How to Start a Nonprofit in Colorado
Wondering how to start a nonprofit in Colorado? The process requires a few basic steps, beginning with forming a corporation, and some due diligence.3 min read
2. Requirements for Forming a Nonprofit
3. Creating a Mission Statement
4. Considerations When Starting a Nonprofit
5. Overview for Starting a Nonprofit in Colorado
About Nonprofit Organizations
Many nonprofits are designated as 501(c)(3) organizations that are formed for specific purposes, such as scientific, educational, religious, literary, or charities. These organizations are eligible for state and federal tax exemptions.
There are several advantages to a 501(c)(3) nonprofit, including:
- The ability to apply for grants.
- The ability to accept donations.
- The ability to limit the officers and directors from liability.
- Not being required to pay federal corporate income tax.
As part of a nonprofit organization, you make the cause legitimate through credibility and instilling confidence in the community.
Requirements for Forming a Nonprofit
The following is a list of mandatory forms and requirements necessary to start a nonprofit organization.
- Articles of Incorporation, which require a clause detailing the nonprofit's purpose and a clause with a provision covering the dissolution of assets. The articles are filed with the Colorado Secretary of State.
- A request form for a name reservation.
- An incorporator's statement.
- A registered agent.
- A set of bylaws.
- Internal Revenue Service (IRS) Form 1023, which is an application for recognition of exemption.
- Form SS-4.
- Form DR 0715.
- IRS Form 990.
- An IRS determination letter.
- You must register with the Colorado Secretary of State as a charitable organization with the Division of Public Charities.
Creating a Mission Statement
The focus of the mission statement is to clearly outline and explain the purpose of your organization. The statement serves as an identifier of the core purpose of the organization and as a guide to decision making.
Determine the issue, problem, or cause that will be the focus of what the organization addresses. Once you've made that determination, consider the effort it will take and the values you want to guide the nonprofit.
Considerations When Starting a Nonprofit
When forming a nonprofit, there are several things to consider to ensure you're taking the right steps.
If you're interested in learning about the operation of a nonprofit organization, consider volunteering. This will provide you with insight into the operation, structure, and services that are provided while increasing your experience, which is needed for a successful organization.
Research Existing Organizations
This is an important step as you don't want to duplicate services already being provided by another organization. It's better to bring something new and beneficial to the community. The research will help identify other organizations that could become future partners.
Mission and Programs
Your mission statement identifies the organization's purpose. With this in mind, decide what programs or services the organization will provide to support the nonprofit's mission.
A nonprofit organization must have a board of directors unless this is specifically noted in the articles of incorporation. Who will sit on the board is a crucial decision, and directors should be chosen carefully. How future directors will be selected is also something to consider.
Overview for Starting a Nonprofit in Colorado
- Form a Colorado corporation.
- Apply with the Internal Revenue Service and the State of Colorado for tax-exempt status.
- Choose a name for the organization. The name doesn't have to be in English, but it must be translated into English to file. It can't be a duplicate name of another corporation already registered with the state. To avoid this, check for name available at the Secretary of State website.
- Recruit the initial directors and incorporators. Directors are the governing body. Select three individuals who aren't related to avoid potential conflicts of interest per IRS requirements. An incorporator is a person who signs the Articles of Incorporation.
- Be aware of age and residency requirements for directors and officers in Colorado.
- Appoint a registered agent. The agent must physically reside in Colorado and have an office with regular office hours. The agent is responsible for receiving all legal paperwork on the organization's behalf.
- Prepare and file the articles of incorporation.
- Obtain a nine-digit Employer Identification Number from the IRS. Use Form SS-4. Filing is free.
- Prepare the organization's bylaws.
- Obtain an unemployment insurance tax account number if the organization has employees.
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