You have the best idea. You know just what will help. You’ve talked to friends and they are onboard or supportive. You’re going to start a non-profit and save the world!
First things first
Just like a for-profit business you need to organize. You’ll want to visit IRS.gov Charities and Nonprofits section and figure out what sort of organization you will become. Are you a church or spiritual organization? Are you a school? Are you filling a need in your community? Write out your mission statement (you will use this later) and dive in.
You, of course, will have to take many of the same steps any business will take such as forming your organization, enlisting a Board of Directors, writing ByLaws, applying for an EIN, applying to your state for an employer identification number, opening a bank account…
What about those donations?
You can operate as a non-profit organization and collect donations and hit the ground running. What you can’t do is offer your donors any tax benefits, or have your organization be tax exempt unless and until you have applied for and received a 501(c)3 determination from the IRS. Keep in mind too that you will likely also have to apply for your state’s tax exempt status as a separate application if you want your organization to be relieved of paying state tax on the organization’s income.
You still do have to report to the IRS and your state what your organization has brought in each year on what programs. If you are a small organization your filing can be as simple as an electronic postcard. But do keep in mind your organization has been given an “exempt purpose” by the IRS, so if your purpose is to provide meals for homeless pets, then the funds you raise to provide that service will be tax exempt. If, however, you start selling T-shirts in a local shop with cute puppies – even if your proceeds will go towards those same puppies breakfast – you are not in the T-shirt selling business and are therefore subject to paying tax on that income.
Be good at doing good
Even though your purpose may be altruistic you still need to think like a business. And all businesses need to keep good books in order to continue. You will already be in the habit of asking for help, so don’t forget to get help with your books and accounting!