How to Start a Nonprofit in Hawaii
Introduction
Nonprofit organizations are a vital part of the United States economy. From social services to environmental protection, nonprofits are involved in every aspect of our daily lives. But what makes them different from for-profit organizations? And how do you start one? In this article, we’ll walk through the steps required to create your own nonprofit organization and get it off the ground.
As you begin to think about establishing a nonprofit organization in Hawaii and the tax benefits that come with it, be sure to consider if your idea is suitable for a nonprofit. A nonprofit is not just another kind of charity: it’s a legal entity that does many things other than raise funds from private donors.
Some nonprofits are not tax-exempt (and thus do not qualify for SBA financing). Nonprofits can have varying structures—some are run by boards of directors while others are managed by one person. Additionally, they may exist exclusively to pursue social or educational goals (such as preserving the Hawaiian language), environmental causes, or other purposes deemed “public interest.”
Form an Advisory Board
Once you’ve decided on the type of nonprofit you’re starting, it’s time to start forming an Advisory Board. An Advisory Board is a group of people who provide guidance to your organization and help shape its direction. They can be members of the community—people who are interested in what you do and want to lend their expertise—or they can be experts in your field.
You’ll want an Advisory Board if:
An advisory board will help with fundraising efforts; they’ll know how much money is needed when it’s needed by, and how best to raise it.
- You plan on working with other organizations/people in the community.
Having advisers familiar with local resources will make it easier for them to get together for collaborations or partnerships.
Conduct Feasibility Studies
A feasibility study is a comprehensive examination of the proposed nonprofit’s goals, objectives, and resources. It can be used to determine whether a given project or initiative is viable.
A feasibility study typically includes:
- A description of your organization’s mission and vision
- An analysis of your organization’s strengths and weaknesses as they relate to accomplishing its mission
- An assessment of the current needs in your community that you would like to address with your nonprofit’s services/programs/activities
- A thorough evaluation of the competition in this space (including other existing nonprofits)
Create a Business Plan
A business plan is a formal document that helps you define your organization’s mission, goals, and objectives. It also outlines how you’ll achieve those goals, what resources are required to complete them, and how much money it will take to get started.
A business plan is used as the blueprint for operating your nonprofit successfully from day one. The more detailed your plan is, the easier it will be to implement your strategies with confidence and grace over time. As an added bonus, having a well-written business plan can help you secure funding from foundations or government agencies such as the U.S. Department of Housing & Urban Development (HUD) or the Office of Hawaiian Affairs (OHA).
Write your Articles of Incorporation
An articles of incorporation is a document that contains the basic information about your nonprofit. It includes:
- The name of your organization, including any alternate names you may use or plan to use in the future.
- A statement that your nonprofit is organized under Hawaii state law, and the official address of its principal office (where it will be registered).
- The purpose for which your nonprofit was formed, along with any specific limitations on what it can do and how long it can exist (if applicable).
- The names and addresses of at least three people who will serve as officers or directors until such time as others are chosen by vote or bylaws. They also need to sign this document as “officers” for the nonprofit.
Draft Bylaws and Organizational Policies
Bylaws are the rules that govern your organization, establish its structure, and govern how it will operate. They can be written by your board or by a lawyer or the nonprofit’s attorney. They should be reviewed annually (or more often) to ensure they remain current with changing laws and regulations, as well as with best practices for nonprofits in Hawaii.
Organizational policies may also include other documents such as conflict of interest policy, confidentiality policy, grievance procedure, and policy on fundraising events or activities.
Seek 501(c)(3) Tax Exempt Status
If you plan on raising funds for your nonprofit and don’t want to pay taxes, it is important to seek 501(c)(3) tax-exempt status. Your application will be reviewed before being approved or denied. In order for your organization to receive this tax-exempt status, you will need a copy of your Articles of Incorporation that show that you are incorporated in Hawaii (or another state if eligible). You will also need to submit an IRS Form 1023 application along with several other forms needed (your Articles, Articles of Incorporation, IRS Form 1024 Application For Recognition Of Exemption Under Section 501(c)(3), etc.).
Once all documents have been submitted twice, it is recommended that nonprofits wait 6-8 weeks before contacting either agency again about their case because they may require additional time depending on workloads as well as any errors made during initial submission attempts (e.g., missing information needed).
Get your Employer Identification Number (EIN)
The EIN is a Tax Identification Number that can be used for tax purposes, payroll, and other filings. It’s a different number than your social security number or business license.
Once you’ve been assigned an EIN, keep it handy as we’ll need it later on in this article.
Takeaway
Nonprofit organizations have to comply with many regulations and file tax returns, in addition to complying with state and federal laws. Some of these regulations apply only to nonprofits, while others apply more generally; for example, all businesses must pay taxes on their income. Nonprofits also have additional requirements (including the ability to obtain tax-exempt status) that for-profit businesses do not face.
Nonprofit organizations are expected to be transparent about their finances. They must report how much money they raise and spend, who gives donations or grants, how much money comes in from different sources such as grants or sponsorships as well as salaries paid out to employees/volunteers working at the organization, and other details related specifically
Conclusion
Starting a nonprofit is a lot of hard work. To make sure your organization stays on the right track, you will need to form an advisory board, conduct feasibility studies, create business plans and bylaws, seek tax-exempt status, apply for EINs(if applicable), and ensure compliance with all relevant codes and regulations.
