An Unconventional Guide to Paying for College

How to Start a Non-Profit Company

For many years I have dreamed of doing something to help students find a better way to pay for college.

The short-comings of federal grants, the rising cost of tuition, and the prevalence of student loans have made it very apparent that something more needs to be done.

Scholarships are one of the most powerful sources of financial aid. They are “free money” that are not required to be repaid. They are also funded and sponsored by an organization that takes a personal interest in the students they support. Often there are award ceremonies, follow up letters, and personal involvement between the donor and the recipient.

This interaction is very powerful in the life of a student, and can be instrumental to their success. Having the backing of an involved scholarship organization often gives students the extra drive that they need to be successful.

With that in mind, my goal is to start a non-profit scholarship organization focused on rewarding college students for excellent in personal finance.

Scholarship Money = Powerful Motivators

Money is one of the most powerful motivators for college students. They need money to go to school, to put gas in their vehicles, to eat out, to eat at all, to take a girl out on a date, to buy textbooks, or to do just about anything else on campus.

By harnessing this powerful motivator, and linking it with personal financial and financial literacy, I will be able to reward students for their personal finance prowess, and encourage them to retain it as a life skill.

Awarding the scholarships and hearing about the success stories is the fun part, and my ultimate goal, but I have a long road before I can get to that point.

Creating my Non-Profit Scholarship Company

Before I get too far ahead, let me be clear. I have not filed any paperwork yet. My non-profit is not official. It is very much in the planning stages.

There is a lot involved with starting a non-profit organization, as I am finding out.

Formulate a Mission Statement

The first step to creating a nonprofit company is to create a mission statement. This is often just the official slogan that explains the idea you have in your head. For example, a sample mission statement for my scholarship organization might be

“To provide scholarships to deserving students who demonstrate financial need, and a desire and proficiency to apply personal finance principles in their daily lives. Our organization is dedicated to helping students succeed by providing them with financial benefits to ease the rising cost of a college degree”.
 This mission statement will guide the rest of the formation steps of your non-profit organization.  

Form a Board of Directors

Your non-profit will not be successful unless it has quality leadership. Even if you plan to remain a very small organization, the quality of your leadership will determine the overall success of your organization and it’s ability to reach and exceed goals. You should seek out a board of directors that has experience in the market or genre that your non-profit is being established in.

In my non-profit, I will likely look for people who have experience in higher education, or in personal finance. I might seek out financial aid professionals, higher education administrators, or possibly even personal finance bloggers (want to be on my board of directors???). The quality of your leadership will determine the quality of your vision and execution, and therefore the overall success of your organization.

Legal Steps

  • File Articles of Incorporation with State Secretary
  • Write the Bylaws
  • Apply for Non-Profit status with the IRS
  • Apply for State Tax Exempt Status

Once you have started the vision for your non-profit and found your leadership, you will need to satisfy all of the legal requirements of a non-profit, and begin taking real steps towards making your non-profit a reality. You will first need to file Articles of Incorporation within your state. This is your formal introduction as a company, and will let your state, and the world, know that you exist.

Next, you will need to write the bylaws of your non-profit. Your bylaws are the guiding rules of your organization. They will cover things like who will lead the organization on a daily basis. How many employees will you have and how will they be hired. How will the salaries be determined and where will the money come from.

Next comes applying for non-profit and tax exempt status from both the IRS and your state’s tax revenue agency. This is a crucial step as one of the main benefits of a non-profit is your tax exempt status. This allows you to pour all of your profits towards reaching the goals that you have set for your organization in the mission statement.

Take the First Step

Organizing a non-profit company or organization is not an overnight process. There are obviously lots of steps involved, and it can be a fairly lengthy process.

As with moth major projects, it helps to have a game plan to begin. That is why creating a mission statement should be your critical first step. It serves to give you a road map of where you want your non-profit to end up, and it also gives you motivation to see it through to completion.

As I work to finalize my mission statement,  I would love to hear if anyone else is involved with a non-profit company!

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10 Comments

  1. I’ve always thought it would be neat to sponsor a scholarship. They had such a huge impact on me. I didn’t pay a dime for college due to the dozen or so scholarships I received.

    This is definitely something for my bucket list. Kudos to you for starting one.
    Jeremy @ Personal Finance Whiz recently posted..Everyone Is Wrong About Bank Of America’s Debit Card FeeMy Profile

    • @Jeremy — Very awesome to hear. I really hope to be able to grow this scholarship into an organization that manages multiple scholarships. Maybe one day we can help you get yours started! Wishing you the best!
      STRONGside recently posted..How to Start a Non-Profit CompanyMy Profile

  2. We tried to do a small scholarship contest this year, but only had one applicant! This is a great idea though, and I wish you all the success! Thanks for giving back.
    My University Money recently posted..How To Fill Out Scholarship ApplicationsMy Profile

    • @My University Money — Your scholarship contest was partly the final push that I needed to begin working on this. I have been thinking about it for awhile, and when I read about your contest, I realized that it is possible. Hopefully you get a much better turn out for future contests!

  3. Congratulations on taking on such a worthy cause. I have worked with several nonprofits over the years but have never started one. There is a lot of red tape involved both in starting a nonprofit and keeping it going. I hope you have success and are able to help many students!
    Dave recently posted..Financial Planning for Retirement, Basic Financial PlanningMy Profile

  4. Hello! I have done past work with non government organizations when the world still had less of them and more of idealism. This is a very commendable venture and I am hoping that you will be successful in starting one. I will surely follow your story from hereon. Good luck!
    Amy Turner @ Credit Donkey recently posted..Best Credit Cards for Young AdultsMy Profile

  5. Strongside-

    I would love to be on the Board of Directors (or involved in some way). I’m back and forth right now on what I want to do with the money earned from Funancials. If I go the non-profit route, I’m between scholarships or supporting breast cancer awareness (hits home). With your guidance here, I may be able to move forward as a non-profit. I’ll keep you posted.
    funancials recently posted..Week In Review: Abe Link-In ReviewMy Profile

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