Want to start a nonprofit in Maryland but don’t know where to begin?
In this blog, we’ll help you launch your very own charity in the state — from understanding how to choose a name to obtaining an EIN.
12 steps to create a nonprofit in Maryland
- Step 1: Research and plan
- Step 2: Name your organization
- Step 3: Choose a corporation structure
- Step 4: Recruit an Incorporator and a Board of Directors
- Step 5: Appoint a registered agent
- Step 6: File Articles of Incorporation
- Step 7: Obtain an EIN
- Step 8: Hold a board meeting and establish bylaws
- Step 9: Apply for federal and state tax exemption
- Step 10: Register for charitable solicitation
- Step 11: Start fundraising
- Step 12: Remain compliant
Step 1. Research and plan
When considering starting a nonprofit in Maryland from scratch, it can be hard to know where to begin. When deciding to take on the endeavor, it is important to get clear on a few fundamental things, including:
- Community needs: Consider what problems you want to address or what positive changes you want to make.
- The market: Research nonprofits in Maryland that work in similar areas or address similar issues. Identify any gaps or needs that your nonprofit could address.
- Your goals: Clarify your nonprofit's specific goals and objectives. Determine what you hope to achieve in the short term and long term.
- Your mission statement: Write a clear and concise mission statement that articulates who you are, what you do, and who you serve.
- Feedback: Seek feedback from stakeholders, potential beneficiaries, and members of your community to ensure that your mission statement accurately reflects community needs.
Step 2. Name your organization
Once you’ve determined your organization’s core mission and goals, it’s time to name your nonprofit. Not only is this step in the process important for marketing and branding purposes, but it’s also a crucial part of the legal process of starting a nonprofit in Maryland.
When deciding on your organization's name, be sure to choose a name that:
- Reflects your mission and goals
- Describes what you aim to do
- Is easy to spell and pronounce
- Offers room for future growth
Then, once you’ve found a name, ensure that it’s not already in use by another organization in Maryland by searching on the Maryland Department of Assessments and Taxation website.
It’s also important to note that the name of your Maryland nonprofit must include “Company", "Corporation,"; Incorporated"; or "Limited" (all of which can be abbreviated).
Step 3. Choose a corporation structure
In the state of Maryland, organizations can be one of three types of nonprofit entities:
- Religious: A religious corporation is formed for religious purposes and is typically associated with a specific faith or religious denomination.
- Tax-exempt nonstock: A tax-exempt nonstock corporation is a nonprofit organization that is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code.
- Nonstock: A nonstock corporation is a nonprofit organization that does not issue stock or pay dividends to shareholders. These organizations are formed for various purposes, including social, educational, charitable, and civic activities.
Step 4. Recruit an Incorporator and Directors
Once you’ve determined your organization name and confirmed that it is not already in use, it’s time to create a leadership team.
Identifying an Incorporator and a Board of Directors is not only a strategic decision that can help make your nonprofit a success, but it’s a required one in Maryland.
- Incorporator: Nonprofits must recruit at least one Incorporator who will be responsible for signing the Articles of Incorporation.
- Directors: You must assemble a board of at least three directors who will help guide your nonprofit through strategic decision-making.
When choosing your leadership team, be sure to select people who are trustworthy, dependable, and bring a skillset to the table. Whether they’re already a member of your organization or a trusted volunteer, they’ll help you make crucial decisions about your charity.
Step 5. Appoint a registered agent
Appointing a registered agent is a vital step when forming a nonprofit in Maryland. In essence, a registered agent acts as a reliable point of contact for legal matters. This designated individual receives important documents and official correspondence on behalf of your nonprofit, such as legal notices and tax forms.
The registered agent must be located in the state of Maryland and available during regular business hours.
Step 6. File Articles of Incorporation
One of the most crucial steps in starting a nonprofit in Amryalnd is filing the Articles of Incorporation using the Maryland State Department of Assessments and Taxation website. In doing so, you’ll officially establish your nonprofit as a legal entity in the state.
When filing, you’ll need to include essential information such as the organization's name, purpose, duration, registered agent, and initial directors. You’ll also need to pay the required filing fee, which ranges from $100 - $150, depending on your organization and selected add-ons.
Step 7. Obtain an EIN
In Maryland, like in other states, nonprofits are required to obtain an EIN, or Employer Identification Number. An EIN is like your organization's social security number. It's used for tax purposes, including opening bank accounts, hiring employees, and applying for tax-exempt status.
To get an EIN, you can apply online using the IRS Form SS-4 on the IRS website or submit it by mail. The application process is free, and you'll receive your EIN shortly upon approval.
Step 8. Hold a board meeting and establish bylaws
Once you’ve established your Incorporator and your Board of Directors, it’s time to host a meeting.
At this leadership meeting, you’ll develop bylaws that outline the internal rules and procedures that govern your nonprofit's operations. Though these differ from organization to organization, they often outline officer descriptions and roles, conflict of interest policies, and more.
In essence, these rules will serve as the foundation for how your nonprofit will function.
Step 9. Apply for federal and state tax exemption
Once you’ve created your bylaws, you’ll need to apply for both federal and state tax exemption.
- Federal Tax Exemption: Apply for federal tax-exempt status under section 501(c)(3) of the Internal Revenue Code by submitting IRS Form 1023, IRS Form 1023-EZ, or IRS Form 1024. This status exempts your organization from federal income tax and allows donors to make tax-deductible contributions.
- State Tax Exemption: Once you have your IRS determination letter, you can apply for state tax-exempt status with the Maryland Comptroller's Office. This status exempts your organization from certain state taxes.
Step 10. Register for charitable solicitation
Next, you’ll need to register for charitable solicitation with the Maryland Secretary of State.
It’s important to note that nonprofits that that received less than $25,000 in the previous fiscal year must file the Exempt Organization Fund Raising Notice.
Organizations that receive more than $25,000 must file the Registration Statement, or COR-92.
Step 11. Start fundraising
Once you’ve filed all of the appropriate forms and established the necessary regulatory foundation for your nonprofit, it’s time to start fundraising.
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Step 12. Stay compliant
As a legal nonprofit in the state of Maryland, you’ll need to remain compliant with federal and state rules and regulations throughout the year. This includes:
- Maintaining records: Keep accurate and up-to-date records of your nonprofit's activities, finances, and governance. This includes meeting minutes, financial statements, tax filings, and other important documents.
- Filing annual reports: File annual reports with the IRS to maintain your nonprofit's legal and tax-exempt status.
- Staying Informed: Stay informed about changes to Maryland state laws and regulations affecting nonprofit organizations. Attend training sessions, workshops, and webinars to learn about best practices and compliance requirements.
How to start a nonprofit in Maryland? Download the 2024 checklist!
Learn how this Maryland nonprofit raised over $300,000 for free
Boys and Girls Christian Home Ministries, Inc. is a Maryland-based organization dedicated to providing nutritional and educational resources to poor and vulnerable children. Since its beginnings, the Boys and Girls Christian Home Ministries has been determined to break the cycle of poverty with love, care, and stability to help children learn and grow.
Like most nonprofits, Boys and Girls Christian Home Ministries needed an innovative solution for raising money and expanding their reach in order to support their programs. In particular, their small team needed a solution that was simple, powerful, and easy to use, and could be customized to fit their unique brand. That meant that they needed a donation form that they could embed right on their website, and would allow donors to give any way they wanted to.
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Since using Zeffy, Boys and Girls Christian Home Ministries has raised $312,820 and saved over $15,000 in fees
How to start a nonprofit in Maryland FAQs
How much does it cost to start a 501c3 in Maryland?
The cost of starting a nonprofit in Maryland can vary. However, there are a few common costs to be aware of:
- Filing fees: These fees typically range from $50 to $100, depending on the type of organization and the method of filing.
- Legal fees for drafting articles of incorporation and bylaws: If you choose to hire legal counsel, fees can vary depending on the complexity of your nonprofit's structure and governing documents.
- IRS application fee for tax-exempt status: If you're applying for federal tax-exempt status under section 501(c)(3) of the Internal Revenue Code, the IRS application fee ranges from $275 to $600, depending on the type of application (Form 1023 or Form 1023-EZ).
How do I start a nonprofit organization by myself?
Here's how to start a nonprofit organization by yourself:
- Step 1: Research and plan: Develop a strategic plan outlining the mission, goals, and activities of your nonprofit.
- Step 2: Name your organization: Choose a unique and descriptive name that reflects the purpose of your nonprofit.
- Step 3: Choose a corporation structure: Decide on the legal structure that best suits the activities of your organization.
- Step 4: Recruit an Incorporator and a Board of Directors: Identify individuals to serve as the incorporator and recruit a board of directors.
- Step 5: Appoint a registered agent: Designate an individual or entity to receive legal documents on behalf of the organization.
- Step 6: File Articles of Incorporation: Submit the necessary documents to officially incorporate your nonprofit.
- Step 7: Obtain an EIN: Apply for an Employer Identification Number (EIN) from the IRS, which is necessary for tax purposes and opening bank accounts.
- Step 8: Hold a board meeting and establish bylaws: Convene the board of directors to adopt a set of rules for governing the organization.
- Step 9: Apply for federal and state tax exemption: Seek tax-exempt status from the IRS and applicable state agencies.
- Step 10: Register for charitable solicitation: Register with the appropriate state authorities to legally solicit donations from the public.
- Step 11: Start fundraising: Generate financial support for your nonprofit's programs and initiatives.
- Step 12: Remain compliant: Stay informed about and adhere to all legal and regulatory requirements.
How many board members are required for a nonprofit in Maryland?
Maryland nonprofit organizations are typically required to have at least three board members. However, it's generally recommended that you have a larger board to bring diverse perspectives, skills, and expertise to the organization
How much do nonprofits make in Maryland?
Nonprofits' revenue can vary widely from year to year, depending on factors such as the organization's size, mission, and activities.
According to research, the nonprofit sector in Maryland contributes significantly to the state's economy — the over 30,000 nonprofit organizations in the state reported $77.6 billion in revenue on their most recent tax filings.
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