How To Start a Nonprofit Organization Benefitting Youths

Forming a nonprofit serving young adults requires the same business planning and legal considerations as any nonprofit organization. Youth-centered nonprofits must follow even more rules than other types of nonprofits. This includes safety rules, like investigating the background of adults working with the children.

In this article, you will find the necessary steps for starting a nonprofit for youth and children.

See FindLaw's Nonprofit Organizations section for more articles on launching and operating a successful and legally sound nonprofit.

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Types of Nonprofit Organizations for Youth and Children

Various types of nonprofits focus on youth development and empowerment. Your nonprofit could target a range of issues and opportunities affecting youth, including:

• Mentoring programs
• Homelessness and sheltering
• Specific areas of education, like early intervention and tutoring
• After-school programming
• Mental health and counseling
• Children living with disabilities and special education
• Juvenile justice and legal aid
• Youth sports and recreation
• Arts, music, and leadership
• High school completion and higher education

Assess the needs of youth in your area to determine your nonprofit's focus area. Your organization should address an unmet need. Partnerships with existing nonprofits can help further your mission and make a greater impact.

The Nonprofit Business Plan

A detailed business plan clearly outlines how your nonprofit should operate. The plan should also outline how your nonprofit will achieve its goals and reach financial sustainability within five years.

A nonprofit business plan will also help you secure donor and volunteer support by detailing your goals and how you plan to fulfill them.

Most nonprofit plans include the following sections:

• The mission statement describes your organization's core values and other principles that guide its efforts.
• Programs, products, and services explain your organization's plans and who it will benefit.
• Financial information includes funding sources, funding projections, and anticipated costs.
• The marketing plan details outreach campaigns and initiatives.
• The operational plan explains how your organization will benefit young people and how you will assess your services.

Your nonprofit business plan should have a one-page executive summary that introduces the plan and a concise overview of its contents. Use your executive summary to sell your nonprofit to potential donors and volunteers.

Choosing a Nonprofit Name

Picking the right name for your nonprofit is important. A good business name should distinguish your nonprofit from other organizations. The name informs your audience of your mission to help young people.

Your nonprofit's name should be memorable and long enough to convey your nonprofit's purpose with precision. People should be able to identify its goals from hearing the name. Test how potential donors, volunteers, and young people respond to your proposed name.

Ensure your selected name is available on your state's secretary of state website. Do a federal trademark search on the United States Patent and Trademark (USPTO) website. It's also a good idea to ensure the internet domain name for your selected name is available.

Changing your business name after you've established your nonprofit is a hassle. You must change its registration with the state, IRS, and other entities. You may also lose recognition and trust people had in the previous name, which can harm your organization's branding. 

By changing your name, you may not be able to keep donations left in donor wills if your old name is listed. If you must change your business name, consider a DBA instead.

Structuring Your Nonprofit as a Corporation

Most nonprofit entrepreneurs structure their nonprofits as corporations. There are three primary reasons this is so:

• It protects owners and board members from personal liability for the organization's debts and obligations
• It simplifies applying for 501(c)(3) tax-exempt status
• It improves your grant eligibility as governments and private organizations offering grants only consider incorporated nonprofits

While the IRS allows other business structures like associations and trusts to apply for 501(c)(3) status, the process is more difficult. The IRS also does not extend as many benefits to these types of business entities.

Nonprofit limited liability companies (LLCs) protect members from personal liability. The IRS will only grant an LLC 501(c)(3) status if all its members are 501(c)(3) organizations. Some states do not allow LLCs to organize as state nonprofits.

You must register with your state to organize your nonprofit as a corporation. You also must make periodic filings and disclosures. Your nonprofit must create a board of directors and hold annual meetings to maintain its corporate status. Many small business owners get help from a nonprofit attorney to prepare the necessary documents.

Applying for Federal Income Tax Exemption

After incorporating your nonprofit, you should apply for 501(c)(3) federal tax-exempt status with the IRS. This status exempts your organization from federal income taxes and encourages donations by providing a tax deduction for contributions.

Apply by filing IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. Nonprofits with less than $250,000 in total assets or $50,000 a year can use Form 1023-EZ.

File your Form 1023 or 1020-EZ within 27 months of the day you file your nonprofit's articles of incorporation. The IRS will backdate your tax-exempt status to the date of incorporation. Failure to file within 27 months will result in the IRS applying your tax exemption from the filing date forward.

Funding Your Youth Nonprofit

Even if you plan on staffing your nonprofit with volunteers, you will still need some income to cover supplies and administrative costs. You may plan to start your organization using your own money.

Most youth nonprofits focus their fundraising activities on the following:

• Registration filing fees: Popular with nonprofits operating sports leagues or community education courses, these cover most or all the costs of conducting activities.
• Individual donations: How many nonprofits raise most of their money, these contributions can be small donations from many donors or large donations from major donors. Many successful nonprofits leverage Venmo and PayPal to make it easy for donors to contribute.
• Events: Events help publicize your organization and generate community awareness. Some examples are charity runs, golf tournaments, and even haunted houses.
• Corporate sponsorships: Partnerships allow you to partner your nonprofit with organizations that supply cash or in-kind donations. In return, the partner often wants your nonprofit to display its logo as a sponsor or other public recognition.
• Grants from governments or foundations: Seeking to further your nonprofit's youth-oriented activities, these can include small grants and large, subsidized grant programs. The application process is often complicated and competitive.
• Online Campaigns: Put social media and digital platforms to work for you to reach a wider audience of potential donors. This can include sharing your nonprofit's story and soliciting donations. Social media channels, direct email, and text-to-give campaigns are great online tools.

If you want long-term success, you must plan for both short-term and long-term financial support.

Background Checks for Volunteers Working With Minors

Most youth nonprofits only function with the help of adult volunteers. Before recruiting volunteers, employ a background check policy to ensure the safety and well-being of the youth you work with. If you are part of a national governing body, like USA Weightlifting, then there are also national standards like SafeSport.

The policy should require all volunteers, staff, directors, and others working with your nonprofit to have a clean record. Check records at least once a year.

Keep your plan uniform across your organization. All volunteers and staff should be subject to the same screening process. This promotes fairness and consistency while avoiding potential bias and discrimination issues.

Most commercially available background checks confirm the identity of the person investigated and screen for criminal history and sex offender registry. Your background checks should find any:

• Felony convictions
• History as a sex offender
• History of domestic violence or child abuse
• Serious driving violations like driving under the influence (DUI)

Check your state laws regarding background checks. Some states require youth sports organizations to review the records of all volunteers.

Who Pays for the Background Check?

The organization requiring the background check often covers the cost.

Expect to pay between $20 and $50 for a single background check, depending on how detailed it is. Since most youth nonprofits will need volunteers early on, consider factoring in background checks in your startup costs.

Hiring Nonprofit Staff

Most nonprofits start small and don't hire staff when beginning operations. Some business activities take up too much time for a volunteer or require the services of a qualified professional. Hiring, training, and retaining staff is a steep expense for a new nonprofit.

Like with volunteers, you should implement background checks for every potential hire.

If your nonprofit hires an independent contractor, you are not responsible for certain expenses:

• The employer's portion of the payroll tax
• Income tax withholding
• Employer-sponsored health insurance, if required in your state

If you hire a W2 employee, you are responsible for covering:

• The payroll tax
• Withholding income taxes
• Other employer-related obligations per your state, like health insurance or sick time
• Worker's compensation insurance
• Unemployment insurance

You will likely need a professional to handle your nonprofit's payroll responsibilities. As your organization grows, you may need other specialized staff, like human resources (HR).

Hiring staff means your nonprofit must follow your state's employment laws. You must also address any employment-related issues.

Getting Business Insurance

Your nonprofit's activities and location determine whether you must legally carry business insurance.

Even if your nonprofit is not obligated to carry insurance, it is still recommended that you do so. Assess your activities, assets, and potential liabilities to determine the appropriate insurance coverage for your organization. Consider the following:

• General liability insurance: Covers someone injured on your nonprofit's property or during an activity or event
• Director and officer insurance: Protects these specific individuals if they are personally named in a lawsuit against your nonprofit.
• Property insurance: Covers the space your nonprofit owns or occupies
• Auto insurance: Covers vehicles used for organizational business, including personal vehicles
• Required state and federal employee insurance: Including workers' compensation and unemployment insurance, required by law in almost every state 

Business insurance is an expense you risk skipping at your peril. 

Renting Office Space

As your nonprofit grows, you may need to rent a commercial space. Ask yourself the following questions when looking for a commercial space:

• How much space does my organization need? (the general recommendation is 100-200 square feet per person)
• Do I need meeting spaces?
• Does it need to be easily accessible to the public?
• Is there enough parking?
• Are the building and parking lot safe?
• What utilities and maintenance costs does the lease include?
• Who handles maintenance and repairs?
• Is the facility wired for my organization's needs? Does it have adequate power and data lines?
• Do the area's zoning regulations permit my nonprofit's operations?

Determine the type of office space your organization needs. It can help to work with a real estate broker who knows your market and can find a lease that suits your business needs.

Marketing Your Nonprofit

Your organization must spread its message, encourage donations, and recruit volunteers. Like for-profit businesses, most successful nonprofits engage in marketing activities to help achieve their goals. Marketing and advertising tactics often include:

• Public relations and media
• Digital marketing (social media, direct email, and SEO)
• Fundraising campaigns
• Promotional fliers, newsletters, and direct mail
• Public service announcements (PSAs)
• Grassroots marketing and community engagement

Tailor your marketing strategies based on your target market. You should also evaluate your efforts on a regular basis to make necessary adjustments. An effective marketing plan should evolve as your nonprofit grows.

Measuring Your Nonprofit's Impact

Measuring the impact your nonprofit has on the youth you serve is crucial. As your organization grows, your donors, board, and community will want to see that your programming is effective. You can employ various strategies to help you evaluate your nonprofit's impact. Consider the following:

• Baseline assessment: This baseline measurement provides a starting point for comparison.
• Key Performance Indicators (KPIs): These can include the number of youth served, changes in behavior, or improvements in targeted issues.
• Collecting data and feedback: Use surveys and interviews to identify successes and areas of opportunity while ensuring your data collection methods are ethical and culturally sensitive.
• Case studies and success stories: Sharing examples of individuals or groups affected by your programs can be an effective way to humanize your impact and highlight real-world outcomes.
• Long-term tracking: This involves tracking outcomes over a longer period.
• Advocacy and systems change: Look for any influences your nonprofit's efforts have on current policies.

Your findings should inform continuous improvement. Modify your approach if certain areas of your programming are not achieving desirable outcomes.

Evaluating your nonprofit's performance is a must for sustainability and growth. You should never stop collecting data, assessing your position, and pivoting your efforts when needed.

Resources for Nonprofits Benefitting Youth

• The Cause Inspired Foundation focuses on helping nonprofits achieve success through digital marketing. It also offers a grant program for nonprofits with budget restrictions to access its services.
• Use the Funding Alert tool from Society for Nonprofits to find real-time grant applications by category. Choose the appropriate category (Children, Youth, and Families) for current grant opportunities.
• Youth.gov features funding opportunities for nonprofits that serve youth and their families. Use their Youth Funding Opportunity Search Tool to find information on more than 1,000 potential grants.
• The National Council of Nonprofits has regional offices in almost every state. They offer various services, including connecting nonprofits with grantmakers, business development, and more.
• The U.S. Small Business Administration (SBA) promotes entrepreneurship and has regional offices throughout the U.S. The SBA offers grants to nonprofits and select community organizations.

Getting Legal Help For Your Nonprofit

Forming any type of nonprofit can get complicated. In addition to tax-exempt status and protecting yourself and other members from personal liability, nonprofits interacting with youth must also factor in background checks and laws pertaining to minors.

Any mistakes you make early in the formation process can lead to significant problems later on. Failing to incorporate your nonprofit properly could force the IRS to reject your request for 501(c)(3) status. This leaves your organization without an exemption and causes donors to lose any claimed deductions.

That's why it's a good idea to work with a local business organization attorney. An experienced attorney can take on the legal aspects of your nonprofit formation, like incorporation, tax exemptions, and hiring laws. This leaves you more energy and time to focus on the mission of your nonprofit serving youth.