How to Form an Association (Step-by-Step)

  • By: Josh Palmer
  • August 1, 2024
How to Form an Association
Reading Time: 4 minutes

Many people feel the desire to contribute toward positive change in their community. One way to make a difference is to create an association. Associations come in many forms, but they all seek to utilize the collective strength of a group of people to work in support of a shared objective. 

Whether you’re looking to establish a professional, trade, or nonprofit association, understanding the necessary steps can streamline the process and set your association up for success. 

In this guide, we’ll walk you through each step of forming an association, from defining the mission to developing bylaws and operational plans.

What is an Association?

An association is a group of people who come together and share a common purpose or goal. Associations can vary widely in size, scope, and purpose. 

Examples include professional associations, which unite individuals in a specific profession, and trade associations, which represent businesses within a particular industry. Nonprofit associations are dedicated to specific causes or issues, while alumni associations connect graduates of a school or university. Ultimately, associations provide a platform for members to network, share knowledge, and advocate for their collective interests.

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How to Form an Association

Follow these steps to form an association. 

Define the Purpose and Mission

The first step in creating an association is to determine what your goals are for the group. Understanding your purpose clarifies the vision for the group and provides a stronger form of motivation for other members. People always work harder when they believe in the overall mission and find it personally fulfilling. 

When outlining your association’s goals, it helps to be SMART. To best express your purpose, ensure your are Specific, Measurable, Achievable, Relevant, and Time-bound. Ask yourself and other founding members questions to flesh out your ambitions for the association. Some example questions include:

  • What community needs do you want to address?
  • Are there other associations or organizations already working in this space?
  • What kind of people do you want to become members of the association?
  • How will you entice potential members to join your cause? 

Develop Governing Structure

Next, you’ll need to develop a governing structure for your association. This typically includes forming a board of directors, creating bylaws, writing the memorandum of association, and establishing various committees to handle specific tasks. A strong governance framework ensures the association operates smoothly and maintains accountability.

Incorporate the Association

Incorporation is a legal process that secures an entity’s recognition by the state and separates individuals from the association, protecting the founders from personal liability. Incorporating your association can make your group eligible for certain grants or other funding methods, in addition to making it easier to transfer ownership in the future. 

One key document in this process is the articles of association. These documents are essential as they legally establish the existence of your association and outline key information, such as the association’s name, purpose, and the structure of its board of directors. While you can amend the articles of association down the road, it’s important they reflect the organization’s values.

The incorporation process changes slightly depending on the state you incorporate in. You will have to file in multiple states if you plan to solicit donations across state lines. The IRS website provides instructions on what paperwork must be filed before becoming an officially recognized association. 

For help drafting articles, check out these articles of association templates.

Apply for Tax-Exempt Status

One of the main appeals of incorporating your association is the privilege of not paying federal taxes, but doing so doesn’t automatically grant tax-exempt status.

To receive the tax exemption, you must register with the IRS as an appropriate 501(c) entity, the most common one being a 501(c)(3) organization. The process (which you can start here) can take several months to complete, and there is a specific fee attached to each IRS form you may potentially use.  

Here are the prices for each form:

  • IRS Form 1023: $600
  • IRS Form 1023-EZ: $275
  • IRS Form 1024: $600
  • IRS Form 1024-A: $600

You will then have to file with the state’s tax commission to remain compliant with state and federal regulations. 

Develop Operational Plans and Procedures

Finally, developing comprehensive business plans and procedures is crucial for the efficient functioning of your association. This includes establishing membership guidelines, financial management practices, and event planning processes. Items to consider in your operational plan include:

  • Organizational structure: Define the hierarchy and roles within the association, detailing responsibilities and reporting relationships for each position to ensure clarity and accountability.
  • Products and services: Outline what your association offers, including benefits to the community and how these offerings align with your mission.
  • Financial plan: Provide a forecast of your financial situation, including the expense budget, balance sheet, membership forecast, and cash projections.
  • Marketing plan: Describe strategies for reaching out to the community to increase membership or raise funds, detailing specific tactics and channels to be used.

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Creating an association takes thought, collaboration, and an understandable vision. And running it efficiently to better serve members requires the right technology. OnBoard provides association board members with an integrated governance solution that facilitates seamless collaboration and offers valuable analytical insights. With features like skills tracking, diversity reporting, and agenda builder, OnBoard helps association boards work smarter and better represent their memberships.  

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About The Author

Josh Palmer
Josh Palmer
Josh Palmer serves as OnBoard's Head of Content. An experienced content creator, his previous roles have spanned numerous industries including B2C and B2B home improvement, healthcare, and software-as-a-service (SaaS). An Indianapolis native and graduate of Indiana University, Palmer currently resides in Fishers, Ind.