How to Start a Charity
So you are wondering how to start a charity.
If you have a passion for a worthy cause, and if you recognize certain needs in your community that aren’t being addressed, you may want to consider starting a charity.
Starting a charitable organization may provide assistance to members of your community or even individuals in any part of the world. It is important, therefore, to first determine the needs of the individuals you are interested in helping. Are they being assisted by other charitable organizations? Are there areas in which the assistance is lacking or nonexistent?
Steps on How to Start a Charity
Once you have determined the direction you want to take regarding your charity, there are a few important steps that must be taken to ensure that your charitable organization is recognized by the state and the federal government. Here is a guide on how to start a charity:
- Decide whether you want your charity to be a charitable organization or a charitable trust. In general, a charitable organization is a non-profit corporation that is involved in charitable activities or the allocation of community services, while a charitable trust is involved with the allocation of money. You can find more information on the difference between charitable organizations and charitable trusts by visiting the Internal Revenue’s website at https://www.irs.gov/
- Once you have determined which kind of charity you want to start, you should then draft a mission statement. Your mission statement will be a short, defined description of the overall focus of your charity and how it will serve the community. Most mission statements are just a few sentences.
- Next, you will need to draft your charity’s Articles of Incorporation, which is an important document that essentially answers all of the important questions about your charity. Some of the points covered in your charity’s Articles of Incorporation will include the purpose of the charity, the duration and type of charity, and how the charity will be structured. Most states have online forms to use when constructing your Articles of Incorporation.
- After your Articles of Incorporation have been drafted, you will need to create a set of bylaws for your charitable organization. Your charity’s bylaws will deal with the decision-making of the charity, who will make the decisions, how the charity will be set up, and which governing structure will oversee and direct your charity.
- Next, file an application with the Secretary of State for your particular state. Most charities are considered corporations in the eyes of the state, so you will need to fill out the appropriate paperwork and pay the related fees to create a corporation for your charity.
- Contact the Internal Revenue to receive your charity’s Employer Identification Number, or EIN. Your EIN is important for tax purposes and is required for hiring employees. You can apply online through the IRS’s website at https://www.irs.gov/, or you can call them at 1-800-829-4933.
- You will also need to file for a charitable status with the IRS. This form, which is available online, requires that you first become accepted by the Secretary of State and that you have completed your Articles of Incorporation and bylaws.
- Arrange a board of directors, as well as a registered agent for your charity. A registered agent will receive all necessary communication from the state regarding your charity.
With an understanding of how to start a charity, you can now begin to truly make a different in your local community or even the world.