How to Start Your Own Charity in 5 Simple Steps

Last Updated: 

October 3, 2023

Thinking about starting your own charity? 

Whether you are an individual, a family, or a corporation, launching your own charity allows you to make a difference in the world and give something back. 

If you want to create your legacy or there is a particular social issue you feel is unaddressed, then the guide below will tell you everything there is to know about starting your own charity. 

Read on to discover how to start your own charity in just five simple steps. 

Key Takeaways on Starting Your Own Charity

  • Write a Clear Mission Statement: Craft a concise mission statement that defines your charity's purpose and its response to a pressing social need.
  • Choose Trust or Non-profit: Decide whether your charity will be a trust or a non-profit, considering the regulations and personal liability implications of each.
  • Seek Legal Help: Hire a lawyer to handle legal matters and ensure compliance with laws and regulations. Appoint a board of directors to oversee operations.
  • Apply for EIN: Obtain an Employer Identification Number (EIN) online through the IRS for tax purposes, enabling you to open a bank account and apply for credit.
  • File for Tax-Exempt Status: Apply for tax-exempt status based on your charity type and maintain it by following state bylaws and keeping detailed records of activities.
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Step 1: Write your mission statement 

The first and arguably most important step is that your charity’s mission statement tells people what your cause is about and can be instrumental in attracting supporters. 

Make sure your mission statement is clear and concise and that it effectively conveys why you are starting your own charity and how it will respond to a pressing social need. 

Step 2: Decide between a trust or non-profit 

Next, you need to decide whether you want your charity to be a trust or a non-profit organisation. 

The former comes with fewer regulations, whereas the latter offers greater protection against personal liability. 

If you are not sure which route to go down, it can be a good idea to seek the help of an independent advisor. 

Step 3: Hire a lawyer

If you launch your own charity, you need to hire a lawyer to take care of any legal matters for you. They will be able to ensure you are compliant with any laws and regulations and facilitate the entire process of starting your charity. 

You also need to appoint a board of directors who will help to make decisions for your charity and oversee operations. They can also help you to keep on top of bookkeeping and help you save money on your taxes, such as with tax deductible donations

Step 4: Apply for an Employer Identification Number (EIN)

 An employer identification number, also referred to as a federal tax identification number, is a number that is used to identify a business entity. This number is used for tax purposes and is a must for all new charitable organisations. 

You can apply for an EIN online via the IRS, and this is a free service that enables you to obtain your number right away. 

Once you have your EIN, you can also open a bank account for your charity and apply for credit if needed. 

Step 5: File for tax-exempt status 

To ensure that you do not pay taxes, you must file for tax-exempt status. Depending on the type of charity that you have formed, there are different forms that you have to fill in. You can find out more about filing for tax-exempt status here

You must also take steps to maintain this status, such as adhering to state bylaws and keeping detailed records of all your charity’s activities. 

Lastly, don’t forget to file your federal tax forms each year, which shows how your organisation handles raised funds. 

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