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A non-profit organization is a non-business entity in many countries which is exempted from tax. The Internal Revenue System in America grants non-profit organizations a status of business exempted from the tax.

Non-profit organizations are established for a cause. If a non-profit generates a revenue, it is further used for the same cause in which the organization was made.  Non-profits pay no income tax on the donations they receive or any money they make through fundraising movements.

Guide to Starting and Running a Non-profit Organization

Be clear on the purpose and mission statement

What is the mission statement?

The mission statement of a non-profit organization should be clear on the purpose of its creation. Mission statements become essential when you want to generate profit for your organization. Mission statements will also clear where and for which purposes the money generated will be used. The mission statement describes the complete purpose of the non-profit organization. The statement can be of any length but it must be concise, comprehensive and easy to understand by the general public. Mission statements should include the benefits to its clients, services it will provide, the population it will focus upon, and how the non-profit organization will operate.

For example, if you run a charity show, you collect donations and the donations are given by the public based on the mission statement of that non-profit organization.

Plan the working of non-profit organization and its members

Some non-profit organizations are made by friends with a common vision to serve their common purpose. They manage the tasks per their schedule and feasibility. But, it is good to register their non-profit organization as well, in case they want to grow it further.

A non-profit can have a bank account and is a legally registered entity.

Avoiding frauds in a non-profit

If the non-profit organization also gets donations and funding by other means, that non-profit should be audit-ready all of the time. If the financial data is not up to date and the organization is not audit-ready, this is a clear indication of discrepancies going on in the bookkeeping of the organization. Accounting statements must match. Financial statements must be related to the balance sheet and cash flow statements. You can easily spot a financial fraud if the accounting statements do not match. When the directors know that there is huge cash present in the account of a non-profit but checks frequently bounce back, this may indicate fraud. An audit must be conducted to ensure transparency.

Consider fiscal support

You can initially get finance management support and sponsorship from another non-profit organization. It is called its fiscal sponsor. This fiscal sponsor can train the members of the new non-profit how to deal with financial management issues.

Proper documentation and bookkeeping

For example, if there is a natural disaster in your area and your non-profit organization comes in front to help people, you cannot just collect money and say it was used for that cause. There should be proper documentation and proper planning that goes into collecting money. Volunteers give their services free of cost. The money donated can be used to assist further in re-establishing the families of that area. There should be complete recording and data of your finances at all times. 

 Find the right partners

You must find the right type of people to work for and with your non-profit organization. The directors, managers, volunteers and doers should be working for a great cause and believe in your mission statement. You will most likely be in need of accounting consultancies if your non-profit organization keeps a banking account and funds finances to support its cause.


If you want to build and run a non-profit organization, it is a great way to help ailing souls in any way. Non-profits are tax exempt and the money generated is solely used on the cause for which the non-profit was made. Follow the above guidelines to establish and successfully run a non-profit.