Key Takeaways

  • Starting a nonprofit begins with defining its purpose and crafting a clear, focused mission statement.
  • A mission statement should be concise, practical, and legally useful for incorporation and tax-exempt applications.
  • Beyond the mission, nonprofits must develop a business plan, select an appropriate legal structure, and comply with state and federal registration requirements.
  • Building a board of directors and adopting bylaws are essential for governance and credibility.
  • Securing 501(c)(3) tax-exempt status, fundraising strategies, and compliance policies are necessary steps for long-term success.
  • Thoughtful planning at the beginning makes starting a non profit smoother and helps avoid costly mistakes later.

Many organizations want to jump in right away with forming a legal organization and applying for tax-exempt status.  However, first, you must decide the purpose of your non-profit. To do this, you should think about the need or problem to be solved and how you could solve it. Researching the problem, talking with people in the area, and spending time thinking about how you will make a difference are some great ways to get the ball rolling. You should be able to answer the question “Why does this organization exist?”.

The second step in creating a non-profit organization is writing a mission statement. Your mission statement explains the purpose of your organization and acts as the guiding principle for your non-profit. Drafting a good mission statement is very important, as it will guide the decisions you make as an organization. Once you’ve crafted your mission statement, you’re ready to hit the ground running in forming your non-profit. 

What does a mission statement look like? 

A mission statement should be one to two sentences long. It is clear and concise. It states the big-picture strategy of what your non-profit organization is going to do. Usually, this will include the problem or need, the stakeholders (people around the problem), and how the non-profit is going to solve the problem or need.  

Research and Validate Your Nonprofit Idea

Before formalizing your nonprofit, research whether other organizations already serve the same need in your community. Overlap is common, and funders often hesitate to support duplicative efforts. Conduct a needs assessment: talk to stakeholders, review existing services, and gather data to demonstrate why your nonprofit is necessary. This validation not only strengthens your mission but also positions you to attract grants, donors, and community support.

What does a mission statement not look like? 

The mission statement shouldn’t be overly complicated or have a big, fancy vocabulary that no one can understand. You want your mission statement to be understandable for everyone! Also, your mission statement isn’t a catchy slogan and shouldn’t have any buzzwords. The substance is what’s important. 

Why is a mission statement important? 

From a legal perspective, a mission statement is important because it is necessary to include it in your organizational formation documents and application for tax-exempt status.  But, a mission statement is even more important because it motivates your team, serves as a reminder of the goal of your non-profit, and tells the world who you are and what makes you special. In the future, your non-profit may run into a problem or tough decision. You should be able to use the mission statement as a tool and reminder of the ultimate goal. Also, you might want to work with another non-profit or business in the future, or you may need funding from a third-party. Your mission statement adds value to your nonprofit because it helps other people see what you do and why it's important. 

Choose a Legal Structure and Incorporate

Once your mission is clear, the next step is incorporation. Most nonprofits start as nonprofit corporations at the state level. Incorporation protects board members and founders from personal liability and creates a legal entity that can own property, hire staff, and enter contracts. The incorporation process typically requires:

  • Filing articles of incorporation with your state’s business filing office.
  • Paying a modest filing fee.
  • Including your mission statement and basic governance provisions.

Incorporation also lays the groundwork for applying for federal tax-exempt status under Internal Revenue Code 501(c)(3).

How should I begin writing a mission statement? 

Writing a mission statement can be hard, but you don’t need to write the mission statement alone. You can start by asking your team, prospective board members, mentors, and other stakeholders about your mission statement ideas to see if they have any ideas. You can spend time thinking, talking, and debating different ideas and wordings. It's important to get the team around you involved since they will be joining you on the mission. You want everyone to be on the same page! 

Form a Board of Directors and Draft Bylaws

Every nonprofit needs a governing board of directors. States typically require at least three directors, though more is recommended for healthy governance. The board’s duties include overseeing finances, ensuring compliance with laws, and keeping the organization accountable to its mission.

Equally important is drafting bylaws—your nonprofit’s internal rulebook. Bylaws outline decision-making processes, officer roles, meeting requirements, and conflict-of-interest policies. Strong bylaws provide stability as your nonprofit grows.

I’ve got the mission statement ready. What should I do next? 

Congratulations! This was an important first step. Now it’s time to start making your mission a reality with the next installment in this series: Preparing a Business Plan.

Apply for 501(c)(3) Status and Register with State Agencies

To accept tax-deductible donations, you must apply for recognition of tax exemption with the IRS using Form 1023 or Form 1023-EZ. Approval can take months, so plan accordingly. Alongside the federal application, many states require nonprofits to register for charitable solicitation before fundraising. This ensures transparency and compliance with state regulators.

Develop a Fundraising and Sustainability Plan

A nonprofit cannot thrive without funding. Create a diversified fundraising strategy that may include grants, individual donations, corporate sponsorships, and events. Avoid relying on a single funding source, as this makes the organization vulnerable. Sustainability also means developing a budget, financial controls, and policies for transparency. Funders and donors want to see accountability and clear use of resources.

Implement Policies and Begin Operations

As your nonprofit launches, adopt key policies such as conflict-of-interest, whistleblower, and recordkeeping rules. These demonstrate accountability and protect your nonprofit’s credibility. At this stage, you can begin delivering programs, recruiting volunteers, and building partnerships. Starting small with pilot projects can help refine your approach before scaling.

Frequently Asked Questions

  1. What’s the first step in starting a non profit? Define your purpose and write a clear mission statement that answers “Why does this organization exist?”
  2. Do I need to incorporate my nonprofit? Yes. Incorporation provides liability protection and is generally required before applying for tax-exempt status.
  3. How do I get 501(c)(3) tax-exempt status? You must file Form 1023 or Form 1023-EZ with the IRS and wait for approval, which can take several months.
  4. How many board members do I need? Most states require at least three directors, though larger boards are common to provide oversight and expertise.
  5. Can I start fundraising before getting IRS approval? You can raise funds after incorporating, but in most states you must register with the attorney general or charitable solicitation office before soliciting donations.

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