Many get confused when it comes to what a non profit organisation is. A non profit is also known as a not for profit or also a charity. Instead of being in business to make a profit this organization’s key focus is on charitable causes. Because the non profit organization does not make a profit it acquires its funding from donations. Donation can come from a variety of ways including but not limited to grants, businesses or gifts from individuals. These donations must be used to further the nonprofit’s mission or given to other non profit organisations.

Charitable purposes for a non profit organization, as defined by the IRS can be spiritual, academic, scientific, literary, testing for public protection, cultivating national or international amateur sports levels of competition, and stopping harshness to children or animals.

The focus of a non profit organization is very different from its counterpart the for profit business. Planting trees misunderstand that a non profit is able to have funding. It also conducts business much the same as a for profit business in relation to being able to pay salaries and expenses. The main difference is its funding comes from donations and it has a charitable purpose rather than a purpose that is solely for profit.

Many when beginning to start a non profit organisation stop short of completing it because of the difficulty they face in its creation. Although many encounter difficulty in creating a non profit organization it is mostly due to lack of information. The creation process is not as difficult as determining the steps needed to create the non profit. By following the steps below forming a nonprofit is straightforward.

Non Profit Organisation Formation Steps
1. File non profit articles of incorporation with the state business is to be done in
2. Obtain an Employee Identification Number
3. To govern the non profit, draft bylaws for the board of directors to ratify
4. Open a banking account for the non profit
5. Create a Board of Directors
6. Fill out and file the IRS 1023 Form with the IRS

Details on these steps can be found at the links below.

Once the above steps are completed the formation of the non profit organisation is complete. The only step above that might be wise to consult an expert on is the IRS Form 1023. It is important that this form is completed correctly, and extra time should be given to it. Once completed, the IRS Form 1023 needs to be filed with the IRS.