Starting a nonprofit in Washington State

Although my study area is Singapore, I thought it would be useful to understand how to start a nonprofit in my current state of Washington. Luckily, there are several resources and guides to use along the way and I hope to provide some clarity and simple explanation of this process. I've included LOTS of links throughout, so make sure to check them out! To start, here is a great introduction video:

In the video, the 5 Pathways for Starting a Nonprofit in Washington State is mentioned. This is an interactive graphic that walks you through the steps to take, along with resources needed to start your own nonprofit. Roll your cursor over any of the shapes in the columns (after clicking the graphic below).

A nonprofit is a type of organization that is created to accomplish a public benefit. Start here for all the Washington state resources about nonprofits. Below, I've laid out what I think the steps to starting a nonprofit in Washington may look like.

1. Planning - It's helpful to know the end goal of where you are going on this journey. Collect thoughts about your idea and how you would like to implement it. Share this with others who may care about your idea or those who have some nonprofit experience. Think about who the organization will serve, how it will serve the community, and how it will be run and be funded. This can be considered your business plan and knowing this information may be helpful to develop answers for if you are pursuing tax-exemption on the IRS application. Below is a sample business plan outline:

Screenshot taken from the Secretary of State, Starting a Nonprofit in Washington State.

2. From your collected thoughts, ideas, and business plan organization, you can then create your nonprofits mission statement. This statement will provide a purpose for your organization and will help guide the rest of its formation. Here is a really good resource for information about creating mission and vision statements along with some helpful examples. Once you know the purpose of your nonprofit, you can research and develop a name, ensuring to search to check the name isn't already taken in the state, as well as checking with the US Patent and Trademark Office for an application here. 

3. A nonprofit's Board of Directors is an integral part of the organization and as such should be given careful consideration in this next step of starting a nonprofit. 

This video is a great starting point along with this site, providing informative videos, covering the five main areas of board practice: connection to the cause, roles and responsibilities, how to build a great board, board operations, and how to engage board members in fundraising. According to the Washington Nonprofit Handbook, "A nonprofit is governed by a board of directors drawn from and representative of a larger community of people who care about the mission of the organization", leading to board composition the next step of starting a nonprofit in Washington. Your board can then also set and decide on an administrative calendar, develop an electronic filing system, and assist in registering the name and logo.

4. According to the Secretary of State of Washington, all corporations must have a Registered Agent (a person or business named to receive legal documents on behalf of the corporation) with a physical address within Washington state, which will receive annual reports, notices, and service of processes of the organization they represent. You can then apply to become a nonprofit corporation with the state, called incorporation. Every year thereafter, you are then required to submit an Annual Report. Assets must now be kept separate from person ones and board meetings and decisions must be documented. Congratulations, you're getting closer!

5. Next on the Federal checklist is to apply for an Employer Identification Number (EIN) for tax administration purposes. The first board meeting should also be around this time and program design, the business plan, budget, and fundraising plan should be discussed. A sample board meeting agenda can be followed below:

        a.  Once the board has selected a bank, you should make contact and determine what documents will be required to open an account. Most banks require the Articles of Incorporation, Bylaws, EIN, and information about each of the Directors. You will also want to set up an accounting system.

        b.  Drafting and approving the bylaws provide the nonprofit's internal operating rules and will establish procedures for electing directors, outline duties and powers, and provide notice for time and place of meetings. You may want to consult legal assistance with this and should visit Community Rise site (this organization provides free or low-cost legal services). Find out how you can apply for these services by clicking here. 

        c.  Find out if your nonprofit will file for tax-exemption and apply here. This would make the nonprofit's revenue exempt from federal income taxes and accepting only donations from foundations and organizations as tax-deductible. This can also be called "501(c)(3) tax-exemption/organization" because of the tax code it is associated with and these organizations are required to follow a set of federal tax rules under section 501(c)(3). *This step, along with filing the Articles of Incorporation must be filed within 27 months of incorporation for tax-exempt status to be retroactive to date of incorporation.

6. Certain kinds of businesses, the hiring of employees, or a trade name may need an application for a Master Business License. Nonprofit organizations in Washington are taxed like any other business, like paying business and occupation taxes on gross revenue and sales taxes. Visit this site to learn more. Additionally, if you choose to hire employees, set up Human Resource and payroll systems. 

7. If the public donates money in excess of $50,000 in a year or if anyone is paid to do the organization's work, you need to apply to become a Charitable Organization. This also requires an Annual Renewal each year thereafter. Click here to learn more information. Side-step to the operations part of the start-up process and start fundraising! While this is a lengthy webinar, it covers donor retention, types of donors, how the board will assist with fundraising, and the overall fundamentals of fundraising. Check it out below:

8. Volunteers are a vital component to a nonprofit management program and the various roles to be filled should be discussed. Proper volunteer engagement begins with the intentional matching of interests and talents with the particular jobs you need done. Another long video, but well worth the time, as it provides helpful guidance and additional resources is here. You can also start a gantt chart to help look at your project management, looking at individual tasks, their length, and expected completion. 

9. Join organizations, like Washington Nonprofits or other organizations with similar visions as your nonprofit. Think about and if needed, buy insurance. Work on a Risk Bow Tie diagram to visualize a risk event your organization faces and plan your next steps to address prevention and corrective controls. Watch this quick video for further explanation: 

10. CONGRATULATIONS! You've completed the checklist to start a nonprofit in Washington state! It's time to celebrate!