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Starting a nonprofit in Alabama can be an incredibly rewarding experience — especially if you’re passionate about a cause in your community.
But just like starting a for-profit business, starting a nonprofit takes some thought and effort, as well as a bit of paperwork. In this blog, we’ll cover everything there is to know about starting a nonprofit in Alabama, so you can begin making an impact in no time.
13 steps to start a nonprofit in Alabama
- Step 1 Research and plan
- Step 2: Name your organization
- Step 3: Recruit a leadership team
- Step 4: Appoint a registered agent
- Step 5: File the Articles of Incorporation
- Step 6: Apply for an EIN
- Step 7: Create bylaws
- Step 8: Get Alabama tax identification numbers/accounts
- Step 9: Apply for tax-exempt status
- Step 10: Register for charitable fundraising
- Step 11: Obtain other necessary permits and licenses
- Step 12: Start fundraising
- Step 13: Stay compliant
Step 1. Research and plan
When considering starting a nonprofit in Alabama from scratch, it can be hard to know where to begin. When deciding to take on the endeavor, it is important to get clear on a few fundamental things, including:
- Community needs: Consider what problems you want to address or what positive changes you want to make.
- The market: Research nonprofits in Alabama that work in similar areas or address similar issues. Identify any gaps or needs that your nonprofit could address.
- Your goals: Clarify your nonprofit's specific goals and objectives. Determine what you hope to achieve in the short term and long term.
- Your mission statement: Write a clear and concise mission statement that articulates who you are, what you do, and who you serve.
- Feedback: Seek feedback from stakeholders, potential beneficiaries, and members of your community to ensure that your mission statement accurately reflects community needs.
Step 2. Name your organization
Once you’ve determined your organization’s core mission and goals, it’s time to name your nonprofit. Not only is this step in the process important for marketing and branding purposes, but it’s also a crucial part of the legal process of starting a nonprofit in Alabama.
When deciding on your organization’s name, be sure to choose a name that:
- Reflects your mission and goals
- Describes what you aim to do
- Is easy to spell and pronounce
- Offers room for future growth
Per Alabama state rules, you’ll need to ensure that no other entity in the state has that name. To do so, use the Alabama Secretary of State website. Once you ensure the name is unique, you’ll need to reserve it using the Name Reservation Request Form for Domestic Entities form and pay a $25 filing fee.
Step 3. Leadership team
Once you’ve determined your organization name and confirmed that it is not already in use, it’s time to create a leadership team.
Identifying an Incorporator and a Board of Directors is not only a strategic decision that can help make your nonprofit a success, but it’s a required one in Alabama.
- Incorporator: Nonprofits must recruit at least one Incorporator who will be responsible for signing the Articles of Incorporation.
- Directors: You must assemble a board of at least three directors who will help guide your nonprofit through strategic decision-making. You’ll need to assign a president, one or more vice-presidents, a secretary, a treasurer, and other officers and assistant officers as deemed necessary are required.
When choosing your leadership team, be sure to select people who are trustworthy, dependable, and bring a skillset to the table. Whether they’re already a member of your organization or a trusted volunteer, they’ll help you make crucial decisions about your charity.
Step 4. Appoint a registered agent
Appointing a registered agent is a vital step when forming a nonprofit in Alabama. In essence, a registered agent acts as a reliable point of contact for legal matters. This designated individual receives important documents and official correspondence on behalf of your nonprofit, such as legal notices and tax forms.
The registered agent must be located in Alabama and available during regular business hours to receive legal correspondence and communication.
Step 5. File the Articles of Incorporation
Next, you’ll need to formally register your organization as a legal nonprofit in the state of Alabama by filing Articles of Incorporation. To do this, complete the Domestic Nonprofit Corporation Certificate of Formation form and file it either online or by mail. When completing this form, be sure to attach your name reservation certificate and pay the $200 fee.
Step 6. Obtain an EIN
In Alabama, like in other states, nonprofits are required to obtain an EIN, or Employer Identification Number. An EIN is like your organization's social security number. It's used for tax purposes, including opening bank accounts, hiring employees, and applying for tax-exempt status.
Step 7. Draft bylaws
Next, you’ll need to call a meeting with your board to draft bylaws that align with your mission and comply with Alabama nonprofit laws.
Bylaws are the rules and procedures that govern how your nonprofit operates. They outline the structure of your organization, the responsibilities of the board and officers, how meetings will be conducted, and how decisions will be made.
When creating your bylaws, be sure to:
- Use clear and concise language: Make the language easy to understand for all board members and stakeholders. Avoid jargon and overly complex language.
- Make them comprehensive: Your bylaws should cover all essential aspects of your organization's governance, including board structure, officer roles, meeting procedures, decision-making processes, and conflict resolution mechanisms.
- Alignment bylaws with mission and values: Ensure that the bylaws reflect and support the goals of the organization.
- Consider flexibility: Include provisions that allow for amendments to the bylaws as the organization evolves and grows.
- Outline board structure and responsibilities: Clearly define the board of directors, its qualifications, terms of office, and responsibilities.
- Determine meeting procedures: Detail the frequency, notice requirements, quorum, voting procedures, and more.
- Address finances: Establish guidelines for budgeting, accounting, and reporting requirements.
- Create a conflict of interest policy: Include a conflict of interest policy that requires board members and officers to disclose any conflicts of interest and abstain from voting on matters in which they have a personal or financial interest.
- Include dissolution procedures: Include provisions for the process of distributing assets and winding up affairs in accordance with state law and IRS regulations.
Step 8. Get state tax Identification numbers and accounts
Alabama offers a consolidated state tax registration application, so you’ll need to file for state tax identification numbers. To do this, complete Form COM-101 and submit it either online or by mail to the Alabama Department of Revenue.
Step 9. Apply for federal and state tax-exempt status
Once you’ve created your bylaws, you’ll need to apply for both federal and state tax exemption.
- Federal tax-exempt status: Fill out Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. You’ll need to provide detailed information about your nonprofit's activities, finances, and governance.
- State Sales Tax Exemption: Fill out form ST: EX-A1: Application for Sales Tax Certificate of Exemption and Instructions.
Step 10. Registered for charitable fundraising
Next, your nonprofit will have to register for charitable fundraising on the Alabama Attorney General website and pay the $25 fee.
Step 11. Obtain other necessary permits and licenses
Once you’ve completed all the necessary filings, you’ll need to consider whether you need any other permits.
Use portals like the Small Business Administration Business License & Permit look-up tool and search by your business type and locality to check to see if you’re in need of other permitting.
Step 12. Start fundraising
Once you’ve filed all of the appropriate forms and established the necessary regulatory foundation for your nonprofit, it’s time to start fundraising.
First, build a fundraising plan that outlines your goals, strategies, and tactics. Plus, be sure to consider how you’ll cultivate donor relationships. Then, Put your fundraising plan into action by launching campaigns, events, and appeals to solicit donations and support. Keep track of your fundraising efforts and evaluate their effectiveness over time.
One of the best ways to start your nonprofit, and begin bringing in funds and connecting with donors, is by using a free all-in-one donation platform, designed specifically for charities. Unlike other platforms, Zeffy offers free marketing and engagement tools, event ticketing and management, raffle and auction tools, and so much more — without charging nonprofits a cent.
So not only can nonprofits start fundraising in minutes, but they don’t have to pay any upfront, monthly, or hidden fees, ever. In fact, over 10,000 nonprofits use and love Zeffy for its powerful but simple —and always free—software designed to help make the world a better place.
Step 13. Stay compliant
As a legal nonprofit in the state of Alabama, you’ll need to remain compliant with federal and state rules and regulations throughout the year. This includes:
- Maintaining records: Keep accurate and up-to-date records of your nonprofit's activities, finances, and governance. This includes meeting minutes, financial statements, tax filings, and other important documents.
- Filing annual reports: File annual reports with the IRS to maintain your nonprofit's legal and tax-exempt status.
- Staying informed: Stay informed about changes to Alabama state laws and regulations affecting nonprofit organizations. Attend training sessions, workshops, and webinars to learn about best practices and compliance requirements.
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Learn how this Alabama nonprofit raised $93,000 for free
Dyslexia Center of the Shoals, a local Alabama-based nonprofit, provides education, information, resources, quality therapy, and teacher training to meet the needs of individuals, families, and communities affected by dyslexia.
One of the center’s biggest hurdles was finding a way to conveniently the therapists they and their beneficiaries worked with. Though lots of nonprofit platforms offered a simple way to collect payments, most all charged hefty upfront costs and processing fees. In order to save money, and launch their own donation form without paying a cent, the center teamed up with Zeffy — the 100% fee-free fundraising platform.
Since using Zeffy, the center has been able to raise $93,000 and save over $4,000 in fees
How to start a nonprofit in Alabama FAQs
How much does it cost to start a nonprofit organization in Alabama?
- Articles of Incorporation fling: $200
- Federal tax exemption: $275 or $600 IRS fee
- Alabama charitable organization registration: $25
- Name reservation: $25
How do I start a nonprofit with little money?
Starting a nonprofit organization with no money requires strategic planning. To cut down on costs, consider:
- Using volunteers: Leverage volunteers for administrative, fundraising, or program work, to reduce the need for paid staff.
- Seeking out in-kind donations and grants: Ask for donations of goods and services from businesses, individuals, or other organizations to support your nonprofit's activities (think office space or equipment). And, research grant opportunities to generate free financial support for your nonprofit's mission.
- Leveraging partnerships: Look for potential partners, such as other nonprofits or community organizations, who might want to collaborate on shared goals.
- Taking advantage of free tools and platforms: Be sure to use fundraising and donor engagement tools that are completely free to use, like Zeffy. That way, you’ll never have to worry about hidden fees and can get started making an impact right away — without paying a cent.
How do I start a nonprofit organization in Alabama?
- Step 1. Research and plan: Determine your mission, target audience, and ultimate goals.
- Step 2. Name your organization: Choose a unique and descriptive name for your organization that aligns with your mission and abides by Alabama state laws.
- Step 3. Recruit a leadership team: Appoint one incorporator and three directors.
- Step 4. Appoint a registered agent: Identify a trusted person who will receive legal documents on behalf of the nonprofit.
- Step 5. File the Articles of Incorporation: File with the Alabama Secretary of State to officially establish the nonprofit.
- Step 6. Apply for an EIN: Apply for an Employer Identification Number (EIN) from the IRS for tax purposes and financial transactions.
- Step 7. Create bylaws: Draft and adopt rules outlining the internal governance and operational procedures of the organization.
- Step 8. Get Alabama tax identification numbers/accounts: Register for individual tax accounts that apply.
- Step 9. Apply for tax-exempt status: Apply for federal and state tax-exempt status under section 501(c)(3) of the Internal Revenue Code and Alabama state law.
- Step 10. Register for charitable fundraising: Register with the state of Alabama in order to solicit donations from the public.
- Step 11. Obtain other necessary permits and licenses: Apply for any additional permits and licenses required to operate legally in Alabama.
- Step 12. Start fundraising: Use a 100% free fundraising platform like Zeffy to start raising funds in minutes.
- Step 13. Stay compliant: Ensure ongoing compliance with all applicable federal, state, and local regulations to maintain nonprofit status.
Is it worth it to start a nonprofit?
Starting a nonprofit can be incredibly rewarding, especially if you're passionate about a cause or issue.
But it's not just about passion – you also need to consider whether your nonprofit can make a real impact. Take a look around your community or society and see if there are unmet needs or gaps in services. If your nonprofit can fill one of those gaps and truly make a difference, then it's definitely worth considering.
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