Starting a nonprofit corporation is like starting any corporation, you register your business with the state, draft bylaws, and file reports. When you set up a business, it can be for-profit or not-for-profit. Typical examples of nonprofits are charities, religious, scientific, educational, and amateur sports associations. This is a way to give back to your community and help those in need. However, it is important to understand all of the steps involved in this process before moving forward. Growing and sustaining a nonprofit may take years of effort and a great deal of determination.
However, there are a few additional steps if you plan to accept donations or apply for tax-exempt status. In this guide to starting a nonprofit, we’ll give you the tools you need to learn how to get up and running. But, before we dive into how to start a nonprofit, let’s take a moment to understand what makes an organization a Nonprofit
What is a Nonprofit Organization?
A nonprofit organization refers to an organization whose mission focuses on furthering a social cause. They conduct their affairs for the purpose of assisting other individuals, groups, or causes rather than profiting.
Steps On How to Start a Nonprofit Organization
Conduct a needs analysis
First, do some legwork. There are already more than 1.5 million nonprofits in the world alone, so the first thing you should do is verify that some other organization isn’t already serving the need you’ve identified. The process of verifying that there’s a market or demand for your organization’s mission is called a needs analysis.
You’re looking to answer the following questions:
- Is any other nonprofit organization already serving your target audience?
- How many people need the service you plan to provide?
- Who is your target demographic—who needs what you’re offering?
- What do they need or want?
Decide on a name and write your mission statement:
Deciding on your charitable startup’s name is an important initial step. You’ll need it to be finalized before incorporating your nonprofit or filing any other official paperwork.
Do some research to make sure no other charitable organizations or for-profit businesses are using the name you’d like to use. At the very least it will be a hassle if you’re constantly competing with another organization for brand visibility—or answering messages from confused donors or clients. The truth is you want to be able to hand someone your card or refer them to your website with confidence that they will like what they see.
Now that you’ve verified that your organization’s services and mission are truly needed by your target audience, and decided on a name, it’s time to write your mission statement.
Keep your mission statement short, and make sure it holds up when you ask:
- Does it distinguish you from all other nonprofits?
- Read your mission statement and three other examples (in your niche) to an employee, board member, or someone receiving your services. See if they can identify which one is yours. If not, go back to the drawing board.
Write your nonprofit business plan:
Nonprofits need a good business plan just as much as for-profit companies, maybe even more. Here’s a guide to writing a business plan for a nonprofit, and a free downloadable business plan template that can help you get started. The process of writing your plan (sometimes called a strategic plan) will help you think through all the different aspects of your organization. Plus, if you’re planning to seek a business loan for larger capital expenses, like building or remodeling, every bank will expect to see your business plan
File the articles of incorporation.
You will need to file your articles of incorporation with the governing agency in the state. Generally, you will file with the secretary of state or a business registration division or department.
Why should you incorporate?
- Having a formal structure will give credibility to your programs and services.
- The corporate structure limits the liability of the organization’s officers and directors.
- The FIRS requires organizing documents and governance policies and procedures that are usually associated with corporations.
Register as a charity.
If your nonprofit involves fundraising or accepting donations, you may need to register as a charity. If required, registration typically must be done before your nonprofit organization accepts any donations.
Create a fundraising plan and get to know your donor base
Every organization has to keep the lights on, and nonprofits are no exception. Your organization will require a minimum amount of money just for operations regularly, not to speak of special projects or unforeseen growth or expenses.
Typically, nonprofits rely largely on donations for this money and having a committed donor base is going to be essential to your organization. Ask yourself if you know whether there is financial and community support for your proposed nonprofit. Who is the person that becomes a member of your organization, or that donates their money? Developing a user persona can be a helpful tool here.
If this is the first time you’ve ever done fundraising or nonprofit development work, consider doing some online courses on how to build a fundraising plan.
Hire your first staff or find volunteers
Your board of trustees is your first volunteer. From there, you’ll probably find that there are still skill gaps within your organization, or that you just can’t get everything done yourself. Maybe it’s time to find a volunteer to help out.
Start with putting together a brief description of the role you need to fill and how much time per week you think it might take. Then get the word out.
A word of caution: if your need is fairly involved or requires a specific skill set, it’s perfectly reasonable to ask a potential volunteer to do an initial project before you commit them to a longer-term project, just to see how it goes.
Volunteers can be really helpful, and many nonprofits are primarily volunteer-driven. But now or at some point in the future (when your finances allow) it might be appropriate to consider bringing on full or part-time paid staff.
In conclusion, as your charitable organization takes shape, make time to review both your mission statement and your business plan. Because you’ve been hard at work getting things up and running, it might seem like everyone around you should be able to recite your mission (and bring it to life) in their sleep. But it doesn’t hurt to keep your mission at the fore of every conversation you have around services, finances, and hiring. “Does your next move support our mission?” is a great question to ask frequently.
Therefore, keep in mind that your strategic plan is your roadmap to actualizing your mission out in the world. Use that plan as a tool to set you in the right direction and ensure that your nonprofit is sustainable well into the future