Churches, Do These Three Things Before You Start Your Nonprofit!
Is your church looking to reach the community in a stronger way? Establishing a separate 501(c)(3) is a powerful strategy to achieve this goal. This designation allows your church to address tangible needs, strengthen community outreach, and secure funding to support these efforts. But how do you make that happen?
Here are three essential steps to take before obtaining your coveted 501(c)(3) letter of determination:
1. Focus on One Program
When consulting with churches about starting a nonprofit, many aspire to implement the "dream center" model, providing extensive support across various needs—single mothers, the elderly, daycare, after-school programs, food pantries, and more. While these initiatives are noble, it's challenging to manage and fund multiple programs simultaneously.
Let’s consider a practical example. Suppose you secure funding for four different initiatives at $5,000 each. This amount may be insufficient to run each program effectively, requiring additional planning and staffing. Alternatively, obtaining four grants for a single program at $20,000 provides a solid foundation to develop and refine your operations.
Tip: Pick one initiative and run with it. This focused approach makes it easier to establish a clear mission and vision, ensuring you can fulfill your grant requirements effectively.
2. Assemble Your Team
Once you have your single program idea, the next step is to assemble your team. The IRS mandates that all nonprofits have a board of directors, consisting of at least three unrelated members to avoid application rejection. When selecting board members, consider these guidelines:
Choose Your Board Members Like the Disciples, Not Like the Avengers: People often seek out the most prominent names—the mayor, a wealthy philanthropist, or a local celebrity. While influential names can be beneficial, it’s crucial to assemble your team like Jesus chose the disciples. Select individuals passionate about your mission from diverse backgrounds and demographics. This diversity not only enriches your board but also strengthens your grant applications.
3. Gather Your Paperwork
Setting up your paperwork is crucial. If you anticipate making less than $50,000 each of the next three years, you qualify to use IRS Form 1023 EZ, which is shorter and about $300 cheaper than the standard form. While the form itself may not require all documents, you must affirm you have the necessary paperwork:
Articles of Incorporation: Obtain these from your state’s office.
Employer Identification Number (EIN): Apply directly through the IRS website to avoid third-party fees and delays.
Bylaws: Have a lawyer review your bylaws to ensure proper operation.
Conflict of Interest Policy: Establish a policy to manage potential conflicts within your board and staff.
Mission, Vision, and Elevator Pitch: Although not mandatory for the form, having these elements helps maintain focus on your objectives and target audience.
I understand this process can be daunting. To help you navigate these steps without spending hours on government websites, I offer personalized assistance. Schedule a 30-minute sales call to get started on our nonprofit starter pack here.
Become True Missionaries to Your Community
Our services assist churches and faith-based nonprofits in establishing 501(c)(3) status and developing funding strategies. This allows your church to focus on its mission to reach the community while we handle the funding.