Does the idea of starting a nonprofit fill you with excitement, anxiety or a combination of both? If you said “both”, that’s certainly understandable.
Starting a nonprofit can be a wonderful way to take an idea with a charitable, educational or other IRS-sanctioned tax-exempt purpose and create an organization that serves the public good. But are you really prepared for the work ahead of you?
Things that can surprise people who start a nonprofit are the time, work and money required to run it. If you are the person contemplating this, you will need to make peace with the idea that you will be running a business and the success or failure of your nonprofit will depend on how well you operate your business.
It’s also important to gather information and talk to a variety of people involved in running a nonprofit before plunging in and making missteps which could derail your efforts or delay the success of your project.
In addition to complying with the state requirements (which vary among the states) and federal laws specific to nonprofits, here are a few ways to incorporate success into your initial planning stage:
- Do your research – find out whether there are existing organizations doing exactly what you want to do. If so, maybe you would be better served to collaborate with an existing organization. Similar organizations will be competing for funding from the same sources so it would be wise to consider whether your idea and target demographic are sufficiently different than those that already exist in your area.
- Make a business plan – this practical attention to planning for the present and future of your organization will be invaluable for assessing the sustainability of your endeavor, attracting the right people to serve on your Board and, ultimately, securing funding.
- Create a funding plan – funding is the lifeblood of a nonprofit; and, without proper advance consideration of how you will fund the organization (realistically, not just hypothetically), your organization will be challenged every day to stay afloat.
- Develop a team – make sure that your plans include other people who will act as valuable team members to assist you at different points along the way. The team will most likely include an accountant, a lawyer, a paid staff member and an effective Board — people who love the organization and its mission; can bring a diversity of professional expertise and perspectives; have a large network of contacts, and be willing to open doors for your organization.
- Evaluate all possibilities – is a nonprofit right for your idea or should you consider another business structure? There are other options and, before you commit to a nonprofit, make sure it will be a good fit for your goals.