Can a Minor Start a Nonprofit? A 'How-to' Guide for Minors!
Can a Minor Start a Nonprofit? A 'How-to' Guide for Minors!
Yes, a minor can start a nonprofit, even without help from their parents! And more minors have started their own successful Nonprofits or NGOs than you’d think, some becoming quite large and famous organizations. These special youths have demonstrated age sometimes really is a number. And if someone has the drive and passion and a burning desire to reach a specific goal, then they too can turn these traits into something that makes the world a better place, and all before the age of 18.
But starting a nonprofit organization as a minor has many legal challenges due to their young age and how laws and regulations deem minors and what they are legally allowed to do. So there are definitely some roadblocks you’ll need to be aware of, and other situations where being a minor is going to work against rather than for you. But don’t worry, we’ll go over all of that, and even layout a step by step action plan that you can use to start your very own nonprofit as a minor.
What is a Nonprofit Organization and Can a Child Start One?
A nonprofit organization is just that, an organization or business that is set up to help society in some way as a whole, but without the idea of making any sort of profit. Rather, all revenues the organization creates goes towards funding the operation in order to assist it in reaching its goals of helping a specific cause. The causes are usually a problem within a community or even the world at large that the founder usually feels isn't being addressed properly or thoroughly enough. Nonprofits usually stem from a lack of services or attention to a problem that's in some way being ignored.
The founder will form a non-profit company in order to help them reach their goals quicker as nonprofits have many advantages when it comes to running a business. These include having tax free status which means they don't need to pay an income tax on revenues received. They can also accept donations and pass their tax free status onto those contributing, allowing donors to write off their donations in order to save on tax liabilities.
What's interesting is there are no limitations on age in order to start a nonprofit, meaning someone can start a nonprofit organization at any age. Theoretically, even a baby could! And later in this article we'll show you successful start ups that have been created by minors as young as 4 years old and still going strong today. This only goes to show a child can absolutely run their own business as long as they have the passion, drive and some adult support and supervision, and do it well!
Youths and Nonprofits
Sometimes seeing the world though the eyes of a child can be an eye opening experience. Children often experience things for the first time, so they see things a bit differently than adults who are jaded by their every day existence. And sometimes this can also mean seeing the bad in the world we've drowned out of our vision, making us aware we are not always taking our part of making the world better as seriously as we'd like.
Just to demonstrate the positive impact a child can have on the world, we've listed 4 nonprofit organizations that have been started by minors that are still thriving today. They should be looked at as a testament of what a child can accomplish once given the opportunity, and hopefully inspire those minors to move forward with their passion and not hold back just because the world sees you as a kid.
The Ladybug Foundation
One of the most inspiring stories of a youth nonprofit on our list, The Ladybug Foundation was started by Hannah Taylor in Canada when she was just 8 years old, in 2004. Her inspiration for starting the foundation came from a personal experience when she saw a homeless person in Winnipeg, Manitoba. This encounter moved her deeply, and she wanted to make a difference in the lives of homeless individuals. Since starting her organization, she has gone on to become a serious voice for the homeless in Canada and continues working towards her mission to end homelessness.
Alex’s Lemonade Stand Foundation
Although the name of this foundation is cute, the sad story behind it isn't. At only age 4 making her the youngest on our list, Alexandra “Alex” Scott started her organization by creating a lemonade stand to make money "to give the money to doctors to help them find a cure" for the rare childhood cancer she was diagnosed with, neuroblastoma. By the time this special girl passed away at the age of 8, only four years later, her lemonade stand idea had generated over a million dollars in donations. Alex’s Lemonade Stand Foundation is still growing strong having raised more than 250 million dollars since the year 2000 to support their mission..."to change the lives of children with cancer through funding impactful research, raising awareness, supporting families and empowering everyone to help cure childhood cancer."
Positive Impact for Kids
Another truly heartwarming start up, Positive Impact for Kids strives to improve the lives of children and adolescents being treated in hospitals through purchasing items to fulfill the wish lists of hospitalized children, similar to the more well know Make a Wish Foundation. What does make this charity different is that the founder, Leanne Joyce started Positive Impact for Kids when she was only 12 years old, raising over $160,000 before ever even graduating high school. In her early twenties, she is still pushing forward with her nonprofit and making a positive impact on those children stuck in hospital beds and fulfilling their wishes.
Free the Children
At age 12, Craig Kielburger was flipping through the newspaper when he read a story about a former child slave named Iqbal in Pakistan being killed for speaking out on human rights issues.Seeing he was the same age and feeling he could have just as easily been born in the same situation, Craig made the decision to try to do something to help end childhood slavery. With him and his brother and some 7th grade classmates, they started Free The Children (we.org) and now 25 years later, we.org is still having a major impact on "freeing children and their families from poverty and exploitation."
As you can see, minors can not only start a nonprofit as a minor, they can make a huge positive difference in the world as well. A testament to what positivity can do regardless of who decides to step up and take the responsibility.
How to Start a Nonprofit Organization as a Minor
Now that you can see how much a youth nonprofit can positively effect the world, we hope we've inspired you to stand up and make a difference yourself. And of course that means you'll need to go through the steps of creating your own nonprofit organization, which we'll go over step by step below. The process for starting a non-profit organization is the same for both a minor or an adult. And although it may look like a lot of work, each step can be completed at your own pace and are all completely doable, even as a kid. Just remember, due to you being a minor, some steps will require adult supervision and signatures, and some steps may be a little different depending on your own state’s laws regarding starting a legal nonprofit organization.
Step 1 - Define Your Mission and Purpose
Clearly articulate your mission statement, or what exactly what problem you want your organization to tackle. Be as specific as possible as many start ups fail because they try to do too many things and aren’t focused tightly enough. A great mission statement should answer the questions, what problem am I trying to solve, and how do I plan on solving it. Expanding on this and creating a clear and concise business plan is another way to have a clear map of where you want your nonprofit to go.
Step 2 - Choose a Name
When naming your new organization, try to be unique while at the same time descriptive and memorable. Once you’ve come up with a few names you like, make sure the one you want isn’t already registered and you can secure the domain URL for it.
Step 3 - Appoint Your Nonprofit Board of Directors and Officers
Choosing your Board of Directors and electing officer position such as the CEO or President wisely as a minor is a very important step. As a minor, you are not allowed to enter into legal contracts such as leases, loans or even apply for grant funding. In fact, in some states a minor isn't even allowed to be a board member, so always be aware of both federal and local laws.
To get around this obstacle, many minors choose to use a member of the BOD to act as a signatory. This can be your parents or any ‘adult’ over the age of 18. You can also choose to use your CEO or President as a signatory if you plan on having minors as your BOD as well. If this is the case, you should implement a Nonprofit Advisory Board for your BOD that is made up of adults of legal age that are able to sign contracts and advise you on legal and financial matters.
Step 4 - Draft Bylaws
Your bylaws are more of an internal document to decide how your organization will operate and aren’t filed with any governmental agency. Your bylaws should outline your organization's internal rules, procedures, and governance structure using specifics like when and how often to hold board meetings, membership (if applicable), decision-making processes, and so on should all be included so everyone is clear on any of the rules your choose to enforce in your organization.
Step 5 - Incorporate Your Non-profit Organization
Incorporating your nonprofit will be different depending on which state your charity will operate in. As such, you’ll need to be sure your following the correct procedures for your specific state and seeking the help of a professional at this step is advisable, especially if you’re under legal age.
The basic steps will be to first file your Articles of Incorporation with your state's government agency responsible for nonprofit organizations. When writing your Articles of Incorporation, make sure they comply with IRS 501(c)(3) rules and regulations.
Step 6 - Obtain an EIN
Apply for an Employer Identification Number (EIN) from the IRS (or the equivalent tax agency in your country). This number is like a social security number for your nonprofit and is required for any donation receipts, invoices or any other documents that specify you’re a tax exempt 501(c)(3). You must apply for this first before you apply for tax-exempt status as you will need to include this number on your tax-exempt application.
Step 7 - File for Nonprofit Business Status
If you're in the United States and want to be tax-exempt under section 501(c)(3) of the Internal Revenue Code, you'll need to file Form 1023 or Form 1023-EZ with the IRS to seek tax-exempt status. This can be a very complex and time consuming process and you should definitely seek out professional legal assistance as a minor here.
If you have a TON of time on your hands and want to give it a shot by yourself, this document lays out everything that’s required. And be aware that it can take months to get approved or even hear anything back, so be patient during all of this.
There are also fees involved that will need to be paid when you submit your application. The user fees for Form 1023 is $600 and for Form 1023-EZ it’s $275. You’ll need to look at both form’s requirements to determine which one is best for your specific organization.
Step 8 - State and Local Regulations
Although section 501(c)(3) of the Internal Revenue Code gives you tax-exempt status on a federal level, it does not guarantee exempt status on a state or local level. Many states however do offer state tax exempt status for nonprofits as do localities that charge additional taxes like NYC, but again, you’ll need to contact your local governmental boards to find out what rules will apply to your specific situation.
In addition to the Articles of Incorporation required by each state, you may need to adhere to other laws like zoning permits and the need to file additional documents, such as a charitable solicitation registration, to operate as a nonprofit within the state.
Step 9 - Compliance and Reporting
Compliance is a ongoing issue for many nonprofits, but staying in compliance is paramount if you wish to keep your tax exempt charity status. In addition, compliance issues are on both a federal and state and local level and there are mandatory reporting procedures that differentiate between whom you're reporting to. Many states require nonprofits to register if they plan to solicit donations from residents of that state. This often involves filing annual reports and financial disclosures. The same goes for the IRS, and correctly submitted information needs to be a priority. Thankfully platforms like PayBee make a lot of this work redundant as our platform keeps detailed records and receipts of all your donors, donations and even hours worked by your staff and volunteers.
What to do While You're Waiting!
During the initial set up stage there will be times when you’re just waiting for a response or some paper work to go through. This is a great time to do other more detailed tasks like opening a bank account or planning out how you’ll fund your new charity. You can even begin seeking out and applying for grants, donations, or hosting events if your federal and state statuses have come through and you’re permitted to do so.
Challenges of Starting a Nonprofit Organization as a Minor
It shouldn't be a surprise that there are definitely some limitations when starting a charity as a kid. Pretty much the world over, minors aren't allowed to sign legally binding contracts, or engage in certain activities like working a full time job at 4 years old. So as a minor, understand there are simply some things you're not going to be legally able to do, and then find someone you trust, perhaps a parent or close relative that is willing to perform the duties you can't for the time being.
The biggest problem for youths under the legal age, which is usually 18 in the United States, is the ability to sign legally binding contracts. These contracts can be anything from leasing a rental space, creating contracts with employees or simply contracting a cleaning service or opening a bank account.
In fact, it is not legal or binding for a minor to sign any legal documents, and in some states it’s explicitly forbidden for minors to serve as officers or directors of a nonprofit business.Current laws in most of the US stipulate an individual must be 18 years old unless they are an emancipated minor, meaning they go through emancipation through the courts to legally declare they are an adult and are able to take on all liabilities an adult would normally assume.
The next major problem stems from state and federal labor laws, or child labor laws concerning how much time they can even work at their organization. The Fair Labor Standards Act (FLSA) is the federal law that governs child labor and the Department of Labor’s Wage and Hour Division (WHD) is the agency charged with its enforcement. As far a states laws go, each state can be completely different, so doing proper due diligence here on a state level is crucial to keep in compliance.
Even as a volunteer, the laws regarding volunteers are murky at best, and there is no stipulation on the amount of hours a child of any age can volunteer, as long as it doesn't interfere with school hours or education work.
Another problem you will experience is when it comes to financial matters. As a minor, it's difficult to obtain a bank account on your own without a co-signer or someone willing to be responsible for any liabilities if you're unable to uphold any obligations you may have. Many states also require an adult to be on record for your charity's charitable solicitation registration, which without makes it impossible for your organization to ask for charitable donations of any kind. Other forms of funding like grants also require an adult's signature, so again, the very basic funding of your charity is at risk without some sort of legal adult.
As you can see, there are many times when either youth involvement is explicitly prohibited, or gray areas that depend more on the local or state the charity is acting in. This is why we strongly advise any minor to consider retaining a qualifies nonprofit attorney who can be sure you’re not violating any laws that can hurt you or your organization both short term or long term.
The only way to get around any of these situations is to either become emancipated, or have someone over the age of 18 take on the responsibility of acting as your guarantor, meaning a person who takes on the liabilities of signing contracts and documents in your place. Most often you should just use a legal guardian, or someone you trust completely. Again, consulting legal counsel in these matters is a smart way to move forward.
While there are definitely some challenges for minors wanting to start nonprofits, there are always solutions too. It just takes some serious commitment and perhaps a little patience as well. But for those of you willing to put in the work, we believe it will be one of the most rewarding expediences you'll ever have in your life. And perhaps you can follow the path of a few of the other teenage entrepreneurs that we introduced above who have grown up to become experts in their fields and have grown their organizations to hundreds of millions of dollars while also positively impacting numerous individuals along the way.
Whether you're looking to start an animal nonprofit, or start a nonprofit in high school, we'd love to be there to support you on your journey every step of the way. PayBee's platform is an invaluable resource and will assist your organization in a plethora of ways you may have not even thought of yet. Try our free demo here to see all the powerful tools and features of our software system that we've designed specifically for nonprofits like yours. And the best part of our system is our UX makes it so simple to use, even adults can use it!
Is it legal for a minor to found a nonprofit in California?
Yes, it is legal for a minor to start a nonprofit in the state of California, although there are some limitations due to the age of the individual like being unable to sign contracts or legally work in their organization.
What are the steps for a minor to start a nonprofit?
The steps for a minor to start a nonprofit are:
- Step 1 - Define Your Mission and Purpose
- Step 2 - Choose a Name
- Step 3 - Appoint Your Nonprofit Board of Directors and Officers
- Step 4 - Draft Bylaws
- Step 5 - Incorporate Your Non-profit Organization
- Step 6 - Obtain an EIN
- Step 7 - File for Nonprofit Business Status
- Step 8 - State and Local Regulations
- Step 9 - Compliance and Reporting
For more information on any of the steps, please read the section above titled 'How to Start a Nonprofit Organization as a Minor.'
Can a minor's parents co-sign legal documents for a nonprofit?
Yes, a minor's parents can co-sign legal documents for a nonprofit as well as perform many other legal tasks the minor is unable to perform.
What are the responsibilities of parents or guardians in such situations?
It is generally agreed that parents or guardians of a minor that starts a nonprofit are indeed responsible for the nonprofit until they become of legal age. This is dependent on individual situations and the structure of the nonprofit as well as many other circumstances and is best researched by a nonprofit lawyer with experience in teen business or youth nonprofits.