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  • Start a Nonprofit

  • Many people want to create a nonprofit organization to help their community, but there are a few important questions to consider before beginning filing for tax-exempt status. Nonprofit Connect has compiled a step-by-step guide for you to reference when starting a nonprofit in the Kansas City area.

    We offer this guide for informational purposes only and encourage you to consult with local legal counsel familiar with tax-exempt law to assist you in ensuring your new nonprofit is compliant with all federal, state, and local requirements.

  • Important Considerations

  • Step 1: Define the purpose and mission of the organization. Step 1: Define the purpose and mission of the organization.

    What is your mission?

    It is important to know why you want to start a nonprofit. What are your goals and objectives? What do you hope to change? Who will you serve? Do you have a 3, 5, and 10-year plan for success? These questions may be helpful to ask yourself as you get started.

    Check out this post on Nonprofit Connect’s blog to help you consider what your organization’s mission should be.

    What Story Does Your Mission Statement Tell?

  • Step 2: Do your research. Step 2: Do your research.

    Have you thought about the need for your nonprofit, or whether there are other organizations already addressing the same problem?

    Is there a demonstrated need for this nonprofit in our community?

    Make sure you have an understanding of the area and people you wish to serve. Take and quantify the problem your nonprofit would address in that area. Define the “demand” and “market” for the services your nonprofit would provide.

    Research other local organizations to ensure you’re not duplicating work.

    There are likely nonprofit organizations in existence that are already working towards your mission. Consider volunteering or joining a committee at a nonprofit that is already active in the area that you are passionate about.

    Click through the list below of nonprofit organizations in Kansas City to see if there are organizations with similar goals.

    Kansas City Nonprofit Organizations by Type

    Human Services
    Arts, Culture, Humanities
    Amusement & Entertainment
    International Relations/Foreign Affairs
    Community Foundations
    Community or Economic Development
    Public/Societal Benefit
    Mutual/Membership Benefit

  • Step 3: Consider an alternative to starting a new organization. Step 3: Consider an alternative to starting a new organization.

    Try partnering with an existing organization.

    After you’ve identified similar organizations, meet with them to explore partnerships such as a special project or initiative. There are many benefits to collaborating with an existing organization, including shared expertise, the potential to leverage an existing brand, and joining forces to apply for grant funding. Partnerships can also enable you to spend more time providing your service or program, rather than focusing on administration.

    Start a local chapter of a national or regional organization.

    There may already be a similar national organization that is working towards your mission, so see if a local chapter is needed in your area.

    Find a fiscal sponsor for your organization.

    If you want to test an idea out first, or plan to work on a limited-time project, consider fiscal sponsorship instead of incorporating. In fiscal sponsorship, your organization can receive tax-deductible contributions by using the tax-exempt status of another organization as an umbrella.

    Learn more about fiscal sponsorship here.

  • Next Steps

  • Step 4: Build your organization's structure. Step 4: Build your organization's structure.

    Establish your board of directors.

    The initial board of directors will assume much of the responsibility in starting a new nonprofit. They will determine the directions and goals of the organization. The first board writes the articles of incorporation and approves the original bylaws.

    In order to incorporate, Kansas requires 1 board director in addition to the incorporator. Missouri requires any nonprofit organization to have at least 3 directors, and there must be a president, secretary and treasurer on the board for incorporation.

    Find board members by posting your opening on Nonprofit Connect’s website.

    Open Board Positions

    Nonprofit Connect offers many board and executive programming throughout the year, including how to recruit for your board, managing the roles of your board, and the relationship between the board president and the executive director. We also provide custom on-site training and board retreats.

    Board Development Programs

    Custom Training

    Write your bylaws.

    ByLaws act as your organizational guidebook through everything from holding elections, organizing meetings, committee development, and essential operations. They often define the size of the board and how it will function, roles and duties of directors and officers, rules and procedures for holding meetings, electing directors and appointing officers, conflict of interest policies, how grant monies will be distributed, and other essential governance matters.

    See Nonprofit Connect’s Bylaws

    Create your business plan and budget.

    It’s important to develop a detailed business plan that considers all elements of a sustainable organization. What funding will you seek to start and support your programs? How will you create public awareness of your new venture? Will you hire employees and how will you manage them?

    Check out this comprehensive list of resources on different nonprofit management topics in our eLearning Center.

    • Fund Development
    • Operations, Finance & Administration
    • Marketing
    • Volunteer Engagement
    • Leadership & Management
    • Board Development
    • Human Resources

  • Step 5: Legally establish your tax-exempt organization. Step 5: Legally establish your tax-exempt organization.

    File for incorporation in your state.

    The main purpose of incorporating is to provide protection from personal liability for board members and volunteers. It is also necessary to write and file the article of incorporation before applying for tax-exempt status from the Internal Revenue Service.

    In both Kansas and Missouri, articles are filed with the Secretary of State.

    • Register your nonprofit corporation in Kansas - Cost is $20 to register your organization

    • Register your nonprofit corporation in Missouri - Cost is $25 to file articles of incorporation

    The IRS requires a complete Articles of Incorporation with suggested legal language in order for you to apply for federal tax exemption.

    Obtain an employer identification number (EIN.)

    Organizations must apply for an EIN through the IRS to apply for tax exempt status, make required form 990 filings, and to pay payroll taxes for employees. You should request an EIN even if you don’t have any employees. Please note that an EIN does not give you tax-exempt status.

    • Click here to apply for your EIN online.

    Apply for federal tax exemption.

    In order to receive exemption from income tax, and for donations to your organization to be tax-deductible, you will need to apply for federal tax exemption with the Internal Revenue Service. This can be done by completing Form 1023 online.

    • IRS Steps to Applying for Tax Exempt Status

    Please note that legal counsel is widely recommended for completing Form 1023. Browse Nonprofit Connect’s list of legal members that work with nonprofits.

    • Members of Nonprofit Connect with legal expertise

    Apply for sales tax exemption in your state.

    Some nonprofits qualify for exemption from state sales tax on purchases like office supplies, furniture, technology equipment, and more.

    • Kansas Application for Sales Tax Exemption Certificates

    • Missouri Sales or Use Tax Exemption Application

  • Step 6: Ensure compliance going forward. Step 6: Ensure compliance going forward.

    Register to solicit charitable donations.

    State law in both Kansas and Missouri requires charitable organizations to register before soliciting charitable donations.

    Kansas Charitable Organization Registration

    • Missouri Charitable Organization Registration

    File your annual reports.

    State Reporting
    Most organizations are required to file an annual report to their state entity.

    File an Annual Report in Kansas

    File an Annual Report in Missouri

    Federal Reporting
    Most tax-exempt organizations are required to file IRS Form 990 each year.

    IRS Information on Form 990

  • Step 7: Become a member of Nonprofit Connect. Step 7: Become a member of Nonprofit Connect.

    Connect to the nonprofit network in Kansas City.

    Nonprofit Connect membership is one of the smartest investments your organization can make. When your nonprofit joins Nonprofit Connect, you are immediately connected to a network of over 2,500 professionals from over 500 organizations representing local, regional and national nonprofits of all sizes, as well as businesses and funders. Enjoy free educational programs, exclusive access to resources and discounts on our job board. Best of all, membership benefits extend to your entire staff and board of directors.

    Your organization is eligible for membership once you’ve filed for your federal tax exemption.

    Read more about membership here.

  • Local Resources

    Midwest Center for Nonprofit Leadership
    MWCNL provides a free, 2-hour seminar covering the basic preliminary procedures and legal steps to become a nonprofit organization.

    Mainstream Nonprofit Solutions
    Mainstream Nonprofit Solutions provides assistance with legal paperwork and strategic planning.