Are you thinking about starting a club/social group, or do you already have one that you’d like to run more seriously? Establishing your club as a nonprofit is a great way to promote growth and reputation, and save money on taxes.
Follow this guide to learn how to start a club as a nonprofit and the steps you’ll need to take.
Does my club qualify as a nonprofit?
Any club or group that has members but doesn’t operate for profit can be a nonprofit, including sports teams, university clubs, student societies, local interest groups, booster clubs, and any other type of club.
What does it mean to not operate for profit?
If your club collects money from your members for dues or events, and you put all that money back into the club’s operations, congratulations! Your club is not for profit, because you do not take any leftover money from your club as a profit. You are therefore eligible to incorporate as a nonprofit.
How to start a club as a nonprofit
Step 1: Establish the mission & vision of your club
If you’re creating a sports club, are you committed to improving health and wellness, fostering a sense of community, or just some friendly competition? Write out why you’re forming the club – having your club’s purpose statement written will come in handy later.
With a general understanding of your club, you can start developing how you envision your club will run. What type of activities will you run? Will you charge for membership?
Step 2: Legally incorporate your club
Once you have a firm grasp of what your club is about and your plans for running it, you should incorporate your club with your local state secretary. Incorporating allows you to operate your club without any personal liability, and with an exemption from income tax from any money you collect.
The incorporation process can be hard for some small groups to manage by themselves. Crowded offers incorporation services at very low prices to get groups up and running quickly and affordably. Within the incorporation process, there are many tasks to complete:
Create Club bylaws:
To incorporate your club, you’ll need to draft bylaws that outline how it will be run. The bylaws will include details about the leadership structure, how leaders are chosen, the club’s mission, and club activities.
(We’ve included a free bylaws template at the bottom of this blog!)
Apply for an EIN:
Every organization needs an Employee Identification Number (EIN), even if you aren’t going to have any employees. This number will serve as your club’s tax identification. Crowded can help your club apply for an EIN for only $20.
Apply for tax-exempt status:
Once your organization is incorporated and has an EIN, you can file for your tax-exempt status to the IRS. This establishes your membership club as a 501(c) organization with the IRS, meaning that you won’t have to pay taxes on the money your club collects on dues or fundraising.
Step 3: Set membership dues
With your club established, you need to determine if and how much you’re going to charge for your club’s dues for members. You need to ensure that you have enough to fund club activities, but you also need to find a price that is fair for your members.
Membership dues are one of the primary concerns of new members of any club. Adding incentives for members can also help drive recruitment. This could be something as simple as a referral program or custom t-shirts with your club’s logo.
Decide which method your club will use to collect dues, tickets, and other funds. Cash? Venmo? We recommend utilizing an online payment collection service that will allow you to easily collect money from your members, and keep the club’s funds secure.
Step 4: Open a bank account
With the dues and money you will collect from your club, you need a dedicated, safe place to store it. There’s no better place than a nonprofit bank account. See our list of top nonprofit bank accounts to choose from.
Crowded’s bank accounts make it easy to handle the financial details of running your club. With our integrated banking platform, you can manage your group’s finances without worrying about high banking fees, scattered systems, or complicated accounting apps. We offer features like easy membership dues collection and digital Visa debit cards for members to make club expenses more efficient and trackable.
Step 5: Building and managing your club’s membership base
A club with a thriving membership base is able to proceed with more of its planned activities, broadening its horizon and making more efficient use of resources. However, growing your club can be difficult. You need to reach new members, and that requires a marketing and outreach plan.
Check out our list of 10 tips for growing and retaining members.
Consider the specific niche that your club appeals to and which specific types of marketing are most effective. The right answer could be print flyers, social media, or other marketing methods.
Joining your club should be easy for any prospective members. Make sure that your signup process is streamlined so that no new members are put off by it. You also want ongoing operations to be as smooth as possible. Nonprofit member management software can make collecting membership dues and other areas of financial management incredibly straightforward for your club.
Business as usual for your new club
As your club moves forward, continue to plan events that provide value for your members, ensuring that your members get the most out of your club. This also helps provide great word-of-mouth for your club, drawing in new members as well.
Hold elections for your club, with the relevant positions for your club’s needs. Every club needs a president and a treasurer, but maybe you’ll want a membership coordinator or a chief of snacks. Make sure that your board abides by the terms that were set out in your club’s bylaws during incorporation
Organizing and carrying out events can be difficult when you’re dealing with multiple members carrying out different roles in planning and execution. Dealing with funds for activities can get complicated quickly, so using the right club spending method is key.
You need to track all expenses, along with having a practical way for different members to access club funds. Crowded’s unlimited free budgeted digital debit cards are a great way for members to make purchases transparently on behalf of their club. Best of all, no more reimbursements!