How to Start a Nonprofit: 9 Steps (Plus Lessons From a Founder Who Started With One Bunk Bed)

Starting a nonprofit in the U.S. usually means nine steps: clarify your mission, research what already exists, choose a name, recruit a board, incorporate in your state, get an EIN, adopt bylaws, apply to the IRS for 501(c)(3) tax-exempt status, and register for state fundraising and tax requirements. Below is each step in plain English — plus lessons from a founder who started with a single bunk bed.

Before you start: lessons from one bunk bed

In 2012, Luke Mickelson built a single bunk bed for a family in his Idaho community. That small Christmas project became Sleep in Heavenly Peace, which by Luke’s count at the time of our Inspire & Impact interview had provided beds for nearly 450,000 children. A few lessons from his story apply to almost every founder:

• Start with one person. Luke didn’t begin with a business plan — he began by noticing a need and acting on it.
• Small moments compound. His “tiny moments” philosophy is that small acts of kindness, repeated, create extraordinary change.
• Design for others to lead. Growth came through local chapters run by volunteers — not by Luke doing everything himself.
• Watch for founder syndrome. Letting go of control was one of his hardest — and most important — lessons.

How to start a nonprofit: 9 steps

1. Clarify your mission

Write one or two sentences that answer: who do you serve, what problem do you solve, and how? A clear mission guides every later decision — and your incorporation documents will need a purpose statement.

2. Research what already exists

Look for organizations already doing similar work in your area. You may have more impact by volunteering, starting a local chapter of an existing nonprofit, or using a fiscal sponsor (an established nonprofit that accepts tax-deductible donations on your project’s behalf) while you test your idea.

3. Choose a name

Check that the name is available with your state’s business registry, and search for existing trademarks and website domains.

4. Recruit a board of directors

Nonprofits are governed by a board. State minimums vary (often one to three directors), but the IRS and donors look for an independent board — not just family members. Choose people who share your mission and bring different skills.

5. Incorporate in your state

File articles of incorporation (sometimes called a certificate of incorporation) with your Secretary of State or equivalent office. To qualify for 501(c)(3) status later, your articles should include a purpose clause limiting the organization to charitable purposes and a dissolution clause saying remaining assets will go to another charitable organization if you close.

6. Get an EIN

Apply for an Employer Identification Number from the IRS. It’s free and is needed to open a bank account, hire staff and file with the IRS.

7. Adopt bylaws and key policies

Bylaws are your internal rulebook: how the board is elected, how meetings run, how decisions are made. Most organizations also adopt a conflict-of-interest policy, which the IRS asks about.

8. Apply for 501(c)(3) tax-exempt status

Apply to the IRS online through Pay.gov using one of two forms:

• Form 1023-EZ — a streamlined application with a $275 user fee, for smaller organizations. You’re not eligible if you expect annual gross receipts above $50,000 in any of the next three years, or have total assets over $250,000.
• Form 1023 — the full application, with a $600 user fee, for everyone else.

Requirements and fees can change, so always confirm the current details on IRS.gov before filing.

9. Register with your state and stay compliant

Many states require charities to register before asking for donations, and you may need to apply separately for state tax exemptions. Each year, most tax-exempt organizations file a version of IRS Form 990; very small organizations can usually file the short electronic Form 990-N.

How to fund a new nonprofit

• Individual donors: your first supporters are usually people who know you and believe in the mission.
• Community events: Sleep in Heavenly Peace grew through community “build days” that turned donors into hands-on volunteers.
• Local businesses: sponsorships, in-kind donations and employee volunteer days.
• Grants: foundations often want to see a track record first, so start building one early.

Common mistakes to avoid

• Formalizing before proving there’s a real need
• Building a board of friends who won’t challenge you
• Mixing personal and organizational money
• Missing annual filings — the IRS can revoke exempt status for repeated non-filing
• Trying to do everything yourself

This guide is general information for U.S. organizations, not legal or tax advice. Rules vary by state, so consider talking to a nonprofit attorney or accountant before you file.