How to Start a Ministry Non Profit
This type of organization is formed under state laws and is tax-exempt from federal corporate taxation under the Internal Revenue Code, section 501(c)(3).3 min read
Are you wondering how to start a ministry non profit? This type of organization is formed under state laws and is tax-exempt from federal corporate taxation under the Internal Revenue Code, section 501(c)(3).
Starting a 501C3 Nonprofit Ministry
In order to become tax-exempt, a nonprofit ministry must be organized and operate for religious, scientific, educational, or other charitable reasons exclusively. The first step in starting this type of organization is deciding on a name. The name you select should clearly communicate the purpose and mission of the ministry. For example, a Christian ministry name should suggest what the ministry does in a memorable and appealing way. The name should evoke emotions in those who would potentially be interested in supporting it, as well as those who may be in need of the support services it offers.
After you come up with some name options, conduct an exhaustive search to make sure the name isn't already in use. Resources for your search include:
- Phone directories
- State and federal trademark databases
- Web searches
- State business registries
- Other industry sources
You want to make sure that the name you are considering isn't already in use by another business or nonprofit organization.
Business Plan and Mission Statement
The next step is coming up with a budget for the ministry and developing a strategic business plan. You need to transform the dreams and hopes for the organization into a plan that outlines how you will make each task happen, taking the plan beyond an idealistic vision to an actual, feasible organization. Your mission statement and business plan will provide direction on what the organization wishes to accomplish, as well as how it will reach those goals. Your mission statement should be clear and well-defined in order to qualify for federal nonprofit status with the IRS.
The mission statement of a ministry nonprofit should be concise and brief, keeping the organization focused as you move forward and make decisions. You should also apply the mission statement when you:
- Determine the name
- Raise funds
- Create and publish materials
Make sure the mission statement is clearly reflected in every aspect of what your organization will do in the community. Before granting nonprofit status, the state and federal government agencies will carefully review your business plan and mission statement to ensure that the organization is eligible.
Board of Directors
Every nonprofit organization needs a board of directors as well. Those on the board should share the commitment to and passion for the mission of the ministry.
An ideal board member for a nonprofit organization should:
- Be able and willing to take care of any necessary tasks for the organization
- Possess business skills that will drive the organization forward
- Have enough time to commit to the organization
- Be willing to aid in fundraising efforts
- Have experience in grant-writing, or be willing to learn
A board of directors may include a pastor or president, a financial director, and/or a coordinator. Each board member should understand their job duties and sign an agreement to perform on the terms outlined. Your board should only include members who share your desire to accomplish the mission of the organization, as well as your religious convictions. After you have selected the board, the next step is drafting the organization's bylaws.
As you draft the bylaws, you will need to decide whether the church will maintain control of the non-profit organization, or if those running the organization will be independent of the church. If you decide on the former option for operation of the nonprofit, it is smart to appoint the members of the church's board of directors to serve as board members in the organization.
Before you can obtain tax-exempt status, the first step is filing your nonprofit organization's articles of incorporation with the Secretary of State's office. File these with the state office in which the ministry will be located.
Each state has its own requirements for what must be included in the articles of organization. However, just about every state requires:
- Organization name
- Organization location
- Organization purpose
The IRS will not recognize a nonprofit organization until it has filed Form 1023, which is the application for recognition of exemption. Every organization needs an employer identification number (EIN), also referred to as a taxpayer identification number (TIN).
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