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How Do I Start a Nonprofit?

Posted by Jonathan Krems | Nov 02, 2021 | 0 Comments

Well, it's the holiday season, and last Tuesday was “Giving Tuesday.”  Many nonprofits use “Giving Tuesday” as a time to promote their nonprofit and raise funds for their cause.  Periodically I get asked by people, “How do I start a nonprofit?”  So, in today's Freedom Friday blog and email newsletter, I am going to answer the question, “How do I start a nonprofit?”

The first part of this answer is that you are asking the wrong question.  Instead of asking, “How do I start a nonprofit?” you need to ask, “How do we start a nonprofit?”  The reason why that's a better question is that in Oklahoma, it takes at least three (3) individuals to start a nonprofit.  If you have three (3) people who wish to come together and form a nonprofit, here are some steps you need to take to start a nonprofit:

1.  Define Your Purpose

The first step in starting a non-profit organization is to define your purpose.  You need to be able to articulate a charitable purpose to the Internal Revenue Service (IRS) in order to receive 501(c)(3) status.  It is important to hire an attorney who can assist you with this first step because the charitable purpose statement must be included in your Certificate of Incorporation and/or your non-profit's bylaws, both of which are usually submitted with your 501(c)(3) application to the IRS.

2.  Choose a Name for Your Nonprofit

The second step in starting a non-profit organization is to choose the name.  This is also an important step because you cannot choose a name used by another nonprofit, or even a for-profit, entity.  There are a lot of options here, but again its best to consult with an attorney who can lead you in this process and conduct a name search to make sure you are not using a name already used by someone else.  You might also consider choosing a name which can be trademarked, and so you might ask your attorney to perform a trademark search on your behalf, as well.

3.  Chose a Business Entity for Your Nonprofit

The third step in starting a non-profit organization is to choose the business entity.  In most situations in Oklahoma, you will want to form a non-profit corporation.  This will almost always be the best choice.  In some limited circumstances, you can choose an LLC, but the LLC will need to meet 12 additional requirements under IRS regulations.  The Oklahoma Secretary of State will also require you to list three (3) incorporators for your non-profit corporation.  Thus, you cannot form a non-profit corporation in Oklahoma by yourself, it is a team sport.

4.  Draft the Bylaws for Your Nonprofit

The fourth step in starting a non-profit organization is to draft the bylaws.  The bylaws of your nonprofit should be drafted by an attorney, and then executed by your board of directors.  Not only should your bylaws include your purpose statement, but the bylaws should outline the responsibilities of the board of directors, and the roles of each officer of the non-profit organization.

5.  Maintain Corporate Formalities

After you have formed your nonprofit corporation, it is important to maintain corporate formalities to separate the nonprofit's assets from your own personal assets.  The nonprofit needs to obtain its own EIN number and have its own bank account.  Its also important to document everything, including the minutes of each board meeting once the nonprofit is formed.

If you are interested in starting a nonprofit anywhere in Oklahoma, or even if you're interested in starting a small business, please contact me at [email protected] to schedule a FREE strategy session.

For more information about Liberty Legal Solutions, LLC, please visit our website at http://www.libertylegalok.com/

About the Author

Jonathan Krems

Jonathan is the Founder and Managing Attorney of Liberty Legal Solutions, LLC, a law firm dedicated to building, protecting, and defending the business and personal interests of our clients in Oklahoma.  Jonathan's primary practice areas are business law, contracts and agreements, business liti...

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