my spouse. Any advice you have would be appreciated. Youth program…

  10. Can non-profit Organization be consider as a Foundation?

  11. How do I contact you to help me

  12. Hello sir, Can a person who is on H1B visa can he/she start 501c3 non profit corporation? Can the person who is on H1B visa who started the Non Profit be one of the directors on board?  Should all board of directors be paid salary?

  13. would paying college tuition be an acceptable non profit?

  14. This was the best explanation for NP. Thank you.

  15. Thanks for the info. How are people getting their 3 people for the Board of Directors? Who are they using and titles?

  16. Dear sir how we get fund ? From where we get fund ..kindly inform me whats aap 9508345756

  17. How does one get in contact with your company ?

  18. Hello, my name is V. Shortman, I am a pastor of a church here in Arizona. I have done all the process of the 501c3, got my certification from the IRS. Now, I am shopping to reconstruct a Fellowship Hall of our Home Church. I'm sorry for not introducing
    myself, I'm the Pastor of our Home Church. Anyway, I shopped at Wal-Mart, Home Depot, and other place and I'm told that I should have a 501c3 Card, I've been trying to ask around on how I to get this 501c3 card for the church to use but sadly enough no one seems to know what I'm talking about. It would be a blessing to our church if you could help me in this area. You can call me at 928-489-2800 and ask for Pastor Virgie. I hope to hear from you, soon. Thank you for the information you provide on the internet but I need help with the 501c3 Card.

  19. Hey, great videos. But have a question. Does the directors/members can get SOME of the profits that it makes (or more correctly to call it "the donations")? I think it can be put under the "operational/running/infrastructure costs"? I've seen, especially in the UK, that you can form "limited by guarantee" and also it is legally possible to distribute profit to the members.

  20. Will an LLC work?.

  21. is a community based organisation also considered as a nonprofit organization?

  22. Does a children foundation fall under the 501c3 category?

  23. What if everything we do is to help children in other countries then the u.s.a ? Still qualify for a 5013c?

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