How To Change a Profit Organization Into a Nonprofit

Non-profit organizations work for the betterment of the community by dealing in social work relating to various issues, ranging from education and charity to politics and religion. They are tax-exempted legal entities with a sole purpose of generating revenue which can be plugged back into the organization for expansion. The surplus is not distributed to the owners or any board member or shareholders but is used for meeting organizational goals.

Non-profit organizations can raise additional funds through charity, provided by various organizations, including private institutions to government associations. If you want to change your current business model to a non-profit one, you need to plan accordingly and contact your state authorities for further details. Basically you are starting from the beginning but with an already running business, you are able to make the transition quickly.


  • 1

    Start by creating a business plan. That will include all the necessary details such as your mission statement and your particular field of interest. Research the area you want to pursue and then decide an appropriate name. For instance if you want to help young children get education, then make an proper business plan on how you would be able to carry out the process in your community.

  • 2

    Naming the organization is only necessary if you are not happy with the existing one. Every state will have its own methods so register by taking into account all the details. Your name may need to end with Corp, Inc, or Ltd, while you need to further refrain from connecting state reserved designations. Preferably visit the state’s office or website for further information.

  • 3

    Your business plan must properly reflect your investing power. How will you be able to raise money? Contact potential investors and other financial institutions for aid but make sure that you cannot return the money as your sole purpose is not profit making.

  • 4

    Follow the state laws when you aim to run your non-profit organization. You need to clearly specify the name of the board members or officers who will be running the organization. Make sure that the earnings are not derived from the profits.

  • 5

    Contact a state advisor and inform him about the change. The IRS will properly evaluate your business structure before granting you permission. You will be then entitled to follow all the necessary regulations and procedures. In return you will be given a tax-exemption status.

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