So you want to start a nonprofit...

There’s a problem and you think you can fix it…what the reality of starting a nonprofit looks like.

First, let’s define nonprofit. A nonprofit does, indeed make a profit. The question is, how is that profit used. A nonprofit must use the profit to serve the community. Funds must be used for what the IRS calls “charitable purposes”. A nonprofit must also pass the “public support test” and receive at least 1/3 of its support from the community. A nonprofit is a business with a specialized tax status.

Do not attempt this on your own!

While many people start out trying to put their nonprofit together on their own, they will soon find out they need others. You need a minimum of 3 unrelated people to make up your board of directors. You will need a president, treasurer, and secretary at minimum. Do not just ask your friends to fill these positions. Consider your long-term goals and will these people help your organization be sustainable.

So many rules to follow…

A nonprofit is required to incorporate and register in their home state as well in other states they intend to raise money. Think social media fundraising, donations through your website, and direct mail outside of your state. Once you have incorporated then it’s time to move on to the IRS tax exempt status. The IRS provides many resources to help through this process. It is a good idea to have a CPA or attorney review your incorporation and IRS exemption to make sure you have not missed anything. Your organization is also required to stay compliant with the IRS and each state every year. I encourage you to use a professional for compliance.

Mission clarity…Houston we have a problem

You and your board need to be clear on what your mission or objectives are. “Mission Drift” is often heard in the nonprofit world. It is when an organization stumbles upon other needs during the work they are doing. They then end up trying to meet that need as well. This spreads the organization thin. You have drifted away from your original mission and now you have put your organization in jeopardy. Stay focused on your original objectives. You can work to find other organizations that already meet the need you have come across.

STOP! What is your strategy?

Most nonprofits don’t last past the 10-year mark. I have seen many nonprofits fail because they don’t plan for the future. The excitement and passion to make a difference in someone’s life is profound. But take the time to create a plan. Creating a strategic plan should be a priority for your board. How will you carry out your mission, who will help carry that mission out, how will you raise money and find future board members? These are just a few things that need to be considered. A strategic plan helps outline your processes and goals. However, a strategic plan is usually a living document and should be updated and amended at least once a year.

Whoop! You are officially a registered nonprofit.

So often people get their official tax-exempt status and immediately start fundraising without a plan. You want to start the great work, help people. But, it is imperative that you and your board sit down and think about the long term. How will you raise money, how will that money be dispersed, how will you track that money, how will you report that money to the IRS and so much more. It is worth spending some time with a seasoned fundraiser to understand best practices and what it really takes to get donors year over year to keep your nonprofit…profitable.

Fundraising and marketing…dirty words?

Two words that are often perceived as dirty in the nonprofit world, even though they are absolutely necessary. For decades the standard has been the less you spend on fundraising, marketing, and administration the better nonprofit you are. Thankfully that thinking is slowly starting to change. Organizations and donors are recognizing that these things are needed to keep the organization going. Finding the right board members that understand this is important. They also need to be willing to help with the fundraising and marketing. Especially in the beginning, because chances are you will be starting out with all volunteers that help run your nonprofit.

Ahhh…volunteers, the lifeblood of many organizations.

If you are a small nonprofit, with minimal funding, volunteers will be the key to getting your work done. Someone finds your mission worthy and is willing to help you carry it out. Treat them like gold. Volunteers need to feel important, and you need to keep them engaged or you will quickly lose them. If your volunteers are all in and love your mission, they will spread the word. This will help you find donors and other volunteers.

Finally….

Do your research and make sure there is no one in your community already working towards filling the need you are trying to. If nothing exists and you have the motivation to get going, I say do it! But, do not think you can recreate the wheel or create a better wheel. If there is a nonprofit working in the space you are interested in, consider volunteering or working for them. See how things in the nonprofit world work. Then you can decide if you have what it takes to start this journey. Good Luck!