How to Start a Nonprofit in Virginia: A Success Blueprint

How to start a nonprofit in Virginia

Starting a nonprofit organization can be a rewarding way to give back to your community and make a lasting impact. If you’re in Virginia and considering this path, you’ll need to understand the specific steps and legal requirements involved. This comprehensive guide will walk you through the process of launching a nonprofit in Virginia by providing the essential information you need to get started.

1 – Define Your Mission

A nonprofit organization is built around its mission. The mission statement is more than just a couple of phrases or sentences; it’s the heart and soul of the organization, providing direction and purpose. It defines why the organization exists, whom it serves, and how it serves them.

Importance of Having a Clear and Defined Mission

A well-defined mission is important for several reasons:

  1. Direction and Focus: The mission provides guidance to the organization’s activities. It helps the board, staff, volunteers, and stakeholders to stay focused on the organization’s main purpose and not get distracted by other interests.
  2. Decision Making: A clear mission guides strategic decision-making. It serves as a framework for determining what activities or initiatives align with the organization’s purpose.
  3. Attract Support: A compelling mission helps to attract volunteers, donors, and grants. People and institutions are more likely to support an organization when they clearly understand its purpose and objectives.
  4. Accountability: The mission statement establishes a basis for accountability. It allows stakeholders to assess whether the organization is fulfilling its stated purpose.

How to Create a Compelling and Impactful Mission Statement

Creating a compelling and impactful mission statement requires thoughtfulness and a clear understanding of the nonprofit’s objectives. Here are some steps to guide you:

  1. Identify Your Purpose: The first step in creating a mission statement is to define your purpose. What is the primary goal of the organization? What problem are you aiming to solve?
  2. Identify Your Target Audience: Who are the primary beneficiaries of your work? Be as specific as possible.
  3. Define Your Approach: How will you achieve your purpose? What actions or strategies will you take?
  4. Be Concise and Clear: A mission statement should be brief and easy to understand. Avoid jargon or overly complex language.
  5. Inspire and Motivate: While clarity is important, a good mission statement should also inspire and motivate. It should communicate your passion and commitment to the cause.

Examples of Effective Mission Statements in Nonprofits

Here are examples of effective mission statements from well-known nonprofits:

  1. Feeding America: “Our mission is to feed America’s hungry through a nationwide network of member food banks and engage our country in the fight to end hunger.”
  2. Charity: Water: “We’re on a mission to solve the water crisis and reinvent charity for a new generation.”
  3. American Red Cross: “The American Red Cross prevents and alleviates human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors.”

Each of these statements clearly defines the purpose of the organization, the methods by which it achieves its goals and the audience it serves. This clarity helps guide their activities and communicates their purpose to supporters and beneficiaries.

2 – Laws and Regulations for Nonprofits in Virginia

All U.S. states, including Virginia, have specific regulations for nonprofits. These rules oversee their creation, operation, and termination. In Virginia, the key legislation is the Virginia Nonstock Corporation Act. This act outlines the legal framework for Virginia’s nonprofit organizations. Some of the state-specific laws and regulations are:

State-Specific Laws and Regulations

  1. Formation of Nonprofit Corporations: Nonprofits in Virginia are created by filing articles of incorporation with the State Corporation Commission. The articles of incorporation must contain specific information, such as the name of the corporation, its initial registered office and agent, and a statement of the corporation’s purpose.
  2. Board of Directors: Virginia law sets specific regulations on the composition and operation of a nonprofit’s board of directors. The board should consist of at least one director, and they must meet at least once a year.
  3. Conflict of Interest: Directors and officers of a nonprofit organization should avoid conflicts of interest. They must always act in the organization’s best interest. Legal penalties may ensue if these provisions are violated.
  4. Reporting Requirements: Nonprofits in Virginia must file an annual report with the State Corporation Commission.
  5. Tax Exemptions: Nonprofits may be eligible for exemption from certain state taxes, such as sales and use taxes, but they must meet certain requirements and apply to the Virginia Department of Taxation for these exemptions.

Importance of Compliance with These Laws

Compliance with the state laws governing nonprofit organizations is crucial for several reasons:

  1. Maintaining Good Standing: Compliance ensures the nonprofit maintains its good standing with the state, which is essential for its continued operation and its eligibility to apply for grants and other types of funding.
  2. Preventing Legal Penalties: Noncompliance can lead to a range of legal penalties, including fines and the revocation of the nonprofit’s corporate status.
  3. Protecting Reputation: Compliance with laws helps to protect the reputation of the nonprofit. Organizations that are found to be non-compliant may face negative public opinion, which can affect donations and volunteer support.

Steps to Ensure Adherence to These Laws and Regulations

  1. Understand the Requirements: The first step to compliance is understanding what the law requires. This may involve consulting with a lawyer or other expert in nonprofit law in Virginia.
  2. Develop Policies and Procedures: Nonprofits should have written policies and procedures that outline how they will comply with various legal requirements.
  3. Regular Review: The board of directors should regularly review the organization’s activities to ensure they are in compliance with the law.
  4. Professional Advice: Nonprofits should seek legal and accounting advice as needed to ensure they are meeting all legal and financial reporting requirements.
  5. Ongoing Training: Nonprofits should provide ongoing training to their board members and staff to ensure everyone understands and can comply with the legal requirements.

3 – Choose a Name

The process of choosing a name is an important step in forming a nonprofit organization. A good name can make your organization easily recognizable, convey your mission and values, and help you establish a strong brand identity.

The Role and Significance of a Nonprofit’s Name

  1. Recognition: A clear and distinctive name helps people remember and recognize your organization. This is particularly important when seeking donations or applying for grants.
  2. Conveys Mission and Values: A good name can convey your organization’s mission and values. It can give potential donors, volunteers, and those you serve a quick understanding of what your organization stands for and its purpose.
  3. Branding: Your nonprofit’s name is a key part of your brand. It can help you stand out in a crowded field of other organizations, creating a unique identity that helps you connect with your target audience.

Guidelines for Choosing a Suitable Name

  1. Reflect Your Mission: Choose a name that reflects your organization’s mission or the cause it supports.
  2. Keep it Simple: Simple, concise names are often more memorable. Avoid using complex words or jargon that may confuse the public.
  3. Make It Unique: Your name should be unique to avoid confusion with other organizations, particularly those in the same field.
  4. Consider Internet Availability: Check if the corresponding domain name is available for your website, and consider how the name will read as an email address or on social media platforms.
  5. Avoid Restricted or Prohibited Names: Avoid names that imply a government affiliation or those that could be misleading.

Procedure for Checking Name Availability in Virginia

Before you can register your nonprofit’s name in Virginia, you must ensure that the name is not already in use by another organization. Here are the steps:

  1. Online Search: First, conduct a name search on the Virginia State Corporation Commission’s business name database. This search will tell you if the name you want to use is already in use by another corporation.
  2. Trademark Search: It’s also wise to check the U.S. Patent and Trademark Office’s trademark database to ensure your proposed name does not infringe on any registered or pending trademarks.
  3. Reserve the Name: If your desired name is available, you can choose to reserve it for a period of 120 days by filing a name reservation application with the State Corporation Commission and paying the applicable fee. This ensures that no other entity can register the name while you complete your articles of incorporation.

Remember, the availability of a name does not ensure its acceptability, so make sure the chosen name abides by all the naming rules in Virginia. It’s often advisable to consult with an attorney to ensure that your nonprofit’s name will not violate any laws or regulations.

4 – Create Bylaws

Bylaws are essentially the constitution of a nonprofit organization. They outline the structure of the organization and provide guidance on various operational aspects, from board meetings to the handling of financial resources.

The significance of bylaws in running a nonprofit includes:

  1. Providing Structure: Bylaws provide a clear structure for the organization, outlining the roles and responsibilities of board members, officers, and other key individuals.
  2. Guiding Decision Making: They serve as a guide for making decisions within the organization, providing procedures for making decisions and resolving disputes.
  3. Ensuring Legal Compliance: Bylaws ensure that the organization is operating in compliance with applicable laws and regulations.
  4. Instilling Confidence: Bylaws instill confidence in donors, volunteers, and other stakeholders by demonstrating that the organization is well-run and accountable.

Key Elements That Should be Included in the Bylaws

Bylaws can differ based on the needs and circumstances of each organization, but here are some common elements that should be included:

  1. Organization’s Name and Purpose: This section should outline the official name of the organization and its mission.
  2. Board of Directors: This section needs to detail the board’s size, the election or appointment process of directors, their office terms, roles, responsibilities, and meeting procedures.
  3. Officers: This part needs to outline the officer positions (like President, Secretary, and Treasurer), their duties, election or appointment procedures, and office terms.
  4. Committees: If the organization plans to have committees, the bylaws need to indicate the formation process of these committees and their roles and responsibilities.
  5. Membership: If the organization has members, the bylaws should outline the eligibility for membership, the rights, and responsibilities of members, and procedures for membership meetings.
  6. Conflict of Interest Policy: This section should outline procedures for handling potential conflicts of interest.
  7. Amendments: The bylaws should also specify the process for amending the bylaws.
  8. Dissolution: The bylaws should outline the procedure for dissolving the organization, including the distribution of assets.

Virginia-Specific Requirements

In Virginia, the Nonstock Corporation Act provides some specific requirements and guidelines for bylaws:

  1. Adoption and Amendment: In Virginia, the incorporators or directors adopt the organization’s initial bylaws. Unless the articles of incorporation or bylaws state differently, the board of directors holds the power to amend the bylaws.
  2. Required Provisions: Virginia law does not require bylaws to include specific provisions, but they typically provide for matters such as the number of directors, the classes of membership, if any, and the manner of notice for members’ meetings.
  3. Consistency with Law and Articles of Incorporation: Bylaws must be consistent with Virginia law and the organization’s articles of incorporation.
  4. Emergency Bylaws: Virginia law allows nonprofits to include provisions in their bylaws for managing the organization during an emergency, such as a natural disaster.

5 – Form a Board of Directors

The board of directors plays a pivotal role in the management and governance of a nonprofit organization. As the governing body of a nonprofit, the board makes strategic decisions, oversees the organization’s activities, and ensures it fulfills its mission in a responsible manner.

The Role and Significance of a Board of Directors

  1. Strategic Direction: The board provides strategic direction to the organization, helping to guide its activities and ensure they align with the mission and objectives.
  2. Financial Oversight: The board actively oversees the organization’s finances, guarantees its financial sustainability, and confirms funds align with and support the mission.

  3. Policy Making: The board is responsible for establishing policies that govern the organization’s operations and activities.
  4. Compliance and Accountability: The board ensures that the organization complies with all relevant laws and regulations and is accountable to its stakeholders, including donors, volunteers, and the communities it serves.
  5. Leadership Selection: The board hires, evaluates, and, when necessary, fires the chief executive.

Steps to Forming an Effective Board of Directors

  1. Identify Needed Skills and Experience: Assess the skills and experience that will be beneficial for your board, considering your organization’s mission, goals, and activities.
  2. Recruit Board Members: Identify potential board members who possess the needed skills and experience and are committed to your organization’s mission. This could be through your personal networks or through a public call for applications.
  3. Establish Board Structure: Determine the size of your board and the roles and responsibilities of each board member, typically outlined in your bylaws.
  4. Provide Orientation and Training: Provide new board members with an orientation to familiarize them with your organization and their responsibilities. Ongoing training should also be provided to keep board members informed and effective.
  5. Evaluate Board Performance: Regularly evaluate the performance of the board as a whole and of individual board members to ensure they are effectively supporting your organization.

Virginia-Specific Requirements for Board Members

Virginia’s Nonstock Corporation Act governs the structure and activities of nonprofit boards:

  1. Number of Directors: Under Virginia law, a board must consist of at least one director. Beyond this, the organization’s bylaws typically specify the exact number of board members.
  2. Qualifications: Directors must be individuals, but there are no requirements regarding their age, residency, or membership in the corporation unless the articles of incorporation or bylaws provide otherwise.
  3. Election and Term of Office: Directors are elected at the first annual meeting of members (or of the board if there are no members), and at each annual meeting thereafter unless the articles or bylaws provide for staggered terms.
  4. Meetings: The board must meet at least once a year. Additional meetings can be held as provided in the bylaws.
  5. Quorum and Voting: Unless the articles of incorporation or bylaws specify a different number, a quorum is a majority of the directors in office immediately before a meeting begins. Most decisions are made by a majority vote of the directors present at a meeting at which a quorum is present.

While the law provides minimum requirements, best practices often go beyond these legal minimums. Nonprofits can – and often should – adopt stricter rules in their bylaws to ensure a diverse, active, and effective board.

6 – File Articles of Incorporation

Articles of Incorporation, also referred to as the charter document or corporate charter, is the document filed with the state that brings your nonprofit corporation into existence.

This document officially establishes your organization as a legal entity in the state of Virginia. It is a critical step in forming your nonprofit and requires careful attention to detail.

Its importance lies in:

  1. Legal Establishment: The Articles of Incorporation officially establish your organization as a separate legal entity, providing liability protection for directors, officers, and members.
  2. Regulatory Compliance: The document details the structure and purpose of your nonprofit. Your organization’s setup for a lawful purpose and intent to comply with state regulations is demonstrated to regulators through this document. 
  3. Fundraising and Tax Exemptions: The Articles of Incorporation are needed to apply for tax-exempt status at the federal and state level and are often required when applying for grants or other forms of funding.

Steps to Filing Articles of Incorporation in Virginia

  1. Prepare the Articles of Incorporation: Draft the document, ensuring that it includes all necessary information as per Virginia laws.
  2. Submit the Document: Submit the Articles of Incorporation to the Virginia State Corporation Commission. This can be done online, by mail, or in person.
  3. Pay the Filing Fee: Pay the required filing fee. The fee may vary, so be sure to check the current fees on the Virginia State Corporation Commission’s website.
  4. Wait for Approval: Once the Articles of Incorporation are submitted and the fee paid, the Virginia State Corporation Commission will review your document. If everything is in order, they will stamp it approved and return a certified copy to you.

Key Information to Include

While the exact requirements can vary, typical information to include in your Articles of Incorporation in Virginia are:

  1. Name of the Corporation: Your nonprofit’s official name.
  2. Purpose: A statement of the purpose of the organization, which must be specific enough to satisfy IRS requirements for tax-exempt status.
  3. Registered Agent and Registered Office: The name and address of your nonprofit’s registered agent in Virginia, who is authorized to receive legal papers on behalf of the organization.
  4. Directors: The number of directors, or information about how they will be designated or elected.
  5. Members: Information about the members of the organization, if there are to be members.
  6. Dissolution Statement: A statement of how the assets of the nonprofit will be distributed upon dissolution, which must meet IRS requirements for tax-exempt status.
  7. Incorporator(s): The name and address of the incorporator(s) – the person(s) preparing and filing the Articles.
  8. Duration: The duration of the corporation, if it is not perpetual.

7 – Obtain an Employer Identification Number (EIN)

Once you’ve legally established your nonprofit organization, your next step is to secure an Employer Identification Number (EIN), also called a Federal Tax Identification Number.

The Internal Revenue Service (IRS) assigns this unique nine-digit number to identify a business entity for tax purposes. For a nonprofit organization, an EIN is crucial for many reasons:

  1. Federal Tax Returns: Nonprofits must use their EIN when filing federal tax returns and other documents with the IRS.
  2. State Tax ID: The EIN is also usually required to obtain a state tax ID number.
  3. Banking: Banks generally require an EIN to open a bank account in the name of the organization.
  4. Hiring Employees: If your nonprofit plans to hire employees, you will need an EIN for wage reporting purposes.
  5. Licenses and Permits: An EIN is often required when applying for licenses and permits.

Step-by-Step Guide on How to Apply

Applying for an EIN is a straightforward process and can be done online, by fax, or by mail. Here’s how to apply online, the preferred method for most organizations due to its speed:

  1. Verify Eligibility: Ensure that your organization is located in the United States or U.S. Territories. The person applying online must have a valid Taxpayer Identification Number (SSN, ITIN, EIN).
  2. Prepare Information: Gather necessary information including the legal name of the entity, name and SSN/ITIN/EIN of the responsible party, mailing address, and details about the organization and its activities.
  3. Apply Online: Go to the IRS website and fill out the online application form. The process must be completed in one session, as you cannot save and return to an incomplete application.
  4. Receive EIN: Upon completion of the application, you will receive your EIN immediately. The IRS will also provide a confirmation notice that you can download, save, and print.

How to Use an EIN in Nonprofit Operations

Once obtained, the EIN is used in various aspects of running your nonprofit:

  1. Bank Accounts: Use the EIN to open a bank account in the name of your nonprofit.
  2. Federal and State Tax Filings: Use the EIN when filing your federal and state tax returns and other documents with the IRS and state revenue department.
  3. Employee Paperwork: If you have employees, use the EIN on their W-2 forms and other employment-related documents.

Your EIN is a permanent federal tax ID number. It does not expire and stays with your organization unless the business structure or ownership changes.

8 – Apply for Tax Exemption

After obtaining an EIN, the next crucial step for a nonprofit organization is to apply for tax-exempt status. This status provides many benefits and is a defining characteristic of nonprofit organizations.

Tax-exempt status, particularly under section 501(c)(3) of the Internal Revenue Code, is what most people think of when they consider nonprofits. This status means the nonprofit is exempt from federal corporate income taxes on income related to its mission.

The benefits of tax-exempt status are considerable:

  1. Tax Savings: Nonprofits with tax-exempt status do not have to pay federal and often state corporate income taxes.
  2. Eligibility for Grants: Many public and private grants are only available to nonprofits with tax-exempt status.
  3. Donor Incentives: Donors can deduct contributions to 501(c)(3) nonprofits on their federal and often state tax returns, incentivizing them to donate.
  4. Postage Savings: Nonprofits may be eligible for lower postal rates on third-class bulk mailings.

Process of Applying for Tax-Exempt Status

To apply for federal tax-exempt status:

  1. Prepare your Application: Fill out Form 1023, the Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. Smaller nonprofits may be eligible to use Form 1023-EZ, a streamlined version of the application.
  2. Submit your Application: Send the application to the IRS, along with the required supporting documents.
  3. Pay the Application Fee: The IRS requires a fee to process your application, with the amount depending on the size of your organization’s budget.
  4. Await the Determination Letter: Once the IRS approves your application, they will send a determination letter. This letter confirms your organization’s exemption from federal income taxes under section 501(c)(3).

For state-level tax exemptions in Virginia:

  1. Exemption from Corporate Income Tax: Virginia follows federal tax-exempt status. So, once your nonprofit receives its 501(c)(3) determination letter from the IRS, it is automatically exempt from Virginia’s corporate income tax.
  2. Sales and Use Tax Exemption: To be exempt from sales and use taxes, your organization must apply to the Virginia Department of Taxation with Form ST-13.

Virginia-Specific Requirements for Tax Exemption

In Virginia, certain types of nonprofits may be exempt from some taxes. For instance, if a nonprofit organizes for charitable, educational, or cultural purposes, it could qualify for exemption from sales and use taxes.

For nonprofits seeking exemption from sales and use taxes:

  1. Eligibility: The organization must be a nonprofit organized or operated for charitable, educational, or cultural purposes.
  2. Apply for Exemption: First, an organization must complete Form ST-13. This is the Exemption Certificate for Sales and Use Tax on Purchases and Uses by an Exempt Organization. Once completed, the form must be submitted to the Virginia Department of Taxation.
  3. Renew Exemption: The exemption lasts for five years. To renew it, you must submit a new ST-13 at least 90 days before the current exemption expires.

Tax-exempt status requires compliance with ongoing rules and restrictions at both federal and state levels. These rules include limitations on political activities. Another requirement is the filing of annual tax returns. If your organization fails to comply with these rules, it could result in the revocation of your tax-exempt status.

9 – Obtain Necessary Licenses and Permits

Even as a nonprofit organization, there are likely a number of licenses and permits you’ll need to legally operate in Virginia. Ensuring you have the proper licensing is a key part of running a compliant nonprofit.

Why Licenses and Permits are Necessary

Licenses and permits serve several purposes in the operation of a nonprofit organization:

  1. Legal Compliance: Obtaining the necessary licenses and permits ensures that your organization is operating within the boundaries of local, state, and federal laws.
  2. Public Trust: Having the right licenses can also increase the public’s trust in your organization, making them more likely to donate to or support your cause.
  3. Avoiding Penalties: Failure to obtain necessary licenses and permits can lead to fines, sanctions, or even the closure of your nonprofit.

Overview of Common Licenses and Permits

The licenses and permits required for a nonprofit in Virginia can vary depending on the nature of the organization’s activities. Here are a few common ones:

  1. Charitable Solicitation License: Most states, including Virginia, require a license to solicit donations. Thus, nonprofits in Virginia intending to solicit contributions must register with the Virginia Department of Agriculture and Consumer Services’ Office of Charitable and Regulatory Programs.
  2. Business License: Depending on the local regulations, your nonprofit may need a basic business license to operate in your city or county.
  3. Fundraising Event Permits: If your organization plans to hold special events like raffles, bingo games, or other gambling activities, it may need a permit from the Virginia Charitable Gaming Board.
  4. Sales Tax Exemption: As mentioned previously, if your nonprofit qualifies for sales tax exemption, you will need to file Form ST-13 with the Virginia Department of Taxation.

Procedure for Obtaining These Licenses and Permits

  1. Charitable Solicitation License: You must file a registration statement before soliciting contributions in Virginia. You can find the forms on the Virginia Department of Agriculture and Consumer Services’ website. The organization may also need to submit financial statements or other documents.
  2. Business License: Check with your local city or county government office to see if you need a basic business license and to learn the process for obtaining one.
  3. Fundraising Event Permits: For permits to conduct charitable gaming activities, check the Virginia Charitable Gaming Board’s website for application forms and information on the application process.
  4. Sales Tax Exemption: Complete and submit Form ST-13 to the Virginia Department of Taxation to apply for exemption from sales and use taxes.

Every nonprofit is unique, and the specific licenses and permits your organization will need may vary. It’s important to research thoroughly and consult with a professional if needed to ensure that your nonprofit is fully compliant with all legal requirements.


Starting a nonprofit in Virginia is a valuable endeavor that can make a significant difference in the community. Each step, from articulating your mission to ensuring regulatory compliance, paves the way for a successful and impactful organization. With determination and the right guidance, your nonprofit can become a powerful force for change.

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