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How to Start a Non Profit Organization From Square One

Updated on June 3, 2012

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It is Hard to Know Where the Beginning is

I have always had a soft spot when it came to homeless persons, and I have done a lot of research concerning the homeless, who they are, and why they are homeless.  I found out through much questioning, that the number one homeless person are veterans.  They get out of the service, a lot of times injured or handicapped, and the next thing they encounter is that their families have moved on without them, divorcing them, and they have no home to go to.  It is really a sad situation, but very true.  Number two are young people, mostly those who have had no learning in how to take care of themselves, latchkey, and when they hit eighteen hears old, their parents give them the boot.  Unless they have taken steps to go on to college, they are doomed.  Thirdly, are the mentally ill, addicted, and emotionally unbalanced persons who are just plain lost.

I decided about five years ago to open a homeless shelter aimed at the vets in our area, who are plentiful.  I am not going to go into what happened with my plans, for that is an entirely different story, but due to trying to open a shelter, I went through all the steps needed to legally become a non profit organization and get a grant from the government to facilitate my plans.

When I began, I thought that getting the grant, and applying for my non profit status was the first steps, but I was wrong.  I made appointments with a financial planner, and then with my bank, and this is what I found out were my beginning steps.

The financial planner told me that I should work with my bank for I had had accounts with them for over a decade, and they knew me best, and then told me that after I had done that, then I would be ready to get a grant, and not before.

So, I made the appointment with a loan officer at my bank, and they said that most people try and fail to get the non profit status, mainly because they apply before they have anything to show the board who decide these things.  They told me that just having a plan on paper is not usually enough to prove to them that a plan will work, that after some work, like opening a bank account with the name of the organization, using my own SSI # but being sure to keep all transactions very separate from my personal transactions.  They also said to work with a charity that is already established, showing that I was able to do charitable work sufficient enough to get somewhere.  Lastly, they said that I had to get a fictitious name search through the county records to make sure that the name I had chosen was not already being used.

Well, I had my work cut out for me that was for sure.  I had to have fifty dollars to open a checking account, and I had to find a way to get donations for my organization.  I contacted our local Catholic Charities, and talked to a worker there who agreed to give me cash reciepts for any and all donations of clothing to them to be handed out to homeless in our area, so that was a big help.  I collected used clothing for months and months and collected the receipts for them.  These receipts  became very valueable later on. for they proved in cash amounts how much effort I was putting into our local homeless community.

There is also a bit of writing and paperwork that must be organized, and a manuscript type of outline as to what the organization will be doing, the exact plans on how it will be run, for example how it will be staffed, and how, besides the grant it will be financed, for the grant is only supposed to be used for getting it started.  So I then had to write a thrift store into my plan and this would not only help finance the organization and its running needs, but it would greatly come in handy for outfitting the shelter with the needed household goods, plus a bonus that I had not thought about, it would start some of my homeless people get a beginning as far as working, and this would be a big plus in the eyes of the board.

There was a lot more to it than I had thought.  I also found out that one cannot get a grant for this sort of thing unless you have a well established organization, like the small business administration, the veterans administration, or something along these lines that is willing to fill out the application for the grant for you, for if it is not done perfectly, it will be rejected and you won't get the needed grant.

It was a lot to think about and more to do than I had anticipated.  The help of others is almost a must.  The person who's name and SSI # is being used on the Bank account, will be the president or head administrator for the organization, rather like the owner.  The short of that one is that if something goes wrong, or something is not done correctly, this is the person who will be held liable.

By law in California, when you have your non profit status, or have it pending, an amount equalling 7 % of all monies accrued must go back into the organization directly.  The remainder can be used for administration costs, paychecks for staffing and that sort of thing, as well as a paycheck for myself.  It did not seem like a very sizable amount, and I then understood why we have so many thrift stores in town using the names of various organizations, like the Humane Society, and Battered Women's etc.  It is very profitable for being non profit, especially considering that it keeps you from having to pay taxes on any of it.

This is the basic rules, regulations, and needs for starting a non profit organization;.  I am still working on mine, and after five long years, I am a bit closer, but am having trouble with our county allowing me to have it here in our town.  Ironic, is this not?


Submit a Comment

  • JY3502 profile image

    John Young 

    8 years ago from Florence, South Carolina


    I was a manager for a men's homeless shelter for 7 years. I quit when the organization went for faith based initiative money. Sure enough, the place went to hell in a hand basket. No more church. All that mattered was numbers. I still get angry because I had put my heart and soul into it.


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