Starting a Nonprofit

Take advantage of these additional resources for nonprofit organizations.

Thinking about starting a nonprofit organization?

We offer a bi-monthly class, "To Be or Not To Be a 501(c)(3)" for individuals considering the establishment of a tax-exempt organization. This session will cover the basic research needed to start a nonprofit, the required organizational documents and a review of the IRS Form 990. Visit our calendar of events to find the next session and register. For resources, visit the Grants Space Knowledge Base. Also, below are some frequently asked questions that we receive.

Should I start a Texas nonprofit?

There are several things to consider before starting a nonprofit. While passion for your mission is a huge factor of success it does not guarantee it. One of the most important things to evaluate is if your organization will be redundant. Are there other nonprofits already engaged in your idea? Like any other business, one needs to look at the market saturation of one’s service. You also need to address the benefits you will provide and at what cost they will be. 

Another point of consideration is your personal qualifications. You need to have donors in place and a business plan. There must be an adequate source of funds for support. You also need to examine your abilities to manage and inspire volunteers and staff Will you have a sustainable structure in place to help reach your charitable goals?

How do I check name availability?

The Secretary of State will not allow an entity seeking incorporation to use a name that is the same or deceptively similar to a name already in use. To check availability and legality of a name, contact:
Texas Secretary of State in Austin
512-463- 5555

You can reserve a name with the Secretary of State for a period of 120 days by filing Application for Reservation of an Entity Name- Form 501.

What are the first steps in creating a Texas nonprofit?

 The first steps in creating a nonprofit are outlined below. PDF versions of each form can be found in this section:

Check out Foundation Center’s checklist for further review: New Nonprofit Checklist

What should take place at the organizational meeting?

The organizational meeting serves several vital needs in nonprofit startup including:
  • Electing officers
  • Adopting bylaws*
  • Electing additional directors
  • Authorizing expenditures
  • Setting a fiscal year
  • Approving bank account resolution
  • Review Greenlight’s Nonprofit Success Sample Bylaws.

    What are the forms? How should they be prepared?

    The certificate of formation, or Form 202, is essential for nonprofit creation. Certain provisions are necessary for tax-emption organizations when filing this form. Make sure to carefully read over the form and address each provision according to the guidelines. The incorporator will need to submit this form in duplicate together with a $25 filing fee. The possible delivery methods are as follows:

  • Mailed to P.O. Box 13697, Austin, Texas 78711-3697
  • Faxed to 512-463-5709
  • Hand delivered to James Earl Rudder Office Building in Austin, Texas
  • The federal employer ID number, or Form SS-4, is necessary in order to be a tax-exempt organization. This number is used on all tax returns and receipts. Most banks will require this number when opening a bank account. You can receive this number online at EIN Individual Request

    To obtain federal tax-exempt status an organization must file the IRS Form 1023, federal tax exemption application. It should be filed within 27 months of the certificate of formation approval. Carefully read over the instructions on the form before preparing it. The IRS has 270 days to rule on the application. They will issue a determination letter if your tax-exempt status is approved. Be sure to keep this letter in a safe place, available for public inspection.

    Before an organization can apply for local option property tax-exemption, the Texas Comptroller office must verify that the nonprofit organization is a statewide charity. The sales, franchise and hotel tax-exemption from Texas comptroller, or Form 50-299, must be submitted for this reason. To apply for state exemption based on federal tax-exemption, complete form AP-205 at Exemptions for Qualified Organizations.   You must include a copy of determination letter issued by the IRS.

    What is an "elevator speech"

    One of the final things you should consider when starting a nonprofit is your “elevator speech.” Could you clearly state the mission of your organization within a two minute elevator ride? The purpose of this hypothetical is to reveal how effectively you can communicate your message. Nonprofits rely on networking. The ability to properly articulate your purpose will prove an invaluable tool for success.

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    The San Antonio Area Foundation helps donors achieve their charitable goals for the greater benefit of the community.

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