Becoming the founder of a nonprofit organization can be a rewarding way to make a difference in the world. Texas has a vibrant and active nonprofit community that spans through various fields such as research, social services, education, and more. Starting a nonprofit can be challenging but at the end of the day, anything that can make a difference and improve people's lives is worth it. Here is a simple guide of how to start a nonprofit in Texas:
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Step One: Set your mission and vision
Figure out what your nonprofit will stand for and set a clear mission statement for others to follow. What problems does your nonprofit seek to tackle? Once you figure that out, make sure the goals you set are attainable and measurable in reasonable ways. Ensure you can track the effectiveness of your efforts and make improvements when necessary.
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Step Two: Build your board and committee
Every nonprofit needs a governing board to guide the organization. These individuals should be likeminded and passionate about your mission statement and possess unique skills that can help move your organization forward. There should be at least three board members and all board members should conduct themselves in a fiduciary manner. Additionally, appoint an advisory committee consisting of individuals who are subject experts and who can add value to the organization by providing unique perspectives on matters such as governance, financial management, fundraising, policy, data management, or professional networks.
Step Three: Incorporate
Next, file the mandatory installment form and the articles of incorporation form AOC. The filing fee for corporation by the state of Texas basically costs US $25 per page following articles of incorporation that are required or necessary. You can submit the documents online at the Secretary of State website. Additionally, ensure that the name chosen for your nonprofit is unique and original by referring to the Texas Secretary of State's online database. It is also necessary that the chosen name shouldn't provide unfavorable public connotations or indicate the beginning of charitable lawless misconduct.
Step Four: Seek 501(c)(3) Tax Exemption
The next step is to apply for tax-exempt status with the Internal Revenue Service under section 501(c)(3), so the organization can effectively fundraise and receive donations from individuals and from grant opportunities. To do this follow the transitional directives specified by the directives of Internal Revenue Code and file the Form 1023 or Form 1023-EZ which involves providing detailed information about the governance aspects of the organization, mission statement, background checks, a flagship project etc. There is a filing cost of $600 for form 1023 and $275 for EZ formation.
Step Five: File the Required Annual Reporting for the State of Texas and the IRS.
To stay active with previously awarded nonprofit status, Nonprofit organizations are expected to engage in ongoing yearly mandatory charity notifications (BoCL) to the Texas Secretary of State and to submit a form 990 with Supporting Organizations or Section 501(c)(3) final acknowledgement notice to the IRS, usually in May. Nonprofit experts typically recommend filing an automated extension because the handouts for plenty of money accounts not usually composed for some period after the economic calendar closes.
It can seem complicated to start a nonprofit, but it can also be incredibly fulfilling if you take your time and familiarize yourself with the processes. Reach out to other nonprofits, business organizations, and local authorities for insight and guidance. Know that there is a diverse community of people out there who care about the same things that you and your organization do. Good luck on your journey to starting a nonprofit!
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