Starting a Nonprofit

Words to know

Questions to consider before starting a nonprofit

  • Do you have less than $5,000 per year in gross receipts? Any organization that has gross receipts in each tax year of normally not more than $5,000 are not required to file for tax exemption. For more information on gross receipts exceptions, go to irs.gov/charities-non-profits.
  • Are you able to maintain formal business records? As a nonprofit, your organization must maintain accurate business records of all activities, revenues, and expenses.
  • Can you fill your board of directors? Indiana requires a minimum of three board members at all times. When a board member leaves, another must be elected or appointed.
  • Does your organization have a proper tax-exempt purpose? Those purposes are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.
  • Is your organization large enough to justify forming a corporation? If your membership is small and your organization does not handle much revenue every year, you may not be large enough to justify the expense and obligations that go along with forming a nonprofit.
  • Can your organization afford to form a nonprofit? The cost to file an application for tax-exempt status starts at $275. The cost to file articles of incorporation in Indiana is $93.

If you answered “no” to any of these questions, consider these alternatives to starting a nonprofit.

Step-by-step instructions for starting a nonprofit

Alternatives to starting a nonprofit

  • Start a local chapter of a national nonprofit. Look for a national organization with a purpose similar to your own that is willing to start a local chapter in Bloomington. This option saves your organization the time and expense of starting a nonprofit on your own, but allows you to continue your mission.
  • Start an informal social club. If your organization makes an insignificant amount of revenue, hosts activities that are local and small, and does not involve a lot of traveling, sports, physical activity, or other events that would expose its members to injuries or other risks, you might consider maintaining an informal social club.