Creating a charity can appear to be a daunting task to someone who has never done it before. While it does require a fairly large sum of money to start up, you do not have to be a rich philanthropist in order to create a charity. However, it does require a great deal of research to be sure that you're complying with the state's regulations and you should consider consulting with an accountant who has dealt with charities before.
- Skill level:
- Moderately Challenging
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Decide what the mission/goals are for your charity. What is your charity for? Who does it benefit? If you're unsure about what kind of cause you want your charity to support, study the needs of your community to see what may be missing. Research is imperative at this point, particularly since you may find that another charitable organisation in your city is raising money for the same cause.
Decide on the organizational structure of your charity. Most charities are set up as a corporation, with a structure that includes a president, vice president and board of directors. Many states require at least three people for a non-profit to be incorporated. Check the guidelines for your state for what's required for incorporation. Create the articles of Incorporation and file them with your state.
Research charitable organisations and decide what kind of charitable organisation you wish to create. This will depend on your charitable goals. There are five different types of charitable organisations that fall under the 510(c)(3) guidelines with the IRS. Once you have decided on what kind of charity you wish to create, file the appropriate forms with your state in order to be recognised as a charitable organisation.
File for an EIN number. You will need a Federal Employer Identification Number so that the IRS is able to identify your organisation when filing taxes. This will also be necessary if you hire employees for your organisation. You can apply for an EIN number online.
Get recognition from the IRS that you are a non-profit charitable organisation. This is important so that your organisation will not have to pay Federal income tax and that the contributions you receive are tax deductible. You can find the application under "charities" at the IRS website. The IRS does have a backlog of applications, and it can take three to six months before you receive a decision from the IRS.