Pick a spot for the mulch pit. Choose an accessible location that won't interfere with foot traffic. High spots with good drainage are preferable to low areas.
Use a hose to outline a circle about 3 feet in diameter or larger depending on the amount of mulch you're storing. Excavate a hole 2 feet deep with a shovel. If you're working in an oddly shaped space, the hole should be shaped to fit the area; it doesn't have to be circular.
Cut a piece of geotextile fabric to fit the bottom of the pit with scissors. Cut another strip equal to the depth and walls of the pit.
Lay the bottom fabric over the floor of the hole and pin the ends down with lawn spikes.
Pin the side strips of fabric to the walls at the top and bottom. Overlap the strips by 3 inches on all sides to block weeds from growing through.
Move the mulch to the pit with buckets or a wheelbarrow, and dump it in. Shape the mulch into a crowned surface so water runs off.
Lay a plastic, weatherproof tarp over the mulch so pieces don't blow away, and pin it down with spikes. Plan to take the tarp off once a week on sunny days. Shovel the bottom mulch to the top and use a pitchfork to turn it over to keep it aerated.