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Starting a Nonprofit

This guide offers information and resources on starting a nonprofit in Colorado.

Forming a Nonprofit Corporation

In order to form a nonprofit, you will need to have the following:

 

EIN

Also, known as the Federal Employer Identification Number.  Think of it as the nonprofit's social security number.

Colorado Nonprofit Incorporation

You will need to file the Articles of Incorporation with the Colorado Secretary of State office.  This does not mean you have received your nonprofit status.  You have registered as a nonprofit with the State of Colorado.  You will only be considered a nonprofit when you have received your 501(c)(3) designation letter from the Internal Revenue Service (IRS).  

Board of Directors

A nonprofit is run by the Board of Directors.  They are legally, financially, and morally responsible for the operation and oversight of the nonprofit. Colorado law does allow nonprofit corporations to have as few as one member.  However, to allow for diversity and representation, it is recommended that a board consists of at least five members.  

Board members should not be family members or personal friends.  You want a board that believes in your mission and is willing to work towards the success of the nonprofit.  They should understand they are responsible for budgeting, planning, fundraising, determining policies and procedures, public relations, program evaluation, board development, and, in some cases, hiring an executive director and staff. The Executive Director and/or staff will be responsible for the day-to-day running of the nonprofit.

Remember, once the nonprofit is established, you do not "own" the nonprofit.  You will need to decide if you wish to be the Executive Director of the nonprofit or serve on the Board of Directors.  You will have to choose.  The Board of Directors does have the authority to fire the Executive Director, even if you founded the nonprofit.  

Mission Statement

Your nonprofit will need to have a mission statement, which states what the organization is trying to accomplish, who they will serve, and how they will serve.

Bylaws

Nonprofit bylaws are the guidelines for how the organization is run.  Will the board of directors be elected, if so, how often? Will you have paying membership? Will the membership vote on the board of directors? Think of these as the manual that guides the operation of the nonprofit.

Articles of Incorporation

This is the nonprofit's formal structure.  It contains the organization's name, address, and registered agent.

Apply with the IRS

Once you have completed the above steps, you will want to apply for the nonprofit designation from the IRS by completing Form 1023 or Form 1023-EZ depending on how large you expect your nonprofit to grow.  There is a difference between the two forms, one being the 1023-EZ has an income limitation if $50,000 each year for the first three years from filing.  Be sure to consult the Instruction sheet for each to determine which is the best route for you to take.

This application can be a long and time-consuming process.  If you are completing Form 1023, you should expect the application process to take 12-18 months to complete.  It is possible you will be asked to revise your form.  

Remember: You are not a tax-deductible organization until you receive the official designation from the IRS.  This means you cannot issue tax-deductible receipts until you receive that designation letter from the IRS.

Register as Charitable Solicitor

In Colorado, if you are going to solicit funds, you must register with the Secretary of State as a Charitable Solicitor.  This is a nominal fee of $10. NOTE: If the organization is soliciting in other states, you may wish to research whether there is a similar filing in that state as well.

  

 

Starting a Nonprofit Assistance

Gale Small Business Builder provides a resource that will guide you through the process of planning your nonprofit. A portfolio of your foundational documents will build in the sections so you can easily view your progress and the work you've done. You can also download or email key elements of your "Build Your Foundation" documents directly from the builder. 

The Community Resource Center offers a Start-Up for Success Workbook that you can purchase and download from their website that will guide you through the start-up process step-by-step.  You can find the workbook at https://crcamerica.org/resources/nonprofit-startup-resources/

Harbor Compliance will actually complete all of the required documents to form your nonprofit in any state you prefer, for a fee.  Feedback from local organizations that have used this service has been positive.  You can find more information on their services at https://www.harborcompliance.com/nonprofit

Startup Assessment Tool: This assessment is for people who are either considering or are already in the early stages of starting a nonprofit. Questions will assess background knowledge, capital, and work experience that are relevant to starting a nonprofit.  Once the assessment is complete, the results will provide customized resources to guide your team on identifying funding, navigating the legal process, developing a business plan, and launching programs.