Nonprofit organizations have the ability to reach people and causes that often go overlooked. Nonprofits work tirelessly to solve the world’s problems, from homelessness and hunger to disease prevention and children’s literacy.
A nonprofit corporation is a tax-exempt organization that is in service to the public and therefore, has specific legal rules to follow. The most common tax designation is the 501(c)(3) public charity. According to the IRS, the 501(c)(3) nonprofit is exempt from federal income tax if it has charitable, religious, educational, scientific, or literary purposes, tests for public safety, fosters amateur sports, or prevents cruelty to children or animals. Nonprofits have specific legal and tax rules, such as bylaws and a volunteer board of directors, to make sure that donations are used properly.
There are over one million public charities registered with the IRS as of 2013. This number increases every year as gaps in basic needs grow.
And this is where the nonprofit starts: with a need. It is often one that has affected you directly because of something you experienced or observed. The need is addressed in your nonprofit’s mission statement and is the reason why you’re fundraising for your cause. Whether your need is urgent or unique, it should be stated clearly in your nonprofit’s fundraising and marketing materials.
Now that you understand your nonprofit’s need, why should you take the steps to start your own nonprofit? Here’s why you should make the move.
The funds go where they are needed most.
Sharpe Group says, “A nonprofit organization has the capacity to directly change people’s lives. When a for-profit business or corporation wants to change lives through public service, they can’t just hand out money in public or show up at people’s homes with food.” They make financial or volunteer contributions to nonprofits that are already serving the cause they want to support. The for-profit business gets credit for its charitable contributions, and the nonprofit gets additional funding or support for its mission.
Charitable contributions to your nonprofit go directly to your public service, with a portion of that going to keep your nonprofit afloat. This means that your nonprofit can use those contributions to help others in more direct ways. For example, when you set up a nonprofit to help kids read over the summer, contributions to your nonprofit will go to purchasing books and supporting the staff or volunteers who are helping the kids. As long as you can show that people’s donations are benefiting your program and not to buy vacations for your retired parents, then you can continue to do the work you feel is important.
You can make a difference, big or small.
The size and capability of your nonprofit depend on the size of your cause. If you want to end world hunger, you would need an organization that raises millions of dollars in donations each year, with a large staff and board of directors to keep everything running smoothly. This might take decades to establish. And you might find that there are other nonprofits already doing this work well.
But if your neighborhood needs mural art to cover graffiti, you could start a nonprofit that raises funds for paint and cleaning supplies. Your nonprofit can buy snacks for volunteers doing graffiti cleanup or commission local artists to paint murals. At the end of the day, you can feel good about making a positive change in your community.
The National Council of Nonprofits is an excellent resource for toolkits and practical advice on starting your nonprofit so you can make a difference in the world.
