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How to start a charity

People give to charity for various reasons. Some may donate in honor of a deceased loved one, while others do so to support a cause that resonates with them.

According to the National Center for Charitable Statistics, more than 1.5 million nonprofit organizations are registered in the United States. That includes public charities, private foundations and other types of nonprofit organizations, including chambers of commerce, fraternal organizations and civic leagues. Canada is home to more than 170,000 charitable and nonprofit organizations. Of those, 85,000 are registered charities recognized by the Canada Revenue Agency.

In spite of the existence of so many charitable entities, sometimes people or groups feel compelled to start their own nonprofit endeavors. Creating a charitable organization can be a rewarding experience, but one that requires a lot of work and dedication. The tools necessary and the legal requirements to starting a nonprofit will vary depending on where the charity will be located. The following tips offer some general guidance with regard to starting a nonprofit organization, but it's recommended that those interested in founding a charitable organization consult with financial and legal professionals prior to beginning the process.

• Decide on the type of charity. In the United States, a nonprofit is known as a 501(c)(3) organization. A nonprofit may be a public charity or a private foundation. The first step to starting a charitable group is determining which type of nonprofit you'd like to start.

Public charities have a diverse board of directors. According to the Foundation Group, a nonprofit resource, more than 50 percent of the board must be unrelated by blood, marriage or outside business co-ownership. Private foundations are largely funded and operated by a relatively small group and can be familial in nature.

• Start researching the market. Figure out if the nonprofit you hope to start already exists or if there is a group nearby doing similar work. It can be challenging to solicit support if your mission mirrors that of a nearby group. In addition, research the demographics of people in your area to see if there is a need for the services of the nonprofit you hope to start.

• Decide if a nonprofit is right for you. Nonprofit organizations are not moneymakers. Founders can apply for grants to pay their salaries. However, many startup nonprofits may not be eligible to apply for grants until they have established themselves.

• Write a mission statement and business plan. If you decide a nonprofit is right for you, then you'll have to spell out your plan. This will be the foundation of the organization and will communicate its purpose. The business plan also can be used to solicit support, including investments.

• Incorporate the charity. By incorporating, you can reduce the liability of the nonprofit, especially as it pertains to protecting it against litigation.

• Establish a board of directors. This board is a group of volunteers who will help make decisions concerning the nonprofit. A board of directors will also help guide the charity and make decisions.

• Establish a fundraising plan. Raising funds will be key to keeping the nonprofit in operation. Establish a fundraising plan and map out who will help advertise and request funds. Expect setbacks, but forge ahead to establish a core donor base.