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What Do You Need to Start a Charity Foundation – Learn the Steps Required

charity foundation

If you frequently volunteer in charities and NGOs and enjoy being a social worker, why don’t you consider your own charity foundation? Starting a charity is definitely a philanthropic venture, but it also indirectly benefits you and your company and contributes to future growth. Many people have left and more are leaving their corporate jobs and establishing their own start-ups. If you also have joined the league, you can try your already ‘for-profit’ business even more scaling by starting a non-profit with its name.

While your founding principle should be a genuine desire to make a difference, your business can take advantage from its benefits, including – charity raises a company’s profile in the local community, social responsibilities and activities bring staff and customers together, creates a harmonious environment amongst staff and boosts employee positive thinking, all of these enormously contributing to growth and success.

Anyone with dedication, direction, and management capability can establish a charity foundation. You may have a great idea and vision for a charity but without knowing the process steps, implementing them can be tricky. Follow our steps on by one, and we assure you, by the end of it, you will have a successful charity running.

Steps to Start a Charity Foundation

Step 1: Find Your Inspiration – Vision, and Mission

To start a charity, you need to have a very strong and fulfilling vision in place. For a vision, you need to identify a cause, need, or a problem that needs your support and addressing. Your vision should stem from an inspiration, which cannot have quantifiable measures but rather a description of what you want to create.

Before you write your vision and mission down on papers, you will have to thoroughly research the need or problem – what is it, what is causing it, how serious it is, how it is harming the society and what measures can be taken to solve the problem?

Once this is done, you will have to develop a mission statement. A Mission statement should be concrete, measurable, have a purpose, and should deliver intent. Your mission will speak about the basic purpose of the charity organization, such as – what it is, what it does, what it addresses, how it addresses, and what is the offered services.

You have to ensure whatever purpose you choose for your charity, the solutions of it are achievable, measurable, and specific. And above all, it should help the society in more than one way.

Step 2: What Kind of Charity Should Yours Be?

Your charity vision should complement your goal. You have to decide if your foundation will be identified as a 501(C)(3) non-profit organization or as a charitable trust.

If you want to start a 501(C)(3) non-profit organization, your services must be charitable, must fit a  certain category, and must adhere to certain restrictions in terms of lobbying activities and political engagement. Your chosen purpose can focus on religion, education, science, literary, public safety, prevention of crimes or altruistic, such as helping the underprivileged. Additionally, you should not run your charity for the benefit of private interests.

Trusts are private organizations that focus more on the allocation of money rather than the allocation of community services. You have to look for donors for support. You cannot rely on inconsistent public funding to run the trust.

Step 3: Come Up with a Name

Charities are mostly associated with their names. If you want people to donate to your organization, you need to describe the function of your charity through the name. Examples include Save Child, World Vision, American Cancer Society etc.

You can also name your charity in memory of credible people who lived with a mission to help others. Mother Teresa Child Foundation could be an apt name. Or, you can name the charity after someone who is or was related to the functions of your charity.

Step 4: Lay the Foundation of Your Charity

Go through the articles of incorporation of a charity foundation available on the web pertaining to your country or state. Your state’s Secretary of State Website is the most viable place to collect required information related to structure, duration of operation, name, permits, limits etc.

In the US, you can apply for your charity online by filling out forms. Your charity foundation should run on set values and ethics. Therefore, you must develop the bylaws of your organization as well. The Bylaws will define the rules that govern your charity – rules how decisions are made, who makes the decisions, how conflicts will be resolved, and what type of structure will direct the charity.

While not all states mandate non-profit organizations to have Bylaws, they are nevertheless useful in running organization smoothly.

Moving forward, it is a wise idea to set up a board of directors, basically volunteers, who will guide the charity and help make growth decisions. Significant donors and fundraisers will also be part of the advisory council. The council must have prior experience in charity and non-profit works. The board should not be too big a size, not more than 15 members.

Step 5: Do the Necessary Paperwork

You need to register your business as a non-profit, tax-exempt organization. The IRS code to this is 501(c)(3).  Look up the Internal Revenue Service website, otherwise known as IRS website to find out the paperwork required to be filled and applied to run a charitable organization. The IRS reviews applications for recognition as non-profit organizations. Before you apply for the federal charitable status, you must complete setting your Bylaws and articles of incorporation, and ensure they are accepted by the secretary of states.

If you are already running an established company, then you should know the filing processes. However, if you are new to this and find this entire thing confusing, look for a reliable and experienced lawyer and accountant for support and guidance.

Your existing company’s lawyer can also be hired for your new non-profit foundation.

Step 6: Start Raising Funds

A non-profit organization, although does not make any profit, needs funds to operate and accomplish their goals. Most businesses set aside a certain amount from their net profit for their social responsibility projects. It is highly recommended that you raise funds for a year’s project at least.You could use your personal funds for your charity trust or raise fund through fundraising events and supporting events.

First, find out how much funds you need to start the charity and complete initial targets. Next, prepare a list of potential donors who you think can donate well for your organization. You can also include friends and relatives in your list. However, you will need more and more donors as your organization grows. Some of the target donors that you can seek are other charitable foundations, individuals, and corporate organizations.

Raising funds may take some time and energy. You will be rejected several times. The path you have chosen is not easy. Nevertheless, staying with your vision and keeping your faith high will definitely help you in the long run.

Today social media gives us immense opportunity to put our thoughts and ideas forward, and garner attention. You can use Facebook, Twitter, LinkedIn, and Instagram to create awareness about your charity and raise funds.

You can also go with crowdfunding and angel donation options. Whichever way you choose to raise funds, make sure you behave and act professionally and follow ethics while doing so.

Step 7: Find a Mentor

You have to look at the financial aspects and the bigger picture of the organization as well, such as cash flow, investment, and VAT. As a registered charity, you will be expected to provide information about your finances, activities, donors, services, trustee,and other elements to the public. As a registered charity, you will stand the chance to become completely exposed. Therefore, to handle all of these, and stay fair and just, you need a mentor who would guide you and show you right from the wrong.

Your mentor can be a lawyer, a business consultant, a business veteran, or someone from the non-profit field itself.

Alternatively, if you don’t want to get into so much of hassles, yet want carry some charity work, you can set up an unregistered charity. An Unregistered charity may not get the right kind of recognition, but it will give you more freedom and flexibility, and fewerrules and regulation.

Step 8: Stay Active and Network in Your Community

You have to do something that potential donators recognize you and show interest in what you do. Moreover, they should stick with your organization for years to come. And, the best way to do so is staying in the limelight, advertise what you are doing and how it is going to help mankind.

Make sure your goals, your services,and its benefits are served to the public and potential sponsors every now and then. You could form a partnership with another charitable organization to establish a donator base. You can participate as a volunteer in one of their projects to build credibility and recognition.

Alternatively, you can consider organizing less expensive events, such as sporting events, painting,and drawing competition, entertainment shows, celebrity related shows etc.

Step 9: Begin Operations

As we understood earlier, you must acquire funds for at least a year of operation. Do not start the charity through loans and debts. This is not a business and most likely, you will get zero returns. You have to be extremely wise and stingy while spending money. You can expect help and heavy donations every other day. You have to do as much as possible for the community with limited access to funds.

Keep in mind that ethics and moral values should be above everything. You cannot act corruptly if you are running this organization. Your spending should all be directed towards the mission of the non-profit organization. Not even a single dime should go in your pocket or in the people’s working there.

Most successful non-profit organizations spend 80% to 90% of their funds in events and projects, and the remaining on administrative work and fundraising processes.

If you are an efficient organization, donors will automatically start flowing in, because they want their money to be utilized for the right cause.

Five Tips to Raise Funds for Charity

Money and regular cash flow is the only important factor that can change the operations of a charitable organization. We have hereby cited a few ways to raise funds for the purpose:

  • Let other non-profit organizations know that you are raising funds for your projects. Find out if they are doing any events or promotions that you can use to leverage a fundraising event.
  • Run your own fundraising event. Do not do it alone though. Seek volunteers and help and delegate tasks to each. A fundraising event may require an upfront financial investment. You can cut back costs by requesting local businesses and retailers to sponsor for the event, in the form of foods, drinks, or other supplies.

For instance, if you are organizing a drawing competition, you can ask a local business to sponsor for drawing boards, sheets, colors and snacks, or sponsor the venue.

  • Ask guests to donate for your cause. If you are volunteering for a social project, you can ask the guests of that event to donate whatever they wish to. In order to raise funds, you can also charge a basic entry fee from the guests for a ticket to the show or event.
  • Alternatively, you can ask your guests to pull in money for a specific item or activity at the event. By making them part of your event you will boost their interest and engagement. This will help you to keep them in the loop for future projects.
  • Organize a social media competition that meets your purpose (best unique hashtag, slogan writing contents, storytelling, share your hero’s story etc) could be a great idea to promote your charity.
  • Ask donators to volunteer their labor for your projects. For instance, if your donator is a great baker, ask him to bake items that you can sell and raise funds for your charity.

These were the essential steps you require and tips that you can follow to start a charity foundation. Hope you are able to help as many underprivileged people as you can and earn respect.All the best. For any help or suggestions do write to us in the comments below.