How to Start a Charity: 10 Basic Steps

Starting a charity is no easy process. Many people come from the business world and decide they want to open a nonprofit so they can create positive change in the world. They believe that opening a nonprofit will be a piece of cake. However, this is typically not the case. Starting a charity requires a lot more time, effort, and money than most people realize. This process can be even more difficult if you are unsure about how to start a charity.

However, this is not meant to discourage you, but rather give you a more realistic view of things. With these ten steps, you can learn how to start a charity and make the world a better place.

human hand supporting drawing

10 Steps to Tick and Learn How to Start a Charity

1. Develop Your Mission Statement and Vision

When learning how to start a charity, developing both a mission statement and a vision is one of the most important steps. This way, you can define what you want to create and actually do with your charity.

However, your mission statement should be a statement of intent for your company. For example, what it does, who it’s for, and how it serves. Nonetheless, your charity’s mission should be challenging, yet achievable. You should also create a number of values that your organization leads by.

2. Choose Your Name

It’s vital that your charity name describes what the organization does, so people will want to support it. For example, the American Cancer Society. However, at the same time, many successful charities are named after people, such as The Jimmy Fund.

Naming a charity in memory of a person, with a strong mission statement, can help encourage people to make donations. You can even gather sponsors for a possible event.

3. Figure Out How to Stand Out

In the United States alone, there are over 1.5 million nonprofits, according to The National Center for Charitable Statistics. However, most of these organizations compete with each other for funding the same cause.

This is why it’s so important to create a charity that will set it apart from the competition and make potential donors passionate about supporting your cause.

4. Create a Plan

A large part of your charity’s plan should already be planning out your vision, mission, and name.

However, you should also be planning out a five-year strategy of fundraising efforts, budgeting, and other important factors.

5. Register as a 501(c)(3)

The next step in how to start a charity is to register your charity as a 501(c)(3), which refers to the IRS code that will allow you to operate as a tax-exempt, nonprofit organization.

However, make sure that you have both a lawyer and accountant on your staff to advise you on how to properly register and operate in cooperation with government rules.

6. Create Your Website

You can use your charity’s website as a fundraising tool, as well as an announcement board for intentions, upcoming plans, important dates, etc.

But, most importantly, you should use it to seek leads for donations to your charity.

7. Start Fundraising

You can put your own funds into your charity, but we suggest that you plan on raising support from other donors. Although this can generally include close relatives and friends, you should work on expanding your support to foundations, grassroots organizations, and other individuals.

However, once you develop your plan to reach out to other donors, you should work on contacting grant-making organizations that focus on your mission statement. You should expect to make plenty of calls and attend numerous meetings to do so. But, don’t get too discouraged if you get a few no’s. Creating a charity takes time and effort, just make sure you stay as professional as possible.

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8. Create an Advisory Board

Your advisory board should be made up of people who have experience in the nonprofit world with things like finances and general operation. Their expertise will help you to have a successful launch. You should formally meet with your board either weekly or monthly though, to start, they should be available to offer advice and assistance whenever needed.

After your charity is up and running, you can grow your advisory board to include:

  • Significant donors;
  • Potentially significant donors;
  • People with lots of fundraising connections.

However, make sure your board does not become too big. Try to keep it at around 20 members. Also, remember that board members are unpaid.

9. Open for Business

Before you commit to any sort of cash outflow, you should have raised enough money to fund both the initial capital requirements and a year’s worth of operating costs.

Try not to go into debt to start your nonprofit. Remember to spend as little as necessary and stretch your cash as much as you can. Most of your money should be going to your charity’s mission, not into your wallet.

10. Focus on Spending Efficiently

Down the line, you will likely need to hire some professionals to help run the nonprofit. However, make sure you are always cautious about your spending. When it comes to charitable organizations, you will want to spend 80 percent on program expenditures and 20 percent or less on administration and fundraising.

Nonprofits who have a higher ratio of program to administrative spending even have an easier time fundraising. People donating money want to know that their cash is going to the charitable cause, not your employees.

Wrapping Up

Though starting a charity is a very noble pursuit, it can also be a difficult one. It can be even more challenging when you do not know how to start a charity. With these ten basic steps, you will be well on your way to starting your charity and creating positive change in the world.

Do you have any experience in the nonprofit industry? Share your experiences in the comments below!

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