Starting a nonprofit in North Carolina requires careful planning, strategy, and a whole lot of forms. To learn how to launch your own charity, follow these 10 steps and best practices.
How to start a nonprofit in NC in 10 steps
Step 1: Choose a name
Selecting a name for your organization is a crucial first step in starting a nonprofit. When deciding yours, be sure to consider:
- Your mission: Consider the purpose and goals of your nonprofit. Think about the impact you want to make and the values you want to uphold. Your name should reflect these core principles.
- Existing names: Before finalizing your decision, make sure the name is available for use as a domain name for your website and on social media platforms. You'll also need to ensure it's available for registration with the North Carolina Secretary of State.
- Readability: Choose a name that is easy to pronounce, spell, and remember. Avoid overly complex or lengthy names that may confuse or alienate potential supporters.
- Future growth: Choose a name that will still be relevant and meaningful as your organization grows and evolves. Avoid names that are too narrow or specific to current activities.
Step 2: Recruit Directors and Incorporators
When forming your own nonprofit in North Carolina, you’ll need to assemble a board of directors. When recruiting them, be sure to choose wisely. These candidates will need to be committed to your organization's mission and bring diverse skills and perspectives to the table. Plus, they need to be reliable and trustworthy.
Incorporators
- Number: North Carolina requires at least one incorporator to form a nonprofit corporation. An incorporator is an individual or entity responsible for signing and filing the articles of incorporation with the North Carolina Secretary of State.
- Qualifications: Incorporators must be individuals or entities legally capable of forming a corporation in the state of North Carolina. There are no specific residency requirements for incorporators.
Responsibilities: Incorporators are responsible for preparing and filing the articles of incorporation, which includes providing basic information about the nonprofit, such as its name, purpose, and registered agent.
Directors
- Number: A nonprofit corporation in North Carolina must have at least three directors. Some organizations may choose to have more than three directors for additional governance and expertise.
- Qualifications: Directors must be individuals who are at least 18 years old and legally capable of serving in that role. There are no specific residency requirements for directors, but they must be willing and able to fulfill their duties.
- Responsibilities: Directors are responsible for overseeing the affairs of the nonprofit corporation, including setting policies, making strategic decisions, and ensuring compliance with laws and regulations. They have a fiduciary duty to act in the best interests of the organization and its beneficiaries.
Step 3: Appoint a Registered Agent
You'll also need to appoint a registered agent. A registered agent is an individual or entity designated to receive legal and official documents on behalf of the nonprofit organization.
In NC, all nonprofit corporations are required to appoint a registered agent who has a physical address (not a P.O. Box) in the state. The registered agent must be available during regular business hours to receive legal and official correspondence, such as service of process (lawsuits), tax notices, and other important documents regarding state tax exemption.
Step 4: File Articles of Incorporation
Next, you’ll need to file for articles of incorporation. This is the legal document that formally establishes your nonprofit as a corporation in the state of North Carolina. To do so requires basic information like:
- Name of the Organization: It should also include a corporate designation such as "Corporation," "Incorporated," "Company," or an abbreviation thereof.
- Registered office and agent: Specify the physical street address of the corporation's initial registered office in North Carolina and the name and address of its initial registered agent.
- Purpose of the corporation: This statement should describe the primary activities and objectives of the nonprofit corporation.
- Duration of the corporation: Specify whether the corporation has a specific duration or is intended to exist perpetually.
- Initial directors and incorporator information: Include the names and addresses of the individuals who will serve as the initial directors of the corporation. And, identify the incorporator or incorporators who are signing and filing the document.
Step 5: Apply for an Employer Identification Number (EIN)
Next, you’ll need to apply for a federal employer identification number from the Internal Revenue Service (IRS). An EIN is a unique nine-digit number used to identify your organization for tax purposes, including opening a nonprofit bank account and applying for tax-exempt status. To do this, you’ll need to fill out the Form SS-4. This application process is free, and you can complete it at any time.
If your federal employer identification number application is approved, you'll receive your EIN immediately upon completion of the online application process. If you applied by mail, fax, or phone, it may take several weeks to receive your EIN by mail.
Step 6: Create nonprofit bylaws
Bylaws are the rules that govern how your nonprofit will operate. They typically outline procedures for holding meetings, electing officers, and making decisions.
To create bylaws, be sure to:
- Gather input: Before drafting the organization's bylaws, gather input from key stakeholders, including initial board members, staff, volunteers, and community members. Discuss the organization's mission, goals, and values, as well as any specific requirements or preferences for the bylaws.
- Choose a format: Typically, nonprofit bylaws include sections covering topics such as the organization's purpose, board of directors, officers, meetings, committees, and amendment procedures.
- Establish governance structure: Outline the structure of the board of directors, including the number of directors, their qualifications, terms of office, and responsibilities.
- Specify officer roles: Define the roles and responsibilities of officers, such as the president, vice president, secretary, and treasurer.
- Determine decision-making: Detail the procedures for holding board meetings, including notice requirements, quorum, voting procedures, and record-keeping.
- Establish financial policies: Specify how funds will be managed, who has the authority to sign checks, and how financial records will be maintained.
- Address conflict of interest: Include a conflict of interest policy to ensure transparency and integrity in the organization's decision-making processes.
- Include amendment procedures: Specify the voting requirements and procedures for amending the bylaws.
- Seek legal review: Once you've drafted the bylaws, consider seeking legal review to ensure compliance with state laws and alignment with best practices in nonprofit governance.
Step 7: Set up financial systems
Establishing sound financial management practices is essential for the long-term success of your nonprofit. This includes setting up accounting systems, budgeting, and financial reporting procedures.
Contact the bank to find out what documents are required to open a nonprofit bank account. Typically, you'll need to provide the following:
- Articles of Incorporation
- EIN confirmation letter from the IRS
- Bylaws of the organization
- Identification documents for authorized signers (e.g., driver's license, passport)
Step 8: File for Federal and State Tax Exemptions
Next, North Carolina nonprofits need to file for tax-exempt status on both the federal and state level:
- Federal tax-exempt status: If your nonprofit organization qualifies for federal tax-exempt status under section 501(c)(3) of the Internal Revenue Code, you can apply for recognition of tax-exempt status with the IRS. This involves completing and submitting IRS Form 1023 or Form 1023-EZ, along with supporting documentation.
- State tax exception: File Form NC-5, Application for Exemption from North Carolina State Income Tax, with the North Carolina Department of Revenue. Include all required documentation, such as a copy of your IRS determination letter granting federal tax exemption.
Step 9: Stay compliant
Once you’ve submitted all of the correct paperwork, and everything has been approved during the formation process, you’re ready to start making an impact.
However, part of being a registered charity in NC requires ongoing compliance. Ensure that your nonprofit organization complies with all applicable state and local regulations governing nonprofits in North Carolina. This may include filing an annual report (Form 990), maintaining proper records, and adhering to charitable fundraising and solicitation laws.
Step 10: Start fundraising
Once you’ve completed all the necessary paperwork and legal requirements, it's time to get started fundraising!
Once your nonprofit organization is established, focus on building capacity and sustainability. Develop programs and services that align with your mission, cultivate relationships with donors and supporters, and implement sound financial management practices to ensure the long-term success of your organization.
This might involve an organizational meeting with your board of directors to determine exactly how you’ll meet your goals and as well as discuss:
- Determining fundraising activities (online raffles, crowdfunding, etc.)
- Mapping out donor engagement
- Identifying our target audience
- Developing a brand voice
- Necessary staff or volunteer involvement
- Budget constraints
- Resources needed
→ Check out our guide on how to raise money as a nonprofit. Or explore our best fundraising ideas.
How much does it cost to start a Nonprofit in North Carolina?
When starting a nonprofit in North Carolina, it’s wise to understand how much it might cost. Before jumping in, consider expenses like:
- Incorporation fee: The primary cost associated with starting a nonprofit in North Carolina is the fee for filing the nonprofit Articles of Incorporation with the North Carolina Secretary of State. the filing fee for Articles of Incorporation is $60.
- Tax-exempt application fee: If you plan to apply for federal tax-exempt status under section 501(c)(3) of the Internal Revenue Code, there is a filing fee associated with submitting IRS Form 1023 (Application for Recognition of Exemption) or Form 1023-EZ (Streamlined Application for Recognition of Exemption). The filing fee for Form 1023 is based on the organization's projected annual gross receipts, with a standard fee of $275 - $600 for organizations with projected annual gross contributions exceeding $10,000.
- Legal fees: While it's possible to prepare and file the necessary paperwork for incorporating a nonprofit on your own, many organizations choose to work with an attorney to ensure compliance. Legal fees for incorporating a nonprofit can vary depending on the complexity of the organization and the services provided by the attorney.
- Additional expenses: Depending on the needs and goals of your nonprofit organization, there may be additional expenses associated with starting and operating the organization. This could include costs for developing a website, marketing and outreach materials, or fundraising activities.
Can you make a living by starting your own nonprofit in North Carolina?
A nonprofit CEO can receive compensation for their work through a salary, just like any other employee of the organization. However, there are specific processes and considerations involved in determining and approving CEO compensation at a nonprofit.
Here's how it typically works:
- Establishment of compensation policies: The board or committee considers CEO qualifications, experience, performance, and similar salaries.
- Transparency and accountability: The board documents how they decide CEO pay to be fair and aligned with the nonprofit's goals. They share this information with internal and external stakeholders to show they're fair and responsible.
- Approval process: Once the compensation committee or board has determined the CEO's salary, it must be formally approved. This typically involves a vote or resolution by the board of directors to authorize the CEO's compensation package.
- Disclosure requirements: Nonprofit organizations are required to disclose executive compensation, including the CEO's salary, on their IRS Form 990. This ensures transparency and accountability in the organization's compensation practices.
→ Check out our guide if you are looking to start a nonprofit with no money.
Best practices for starting a nonprofit in North Carolina
Thoroughly research your mission
Before starting a nonprofit, conduct research to ensure there is a genuine need for your services or programs in your community. To define your mission and objectives, consider questions like:
- What problem has gone unaddressed in this community?
- Why is this issue important?
- Who will benefit from our work and why?
- Who will be interested in supporting our work and why?
Build a strong board of directors
When creating your required Board of Directors, it’s essential to choose them wisely. When recruiting, be sure to consider if they:
- Are mission-aligned: Board members who are genuinely committed to your organization's cause will be more motivated to contribute
- Contribute diverse skills: Aim to recruit a diverse group of individuals with a wide range of skills, expertise, and backgrounds.
- Possess nonprofit knowledge: Seek board members who have a good understanding of nonprofit governance, legal requirements, and financial management.
- Have availability: Choose individuals who have the capacity to dedicate sufficient time and effort to their board responsibilities and who are willing to make a meaningful contribution to the organization.
- Provide a network: Board members with strong networks and connections can help open doors to fundraising opportunities, strategic partnerships, and community support for your nonprofit. Consider candidates who have a wide reach and the ability to leverage their connections to benefit the organization.
Plus, be sure to establish clear term limits for board members. Implement a succession plan to ensure smooth transitions when board members complete their term.
Seek professional advice and support
Don't hesitate to seek advice and support by hiring professionals, such as attorneys, accountants, and nonprofit consultants, who can provide guidance on legal documents, and financial and operational matters.
Or, tap into your existing network to see who might be able to help provide feedback and guidance for free.
Use nonprofit-friendly technology
When creating your nonprofit, and assembling all of your fundraising activities and programs, it's essential to choose technology that is built for nonprofit use. Though lots of fundraising and donor management softwares have nonprofit tools, they’re not specifically designed for charitable use.
A nonprofit-specific platform can offer nonprofits tons of crucial features, like:
- Custom donation forms
- Event management tools
- Online donation acceptance and management
- Raffle and lottery management
- Donor management
- Marketing and communication tools
And, when considering what technology to use, be sure to consider the price. Most fundraising and donor management sites can cost a lot — taking away from both your ability to make an impact, and pay yourself.
Instead, choose an online platform that is 100% free.
Find out how this North Caroline nonprofit saved over $4,000 in fees with Zeffy
The Etowah Valley Preservation Society, a North Carolina-based nonprofit’s mission to protect Etowah, needed a fundraising solution that would help them raise money, and reach new supporters.
in order to accomplish the task, they needed software that would allow them to create custom donation forms and websites that would accept donations online easily, while offering supporters multiple different payment options. Plus, they wanted to be able to share their mission far and wide and motivate supporters with a campaign thermometer and a donor board.
And, they wanted to do it all for free
The solution? Zeffy — the 100% fee-free all-in-one fundraising solution.
Unlike other fundraising software that charges nonprofits thousands of dollars in fees, Zeffy is the only platform hard doesn’t charge nonprofits a cent. For The Etowah Valley Preservation Society, this was essential. Without having to pay any fees, 100% of the donations they received could go directly to the cause — and not a cent less.
In total, Preservation was able to raise over $80,000 and save over $4,000 in fees.
Launch your nonprofit in North Carolina with Zeffy
Starting a North Carolina nonprofit corporation requires time, money, and strategy. From filing for federal tax-exemption to maintaining compliance, running your own charity is a lot of work — but well worth it in the end.
Once your nonprofit is up and running, Zeffy can help you fundraise for free. From managing donors to creating text-to-donate campaigns, nonprofits can organize all of their charitable activities in one central place — without ever having to pay a cent in fees.
