From Idea to Impact: 4 Expert Tips For Launching Your New Nonprofit in 2023

Every great nonprofit starts with a dream – an idea that ignites your passion and drives you to make a difference in the world. But once you've identified your purpose and mission, what comes next? How do you take that first step and turn your vision into a reality? 

At Resilia, we understand the challenges that come with starting a nonprofit. We've helped countless nonprofit leaders bring their ideas to life and make a meaningful impact on the communities they serve.

In this blog post, we're excited to share the insights and advice our nonprofit experts have gathered over the years to help you get started on the path to creating a successful nonprofit. 

Let’s dive in and start bringing your dream to life.

Who Are You Serving?

The first and most crucial step as a nonprofit founder is to clarify who you are serving and how. You can ask yourself some key questions to ensure your organization is set up for success. 

• What is the mission of your nonprofit? Defining your organization's mission is a critical step in starting a nonprofit. What is the specific need that your organization aims to address?

• Who is your target audience? Who will benefit from your nonprofit's services or programs? It's essential to clearly understand who your organization is designed to help. 

• Who are your key partners and stakeholders? Identify the individuals (with the most important being your Board of Directors), organizations, and communities that are critical to the success of your nonprofit, and develop strategies to engage and work with them.

Tip #1: Building Your Board of Directors 

The next step is to think through and start adding your board members. Your board is the foundation of your nonprofit, and you want to create a strong board with varied knowledge, expertise, and skill sets, with a shared passion for your mission.

Every nonprofit requires a board, and the IRS requires a minimum of 3 members. Your board members should be volunteers that you trust to help move the organization toward your mission.

The three most common board member roles are President (long-term/strategic planning), Secretary (compliance/reporting), and Treasurer (Finance).

Tip #2: Apply for Your 501c(3) Status

The next step is to apply for your 501c3 status as a federally tax-exempt organization. Having your 501c3c status means any donations to your organization are tax-exempt, which is an incentive for potential donors.

Most foundation and federal grants require that your nonprofit be a 501(c)(3) tax-exempt organization to apply and be considered for grants. 

As a 501c3, you can receive tax-exempt financing and be exempt from various taxes, including federal income tax, sales and employment taxes, and federal unemployment tax. Gaining an exemption allows your organization to take full advantage of all the benefits of being a nonprofit.

To obtain 501c3 status, you must apply to the IRS. Before you can submit the 1023 application to the IRS, you'll need to incorporate your organization, obtain an EIN (or Employer Identification Number), and compile your nonprofit Bylaws. You may also need to apply for a solicitation license, although this requirement varies by state.

Tip #3: Nonprofit vs. LLC

An LLC, or Limited Liability Company, is a for-profit business that cannot become a 501c3. If an organization wants tax-exempt status, it must incorporate/register and apply federally as a nonprofit (or non-stock) organization.

If you want to learn more about whether a nonprofit or LLC is right for you, see our blog post dedicated to the topic.

Tip #4: Understanding Fees and Timeline for Registering a Nonprofit

Filing for 501(c)(3) status can be complex and time-consuming. There are several challenges new nonprofit founders may face when filing for their 501(c)(3) status:

• Understanding the legal and tax implications. Filing for 501(c)(3) status has legal, tax implications and nonprofit founders must understand these implications before filing. 

• Gathering and preparing the required documentation. Nonprofit founders must gather and design a range of documentation, including financial statements, bylaws, and other organizational documents, to file for 501(c)(3) status.

  Gathering and preparing this documentation can be time-consuming and challenging for new nonprofit founders who may not have experience in this area. 

How Long Does It Take to Receive my 501c3 Status?

The length of time it takes to obtain your 501c3 status once you've filed depends on a few factors, including whether you submit the 1023-EZ or 1023 form, where the IRS is in their approval queue, and if the application was expedited or not.

Generally, it takes four to six weeks for the 1023-EZ application and five to seven months for the 1023 long form. Expedited forms typically arrive much quicker than the standard application.