Starting a nonprofit organization can be an exciting time. As you gather support for your new nonprofit startup in your community, you’re probably imagining all the ways your nonprofit organization will impact the surrounding community for years to come. Your dream of building a nonprofit organization from the ground up and finally coming true, and you couldn’t be more excited to begin the journey.
Over the years, we’ve seen too many nonprofits fail due to lack of planning and/or insufficient tools. These devastating mistakes can cause many nonprofit organizations to fail before they even begin. With so many governmental and private donor regulations, it can be difficult to navigate the many requirements expected of nonprofit organizations in addition to the complicated steps required of setting up a nonprofit. We’ve advised nonprofit startups for several years and have witnessed firsthand the many challenges involved in starting a nonprofit organization from the ground up. In response, we have developed 7 crucial steps to help nonprofits achieve a smooth startup.
- Make sure there is a need for your organization in your area
Ultimately, your nonprofit organization is a business. In order for your nonprofit to be successful, there needs to be a demand for the services and programs your organization will offer. Research the community you are planning your startup and see if there is a need for your organization. Is there another organization in the area that offers similar services and programs? If so, is there a way to team up with the existing organization? Research the area and your options before you set up your organization. If there is an existing organization already offering the same services to the community, there may not be a need for your organization. - Create a “Business Plan”
As we said before, a nonprofit organization is essentially a business. While there are stark differences in the way nonprofits and businesses are run, there are many similarities. Like a business, your organization needs to have a healthy cash flow in order to survive (meaning there needs to be more money – or “funds” – coming into the organization than going out of the organization).Your business plan does not have to be complicated, and you can always change it as your nonprofit grows and progresses. A business plan is a like a roadmap; it brings focus to your goals for the organization and details plans you have for future growth. For more information about what your business plan should include, click here (link to July Article # 1). - Make sure your organizations qualifies for nonprofit status
While your idea for a nonprofit organization may seem substantial, are you sure it qualifies as a charitable cause? There are many types of nonprofit organizations, and it is crucial to know what kind of organization you will operate as. Research the types of nonprofit organizations and determine which type of organization you will be running. If you need help determining your status, contact your CPA. They will be able to help guide you through the nonprofit qualification process and answer any questions you have about achieving nonprofit status for your organization. - Meet all legal requirements
Many nonprofit owners are shocked at the number of legal requirements organizations are faced with. Nonprofit organizations are heavily regulated on a government, state and private funder level. Research all of the requirements you will have to meet, and enlist the help of your CPA or accountant. They can help you navigate the seemingly endless list of legal requirements and set you up for success. - Maintain accurate records
Keeping good records (financial, organizational, etc.) is key to the success of your organization. As we mentioned above, nonprofits are subject to many legal requirements, and accurate records will alleviate the stress related to meeting those requirements. Many funders have special reporting expectations, and a good set of records will help your organization effectively meet those expectations. If you maintain good records from the beginning, you will be less likely to run into problems in the future. - Create a fundraising plan for your organization
Fundraising is crucial to your nonprofit’s success. Without funds, you will not be able to provide the services and programs your community needs. It is important to have a strategic plan in place when it comes to fundraising for your organization. Brainstorm how you wish to obtain the majority of your funds. Do you want to apply for government grants? Would you rather receive funds from private donors? Determine what is best for your organization, and develop a plan. Without proper planning, your fundraising efforts will most likely fail. - Choose your board members wisely
Your board is crucial to the success of your nonprofit organization. The board is legally responsible for keeping your nonprofit on track with its mission, providing you with the expertise you need, and helping you raise the necessary funds to keep your organization running effectively. Make sure you choose the right people with the right expertise to serve on your board. The wrong board members can cause serious – and potentially costly – issues in the long run.
As you can see, starting a nonprofit organization involves more than simply providing a few cool programs and services in the community. It is a business venture and requires proper planning to be successful. If you have any questions regarding your nonprofit startup, contact us today. We’d be more than happy to help guide you through the legal and financial requirements involved in starting your organization and prevent these devastating mistakes from occurring.