How to Start a Nonprofit: A Step by Step Guide

Turn your passion into purpose and your purpose into a plan.

When the founder of Lamp of Learning became ill and the organization began depleting its cash reserves, Paul Bergman stepped in. Though he had no prior nonprofit experience, his determination to sustain its impact led him to incorporate the organization as a 501(c)(3) and shepherd it through a successful recovery. Fifteen years later, Lamp of Learning continues to help first-generation students get into college and thrive.

Transforming an idea into a fully functioning nonprofit takes more than heart; it requires planning, structure, fundraising skills, and a clear understanding of what it takes to run a mission-driven organization. Throughout this guide, you will find practical steps informed by the experience of Bergman, CEO of Lamp of Learning, UC San Diego alumnus, and advisory board member for the Division of Extended Studies Cybersecurity Certificate. Bergman has also incorporated five nonprofits, served on nine boards, and completed the UC San Diego Division of Extended Studies Fundraising and Development Certificate program.

Step 1: Identify the need

Every strong nonprofit begins with a well-defined need. Before you dive into paperwork or program planning, take the time to answer a few critical questions:

• What issue or community need are you passionate about?
• Who is affected, and how can your organization help?
• Are there existing organizations doing similar work?
• What gap does your nonprofit aim to fill?

Conducting a community needs assessment—through informal interviews, surveys, or research—can help validate your idea and shape your mission. Bergman explains the importance of this step: “Before you incorporate, survey the landscape and research what organizations are already serving your community. Ask whether your energy, skills, and resources might create greater impact by strengthening an existing effort.”

Step 2: Develop a mission and vision

Once you’ve confirmed there’s a need, it’s time to craft your mission and vision statements. These foundational elements will guide your strategy, attract supporters, and provide clarity as your organization grows.

• Mission statement: Describes your organization’s purpose and the core problem you’re working to solve. It should be specific, actionable, and inspiring.
• Vision statement: Paints a picture of what the world will look like if your mission is achieved. It should be bold and aspirational.

Example:

• Mission: Reduce the barriers that high-achieving, low-income students throughout San Diego County encounter when preparing, applying, and paying for a university education through mentoring and scholarship programs.
• Vision: To build a more just and equitable society where education empowers every student to become a lifelong learner and a leader in their community.

As Bergman emphasizes, “A compelling mission is the spark, but it’s only the beginning. You need clarity on what you want to accomplish and why.”

Step 3: Create a nonprofit business plan

A business plan isn’t just for for-profit companies. A nonprofit business plan helps you clarify your goals, map out your programs, build a budget, and plan for long-term sustainability. It’s also essential for attracting funders, partners, and board members.

Your plan should include:

• Executive summary
• Mission and vision
• Description of programs and services
• Organizational structure and staffing plan
• Marketing and outreach strategy
• Fundraising plan
• Budget and financial projections
• Evaluation plan to measure impact

He notes, “Even with a great idea, passion alone doesn’t pay for staff, programs, or sustainability. A plan is essential to keep the mission moving forward.”

Step 4: Recruit your board of directors

Your board of directors plays a critical role in governance, strategic oversight, and fundraising. Most states require at least three board members to incorporate. When choosing board members, look for individuals who bring:

• Passion for your cause
• Skills in areas like finance, law, marketing, or nonprofit operations
• Diverse perspectives and lived experience
• A willingness to fundraise and contribute time

Make sure to establish clear roles, expectations, and bylaws to guide board operations. Bergman reflects on early board challenges: “Every nonprofit needs a board so startup nonprofits end up with what I call a ‘friends and family board.’ That’s fine in the beginning but you need to grow out of that as quickly as possible. I’m a strong believer of recruiting for board talent that the nonprofit needs. You want someone on the board that will be extremely comfortable with the finances. Marketing is much more than social media; the board should have someone willing to develop a complete marketing strategy. All the board members should also understand that their primary role will be fundraising.” He also recommends clear bylaws: “As far as bylaws go, I always suggest a few things be addressed in bylaws: board terms, board term limits, and create (and use) a board of advisors.”

Step 5: Incorporate and obtain tax-exempt status

To become a legal nonprofit in the United States, you’ll need to:

1. Incorporate in your state by filing Articles of Incorporation.
2. Apply for an EIN (Employer Identification Number–your organization’s tax ID) through the IRS.
3. Submit IRS Form 1023 or 1023-EZ to apply for 501(c)(3) status (the official application for federal tax exemption).

Getting your 501(c)(3) designation means your organization is recognized as tax-exempt, and donors can deduct contributions on their taxes, making it easier to raise funds.

Each state also has specific requirements for charitable registration and reporting, so be sure to check with your Secretary of State’s office or attorney general. Outside the United States, register with the appropriate companies registrar.

Bergman observes, “Once you’ve made that commitment and validated that your mission fills a true gap, the technical steps in California are relatively straightforward.”

Step 6: Build your infrastructure and Plan for the Long Game

Now that you’re official, it’s time to set up your internal systems and processes so you can run your organization efficiently and ethically. This includes:

• Opening a business bank account
• Creating accounting and financial management systems
• Setting up a donor management system or CRM
• Developing policies for conflict of interest, recordkeeping, and volunteers
• Securing insurance and understanding legal requirements

As Bergman explains, “Your initial excitement will wane eventually. I’ve seen many nonprofit leaders run out of steam and want to move on to something else. I’ll just tell you that closing down a nonprofit is not nearly as simple as just locking the doors!” Building these systems early safeguards your mission, helps you stay compliant, and ensures your organization can thrive, or transition, responsibly for years to come.

Step 7: Design your fundraising strategy

A nonprofit can’t fulfill its mission without funding. From annual giving campaigns and grants to major gifts and corporate partnerships, fundraising is a core part of every nonprofit leader’s job.Your fundraising strategy should align with your mission, donor base, and organizational capacity. Consider:

• Individual giving
• Foundation and government grants
• Corporate sponsorships
• Events and peer-to-peer fundraising
• Monthly donor programs

Learning how to cultivate donors, steward relationships, and effectively communicate your impact is key to long-term sustainability. Bergman reflects, “The most common pitfall I see new nonprofits encounter in their first year is underestimating how central fundraising is to success. Many founders have incredible missions and creative program ideas, but they don’t anticipate that fundraising will quickly become their full-time focus. When I launched Lamp of Learning, I came from a software engineering background and initially felt uncomfortable constantly asking for financial support. But I quickly realized that no matter how strong the vision or how impactful the programs, none of it moves forward without the resources to fund it. I’ll be honest that fundraising isn’t my favorite part of my job but I have to admit it’s the most important part.”

Step 8: Launch and lead with purpose

Once you are ready to launch, focus on building community relationships, sharing your story, and delivering programs. Keep operations lean, respond to feedback, and always return to your mission when making decisions. As Bergman advises, “Do not just build a great program, learn to tell a great story. Funding follows the story, not the description of the operations.”

And remember, this is just the beginning. Leading a nonprofit is a continuous process of learning, adapting, and growing your impact.

Lamp of Learning 2025 award recipients with their college sweatshirts. Photo by J.T. Macmillan.

Strengthen your skills with professional training

Running a nonprofit takes more than good intentions. It takes communication, fundraising, leadership, and operational skills, especially in an increasingly competitive funding environment.

The Professional Certificate in Fundraising and Development from UC San Diego Extended Studies equips emerging and experienced nonprofit professionals with practical, career-ready skills in:

• Donor relations and communication
• Annual giving programs
• Grant writing and proposal development
• Corporate and foundation partnerships
• Relationship-building and stewardship
• Fundraising technologies and trends

This fully online certificate offers networking opportunities with fundraising executives and peers, access to career resources, and the flexibility to tailor your learning through electives that meet your specific goals.

Bergman, an alumnus of this program, reflects on its impact: “The first thing that running a nonprofit taught me was that ‘THE MISSION’ was not really enough and I needed to listen more. The listen-first approach that was common throughout the UC San Diego Extended Studies program was a big shift in my approach to donations. Also, the formality of developing a budget for programs helped lead to a menu of donation opportunities that I could offer. With that in mind, I was able to listen to the donor’s interests and offer paths that aligned with their interests.”

Whether you are launching your first nonprofit or expanding your impact, building professional skills strengthens your ability to sustain meaningful work.

Ready to Make a Difference?

Starting a nonprofit can feel overwhelming, but you don’t have to do it alone. With a clear plan, the right support, and a commitment to learning, you can build something meaningful—and sustainable.

If you're ready to lead with purpose and strengthen your ability to fund and grow your organization, enroll in the Fundraising and Development Certificate and take the next step in your nonprofit journey.