Hawaii, with its breathtaking landscapes and vibrant communities, is more than just a tropical paradise - it’s a place where nonprofits thrive. Nine thousand tax-exempt organizations already call Hawaii home. This comprehensive guide provides a step-by-step process for navigating the complexities of starting a nonprofit in Hawaii, empowering your organization to contribute meaningfully to this beautiful community.
Hawaii is a beautiful vacation destination for many, but few have the chance to live here. Those who do have lives filled with opportunities and challenges, just like the rest of the world. Nonprofit organizations in Hawaii work tirelessly to address many of those challenges while simultaneously adding to the opportunities.
Currently, there are over 9,000 tax-exempt nonprofit organizations in Hawaii. The following step-by-step process to start a nonprofit in the Aloha State will make it easier for your nonprofit to join them.
Are you ready to get started? This list involves both simple and complicated steps, but sticking with the process will help you tackle the process with confidence.
The first step can be the easiest or the hardest. If you’re struggling with a name that tells your story, check out our nonprofit naming checklist.
Hawaii does not have rules regarding your organization’s name, but you must ensure that the name hasn’t already been taken. Search Hawaii’s Department of Commerce and Consumer Affairs website to see if your name is available.
Your nonprofit’s mission is the purpose of your organization and must be included in several federal and state documents. It’s best to finalize a mission statement for your nonprofit before filing any forms to ensure you use the exact wording on all documents, or risk having to submit them again.
Your nonprofit mission statement is also an excellent fundraising tool. It can inspire the public to learn more about your organization and donate to your cause. Add your mission statement to your organization’s website, donor appeals, and financial reports.
Bonus: Use our downloadable Mission & Vision Statement worksheet to help you put your mission into words.
Creating a business plan for a new nonprofit is easier than it seems. Although you won’t have financial reports yet, with a little research, you can develop a financial plan that appeals to potential funders.
The executive summary is the last thing readers see, but it should be the first thing you write. It states the purpose of your organization, why your community needs it, and how you will stand out from other nonprofits. You can also use this section to describe your nonprofit’s ideal donor.
This section may seem obvious, but when laying out your nonprofit plans and services, make sure to provide as many details as possible. Use images and infographics to help explain complicated concepts and problems.
Your nonprofit marketing plan must address two different consumers: donors and beneficiaries. It can explain your ideal donor and user, outline how you will sell any services or products, and share how you stand out from other organizations.
Before writing anything in this section, it’s best practice to conduct market research for a detailed analysis.
The operational plan provides funders with details on your nonprofit’s primary location, government and organizational structure, and legal requirements. You can also share an organizational chart to help explain your organization’s structure.
A free resource to get you started: Download this guide to see different organizational chart types in action and learn how each works.
An impact plan is vital in the beginning because it explains how you will address an issue within the community that donors care about. This section will also help you create your annual report at the end of the year. It’s crucial to use statistics to back up your claims whenever possible.
Since you don’t have any financial reports when you’re just starting out, your financial plan is simply a list of potential revenue streams. You’ll also want to show how to use this income to fulfill your organization’s mission. Look at other nonprofit financial statements and reports for help developing your financial plan.
Your business plan’s appendix should include names, pictures, and resumes of your board members and high-level staff. You can also include promotional material for your nonprofit and any upcoming events.
To start a nonprofit in Hawaii, you must have at least one incorporator and three directors. An incorporator signs your organization’s articles of incorporation. Board directors are your organization’s leaders, so you must choose and onboard directors wisely.
The Internal Revenue Service (IRS) also requires nonprofits to have at least three board members to claim tax-exempt status. They recommend more to ensure the board can operate and fundraise for the organization.
Nonprofits in Hawaii also need one officer to prepare board minutes and authenticate the corporation’s records. The same individual can hold both offices. All Hawaii nonprofit board committees must also have a minimum of two directors.
Hawaii has no residency or membership requirements for board members.
A nonprofit registered agent is responsible for receiving legal notices for the organization. Registered agents can be either an individual or a company. Registered agent offices must be in the state and have regular business hours.
Nonprofits can file articles of incorporation in Hawaii online, by email, mail, or fax. The filing fee is $25, with an additional $25 for expedited service. If you want a certified copy of your application, the fee is an additional $10, plus a $0.25 per page fee.
To file articles of incorporation, you must have:
All businesses must apply for an Employer Identification Number (EIN) from the IRS. This number is necessary when filing for tax-exempt status, hiring staff, paying taxes, opening a bank account, and applying for state business licenses and permits.
You’ll need to hold your first board meeting and elect your board of directors before applying for tax-exempt status with the IRS. You must also write and approve your organization’s bylaws, conflict of interest policy, and a resolution to open a bank account.
Your nonprofit’s bylaws provide a map for your organization’s leadership team to follow. Bylaws must include the following:
Your nonprofit’s conflict of interest policy provides rules to follow when individuals in leadership have conflicting priorities.
The IRS rewards 501(c)(3) federal tax exemption for organizations with the following purposes:
Churches do not have to file for tax exemption with the IRS but may want to develop their authority and trustworthiness.
Nonprofits that earn under $50,000 for the first three years can file Form 1023-EZ for $275. There is an eligibility worksheet to determine if your organization qualifies. All other nonprofits must file Form 1023 and pay $600. It can take up to six months to receive your determination letter from the IRS.
Most other nonprofits must use Form 1024 and pay $600 to file for tax-exempt status with the IRS.
Hawaii does not have a sales tax, but it does have a general excise tax.
All nonprofit organizations must apply for exemption – this includes subordinate organizations (chapter, local, post, or unit) of a central organization. You must have an existing Hawaii Tax Online logon or General Excise Account. The application also requires organizations to include the following:
Nonprofits must register with the state of Hawaii before soliciting donations. This is a one-time registration process. There is no fee, but the turnaround is four to six weeks. Read the directions before applying to make sure you have all you need.
No specific nonprofit laws exist for bingos, raffles, and other charitable games. Hawaii nonprofits, however, must follow state gambling laws.
Domestic nonprofit organizations in Hawaii must file annual reports based on their incorporation date. If you register between January 1 and March 31, your annual report must be filed on or before March 31 each year for the previous calendar year. Other registration dates are:
Pro tip: Nonprofits can use annual reports to apply for grant funding and appeal to donors. Check out this article for tips on how to share your organization’s impact and raise more funds.
Starting a nonprofit in Hawaii can be a compelling journey filled with possibilities. Following the detailed steps outlined in this guide can lay a solid foundation for your organization’s success.
Each milestone, from naming your organization to obtaining tax-exempt status from the IRS and state, brings you closer to realizing your vision and making a positive impact.
When you’re ready to get started, check out this list of affordable features from Donorbox for an idea of how we can help you fulfill your mission through a suite of innovative fundraising tools.
Learn more about Donorbox on our website and check out The Nonprofit Blog for more fundraising tips, how-to guides, and actionable advice. Mahalo!
Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development.
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Kristine Ensor