Good work: Three steps for starting your own charity
Has starting your own charity ever crossed your mind? If it has, you are not alone. Thousands of new charities are started each year by people who are passionate about causes to help others. So how can you get started?
Here are three steps to success.
1. For profit, or nonprofit?
If you've got a cause you're passionate about, first decide whether you want to start a charity, or a business. The rules and tax advantages are different, and so is the way you fund the enterprise. Charities keep the lights on by getting donations. Businesses keep the lights on by selling goods or services. Either way, you've got to pay employees and run a budget.
2. The state and the Feds.
If you decide starting a charity is for you, your next step is to set up your legal entity. It's just like starting a business, and you file your articles of incorporation with the state. The forms are a little different for nonprofit organization. And, unlike a for-profit business, to start a nonprofit you need to apply to the Internal Revenue Service for an exemption under Section 501(c)(3). This exemption is what allows your organization to be free from paying income tax, and also allows people to donate to your organization and be eligible for a tax deduction on their own tax returns.
3. Sell, sell, sell.
Most people who start a charity are passionate about a cause and probably already have programs in place or in mind to help others. The trick, though, is to get out there and share the news about your cause to raise money. It's just like selling, only you are asking for donations to support your good work instead of selling goods or services like you would in a for-profit business.
Remember, there are more than 1.3 million charities in America, and every single one of them is asking people for money. Making sure your charity stands out is the ticket to success.