When and How to Establish a Public Charity

If you have a passion for a particular cause and want to make a difference by addressing a specific need in your community or the world, you might want to start a public charity.

Starting a public charity can be a way to channel your energy and resources into something that you believe in and that has the potential to have a positive impact.

Why Start A Public Charity

It is important to carefully consider the time, effort, and resources that are required to start and maintain a public charity before taking this step. The rewards can be great, but it is also a significant commitment.

Here are five reasons why you might choose to start a public charity, including:

  1. To address a particular social or community issue that is important to them.
  2. To create a legacy and make a lasting impact.
  3. To bring attention to a cause that they feel is not getting enough support.
  4. To build a sense of community and engage others who share their passion.
  5. To gain a sense of personal fulfillment and satisfaction from making a difference.

How To Start A Public Charity

Establishing a public charity typically involves the following steps:

  1. Develop a Mission Statement: Clearly articulate the purpose and goals of your organization.
  2. Choose a Name: Choose a name for your organization that is distinctive and reflects its mission.
  3. Form a Board of Directors: Assemble a group of individuals who are committed to the mission of the organization and who will provide leadership and oversight.
  4. Obtain Tax-Exempt Status: Apply for tax-exempt status with the Internal Revenue Service (IRS) by filing Form 1023 or Form 1023-EZ.
  5. Register with the State: Register the organization as a non-profit corporation with the appropriate state agency.
  6. Develop Bylaws: Draft bylaws that outline the governance structure and operations of the organization.
  7. Fundraise: Develop a plan for fundraising, including strategies for soliciting contributions from individuals, foundations, corporations, and government agencies.
  8. Comply with Reporting Requirements: File annual reports with the IRS and comply with any state reporting requirements.

What is a mission statement?

According to Fidelity Charitable, “A charitable mission statement is typically one to three sentences that puts the purpose of your giving into words. Your values, life experiences, interests, and close relationships can all play a role in helping you decide what your mission is.”

Here are four reasons why creating a charitable mission statement is important.

  1. It gives you a focus.
  2. It energizes why you’re doing this in the first place.
  3. It helps you decide when to say “no” to solicitations.
  4. It can help you make a greater impact over time.

It is important to seek the advice of a lawyer and/or accountant when establishing a public charity to ensure that the process is done correctly and in compliance with all applicable laws and regulations.

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About the Author

Eric Sheldon

Eric Sheldon

Eric Sheldon is a certified public accountant with more than 25 years of experience in a wide variety of industries. He's the owner/operator of Eric Sheldon CPA, PC, an accounting firm that specializes in providing tax strategy and preparation, accounting, and bookkeeping services to individuals and small business owners.

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