Introduction to Start a Nonprofit
Starting a nonprofit organization can be an exciting and rewarding way to make a difference in the world. Having passion, patience, commitment, and a willingness to work hard are required to ensure your organization is successful but so is conducting community and demographic research, creating a nonprofit business plan, and defining a core mission statement. The more you know about the nonprofit landscape and how to succeed early on in your planning process, the better positioned you’ll be for long-term success.
Before you start drafting plans for a nonprofit, it’s important to understand what gives an organization a nonprofit classification. According to the IRS, nonprofits are considered tax-exempt. Services, programs, and products are offered not for profit but rather to serve the public.
Generally, the IRS classifies nonprofit organizations with the designation 501(c)(3). Examples include:
- Public libraries
- Arts, literary, and cultural offerings
- Educational institutions
- Religious groups
- Public health and safety organizations
- Medical or scientific advocacy
- Community outreach and improvement groups
There are other 501(c) designations, but typically, the above can all fall under the 501(c)(3) umbrella.
Start with a Strong Foundation
Starting a nonprofit is very similar to launching a for-profit business or startup. You’ll need to conduct demographic and market research, draft your business plan, and submit the required nonprofit-entity documents with the state(s) you’ll be operating in. Before writing a business plan for your nonprofit, take time to investigate the following three steps:
1. Conduct market research. Thoroughly investigate the demographics of those you plan to serve. For example, suppose you’re starting a job skills nonprofit that addresses residents’ employment needs. In that case, you’ll need to know what schools and training opportunities are available, the primary industries needing workers, and the demographics of those currently seeking work or unemployed.
2. Identify the need and state the problem. Learn about similar programs in other communities. Interview people that your nonprofit plans to target. Talk with them about their needs and obstacles.
3. Craft a mission statement. A meaningful mission statement is critical. It can help your nonprofit define its values and purpose and send a clear message that communicates what you stand for. Here are some guidelines to consider:
- Keep your mission statement simple, easy to comprehend, and brief.
- Avoid buzzwords, jargon, and generalities.
- Make sure your language conveys what your organization does.
Write the Business Plan
Regardless of the type of nonprofit, writing a business plan allows you to create a blueprint that details the operation of your organization. Here are the basic components you’ll need to address:
Describe your nonprofit’s purpose and mission, identify market analysis findings, and show how the community’s needs will be met.
Services and Products
Detail the services and products that will be offered by your nonprofit. Who will benefit from your organization? Explain the outcomes you want to achieve and how you expect to reach them.
Illustrate market trends and how your nonprofit incorporates them. What is your marketing and communication plan for sharing your message?
Map your organizational chart. Establish responsibilities for each role and where people will work.
What objectives will your nonprofit accomplish? How will changes be measured and evaluated? Create key performance indicators and organizational milestones. These will provide performance information and allow you to evaluate and track progress over time.
Establish an operating budget and determine the number of funds necessary to start. What are revenue streams you can tap into?
What’s Needed to Incorporate a Nonprofit?
A nonprofit needs to be incorporated to receive charitable donations. Legal incorporation requires the following:
- The organization’s name
- Names of Board members
- Identifying the nonprofit’s legal classification
- Successfully filing paperwork for incorporation
- Receiving tax exemption status
- Obtaining any required licenses
Consulting with a lawyer at this stage can help to answer questions you may have about required obligations, paperwork, and taxes.
Secure Startup Funding
For nonprofit organizations, identifying funding sources can be challenging. A nonprofit with inadequate early-stage revenue will have difficulty sustaining itself until a fundraising program is fully established. There are six funding types to consider:
- Individual Giving: Individual donors can give one-time monetary gifts or through recurring automatic payments that are charged directly to a credit or debit card.
- Corporate Sponsorships: Corporate sponsorships can be philanthropic donations, event sponsorship, or donor matching employee programs.
- Membership Fees: A membership program asks for a contribution of a certain amount in exchange for receiving certain benefits.
- Selling Merchandise and Access: Selling branded merchandise (e.g., t-shirts, calendars, mugs, bumper stickers) or charging access fees (e.g., museums charge admissions fees, symphonies sell tickets) can generate funding.
- Donations of Tangible Goods: When supporters donate items such as food, clothing, and office supplies, it is called giving an “In-kind” donation. For example, if your nonprofit provides art classes to seniors, in-kind donations like paints, paper, and craft supplies can be very beneficial.
- Grants: Grants are funds awarded for a specific purpose. While grants provide funds more quickly than other sources, researching and writing the application can take considerable time.
Read more: most-common-sales-mistakes
When it comes to accepting financial donations, your systems for recording information must be secure. Cutting corners when it comes to cybersecurity can leave your organization vulnerable to hackers and criminals.
Form Your Team
Good people are crucial to running a successful nonprofit organization. Let’s look at three key groups of people you’ll need at your nonprofit.
- Board Members
A nonprofit Board is responsible for a range of tasks including regulatory compliance, decision-making, operations assistance, and hiring.
Nonprofit organizations often use volunteers in many capacities. Before creating and promoting volunteer descriptions, consider how many volunteers can successfully be managed? Will volunteers require special skills? And, if volunteers will need training, how much time will it take?
Unlike volunteers and Board members, the staff is typically paid, so determining how much the organization needs to cover salaries and benefits is necessary. Nonprofits frequently hire for staff positions such as Membership Coordinator, Communications and Events Manager, and Development or Fundraising Directors.
Build Your Nonprofit Brand
Create a marketing plan that includes the ways your organization will communicate with the target audience. Establish a professional website and social media accounts and update them frequently with new articles, events, and photos.
Good branding strategies will bring together your stakeholders, allow you to effectively communicate your message, and increase your audience’s trust.
Plan Today for a Successful Tomorrow
Starting a nonprofit takes time, energy, and a willingness to wear many different “hats” to get the job done. Because of that, laying a strong foundation today can help ensure a successful tomorrow for your organization. Creating a nonprofit is an excellent way to bring about social change and better our communities and the world. The tools you need are at your disposal. Get ready to start building the future!