A nonprofit is a corporation, just like General Motors, or Sears, or McDonald's.

You file the incorporation documents with your home state the same way.

There must be an official address and place of business, by laws, a board of directors, board meetings, and minutes of those meetings.

They are required to file formal reports on their financial activities with the state AND the feds.

And you must be an adult to file the legal forms.

Once the org incorporates, it must apply to the IRS for a tax exempt status.

Those rules are under section 501(c) of the IRS code.

Most charities are under (c)(3).

Labor unions are under c5.

There are 31 different categories.

Until you do that, YOU DO NOT HAVE A NONPROFIT ORGANIZATION.

You have a hobby.

And all of the money that you raise IS TAXABLE.

And you are not permitted to solicit money from the public until you have a state-issued solicitation license.

Violations can result in hefty fines and even jail time.

Yes, really.

"Nonprofit" means that the corporation has no owner and no stock.

When the corporation brings in more money than it spends, the excess is called a "fund balance", instead of a "profit".

That fund balance can be re-invested in the corporation or held in savings for future projects or for lean times.

The board of directors makes those decisions.

"Tax exempt" status means that That means that the ORGANIZATION does not pay taxes on its income.

The EMPLOYEES of the organization pay their personal taxes under the same rules as everyone else.

And yes, nonprofits can and do have employees, just like McDonald's.

Approximately 10% of the American work force is employed by nonprofits.

Individuals who donate money to c3 orgs can deduct it from their income taxes, if they itemize.

Donations to other categories - c4, c5, etc. are not deductible.

There are thousands of state and federal rules governing activities, finances, and reporting.

For example, c3 orgs CAN NOT endorse political candidates and there are strict limits on the lobbying that they can do.

That's why labor unions can endorse candidates and churches can't.

C3 and C4 orgs can be eligible for government grants for their work.

They can also solicit money from charitable foundations.

But then the foundations will come to their offices and tell them they're doing everything wrong and refuse to give them any money unless they change everything they do.

And even then they might not give the money.

I hate foundations.

There are thousands of organizations already doing the work that you want to do.

And they're already competing for VERY scarce dollars.

Find a good one and volunteer.

http://serve.gov/

Take relevant classes in high school and college.

Eventually, you can get a paid job with a nonprofit.

You could get a degree in nonprofit management.

Look at http://www.irs.gov/charities/index.html

There is more info at www.foundationcenter.org

Source(s):

28 years as volunteer, staff, manager, board member, board president, and consultant to nonprofit corporations.