Embarking on the journey of starting a nonprofit organization is a huge undertaking. Nonprofits provide a critical channel for individuals and groups to translate their passion into purposeful action that touches lives and transforms communities. If you’re looking to get started, you came to the right place.
This comprehensive guide will walk you through the process. We’ll teach you exactly how to start a successful nonprofit organization and give plenty of examples and tips along the way.
WHAT IS A NONPROFIT?
At its core, a nonprofit organization is a unique group or business that revolves around the principle of service. Unlike their for-profit counterparts — which aim to generate profits for owners or shareholders — nonprofits operate specifically to further a social cause or advocate for a shared point of view.
The range of sectors that your nonprofit can operate within is vast, spanning from education, healthcare, and social services to environmental conservation and cultural preservation.
Nonprofits come in various sizes. You might run a community-based charitable organization that offers local outreach, like a food pantry in your neighborhood. Alternatively, you could run an operation like the American Red Cross, which is a massive national nonprofit.
WHO CAN START A NONPROFIT?
Starting a nonprofit is something that anyone can do if they genuinely want to make a difference.
However, running a nonprofit involves managing an organization and making business decisions that can determine the success or failure of your venture. Successful nonprofit founders often possess a solid grounding in business principles, which can be acquired through formal education — like obtaining a degree in business management or a Master of Business Administration (MBA).
Other nonprofit founders have prior experience in the business world. This foundational knowledge can help to ensure that your nonprofit is structured for success.
While passion and purpose are the heart of any nonprofit, the head that guides these drives into effective action usually has a deep understanding of strategic planning, budgeting, human resource management, fundraising, and marketing.
Essentially, these are core business principles that can be applied to nonprofits to improve their chances of survival and growth. So, who can start a nonprofit? Anyone. But who is the best option for running a successful nonprofit? Someone with a ton of business acumen and preferably an MBA.
VALUABLE SKILLS EVERY NONPROFIT OWNER NEEDS
As we mentioned, running a nonprofit is much like running a business. It requires a balance of hard and soft skills combined with an inherent desire to make an impact.
Nonprofit founders need to be self-driven and hard-working, possessing a level of determination that can see them through challenges — it’s worth mentioning that you’re likely to run into a lot of challenges in your nonprofit. As long as you have the right skill set, you’ll work through the challenges and grow your operation.
Building a nonprofit from the ground up is no easy feat. It requires resilience and an incredible commitment to the cause.
In addition, you should embody a charitable spirit since the essence of a nonprofit lies in serving others and contributing to the community or cause. The ability to empathize with people or groups that your organization is designed to help is essential.
On the hard skills front, nonprofit founders should understand basic financial management, strategic planning, and project management. They should be able to oversee fundraising efforts, manage volunteers and staff, and promote the organization to the public effectively.
Remember that these skills can be developed over time through experience, learning from mentors, and formal education. No one is born with all these skills, but they can be acquired and honed with time, dedication, and education.
Next, let’s talk about the specific steps you should follow to start your nonprofit organization.
STEP #1: CLARIFY YOUR MISSION/VISION
Initiating a nonprofit begins with the critical task of creating your mission and vision. At the core of this is identifying a cause or issue you feel strongly about. Perhaps you’re moved by the growing population of unhoused people in your city, the challenges facing endangered wildlife, or the pressing need to advocate for clean energy.
Once you’ve identified your cause, you’ll need to articulate the goals and objectives of your organization. This is usually easier said than done. Consider what outcomes you aspire to generate through your work. How do you envision making a difference?
From these considerations, you should develop a clear mission statement and vision statement. The mission statement outlines your nonprofit’s purpose and methods, while your vision statement paints a picture of the long-term impact and change you hope to create in the world.
This is a lot of information, so let’s bring up an example: Habitat for Humanity. Their mission statement is “Seeking to put God’s love into action, Habitat for Humanity brings people together to build homes, communities, and hope.”
Their vision statement is “A world where everyone has a decent place to live.”
What do you notice about these statements? They’re concise and powerful and paint a picture of the organization’s goals. They also explain their desired outcomes, which provide a clear guide for their operations and programs.
STEP #2: RESEARCH AND ASSESS FEASIBILITY
Following the establishment of your mission and vision, the next step is to immerse yourself in research and dig into the feasibility of your nonprofit. This stage involves studying the existing landscape to identify gaps. Are there other organizations that serve the same cause? If so, what unique angle or approach can your nonprofit offer to differentiate itself?
On top of that, it’s also crucial to assess the needs and demands of your community. Is there an actual need for your proposed services, or is it better to partner with an existing organization instead? Do potential donors and investors resonate with your cause? These questions can be answered through surveys, focus groups, and community meetings.
A feasibility study is also critical at this stage. This involves evaluating whether you possess the necessary resources, support, and capacity to successfully launch and run your nonprofit.
You’ll need to consider potential challenges, required resources, and whether you have access to the necessary human, financial, and material assets.
STEP #3: DEVELOP A STRATEGIC PLAN
After confirming the feasibility of your nonprofit, the focus shifts to developing a comprehensive strategic plan. Any public charities or nonprofits need a strategic plan to succeed.
Begin by establishing your organizational structure and governance. Essential questions to consider include: Who will make the decisions? How will your organization be structured to function most effectively?
Next, you’ll need to determine your funding strategies and plans for financial sustainability. Here, you’re faced with a two-part challenge:
First, you’ll need to devise a plan to raise the funds to launch your nonprofit. Then you’ll need to develop strategies to ensure the continued inflow of money and resources to sustain your operations in the long term.
It’s also vital to outline your programs, services, and activities. What specific programs will you offer to achieve your mission? How will these programs facilitate your desired outcomes?
Finally, your strategic plan should include a clear timeline and measurable goals. When do you plan to officially launch your nonprofit? What key milestones do you hope to achieve within the first year? Or the next five years?
To better grasp the importance of a well-structured strategic plan, consider the example of the Tiffany Circle, a community of women leaders who advance the American Red Cross mission. Their strategic plan clearly outlines their priorities, strategies, and measures of success. They also provide a “Strategic Plan Dashboard” that transparently tracks their progress toward their goals.
STEP #4: DEFINE LEGAL AND REGULATORY REQUIREMENTS
The next stage involves getting familiar with the legal and regulatory requirements associated with the incorporation and operation of a nonprofit, specifically when it comes to filing your taxes and any tax exemption that comes with it. The specific requirements you’ll need to meet depend on various factors, including your location and the nature of your activities.
Types of Nonprofits
In the United States, the Internal Revenue Service (IRS) recognizes several types of nonprofits, including:
- 501(c)(3): This is the most common type of nonprofit, including organizations that operate for religious, charitable, scientific, literary, or educational purposes.
- 501(c)(4): These organizations promote social welfare and include civic leagues and local employee associations.
- 501(c)(7): This category covers social and recreational clubs.
Each of these designations carries specific bylaws and guidelines regarding governance, operations, and reporting. Understanding the distinctions can help you select the correct category for your nonprofit.
Understand Tax-Exempt Status
Most nonprofits strive to gain tax-exempt status. This status means that the nonprofit is exempt from federal income tax.
To obtain and maintain this status, it’s crucial to understand the registration process, all paperwork required, the qualifications you’ll need to meet, and the obligations you’ll need to fulfill. Skipping this step will lead to massive legal and financial issues in the future.
STEP #5: BUILD YOUR BOARD OF DIRECTORS
A critical part of establishing your nonprofit involves assembling your board of directors. These people will play a pivotal role in strategic planning, legal, and ethical accountability, and financial oversight. It’s essential to identify individuals aligned with your mission and vision. They should be deeply committed to your cause and bring a wealth of diverse skills to your organization.
An essential task here is defining the roles and responsibilities of each board member. Who will be the chairperson? Who will handle the finances? How will responsibilities be divided among board members, while maintaining internal checks and balances for proper financial management? Clear definitions of roles, and good communication, ensure smooth functioning and prevent misunderstandings.
STEP #6: DEVELOP FUNDRAISING STRATEGIES
A solid fundraising strategy is the lifeblood of your nonprofit’s operations. Since you’re not making profits by design, you’ll rely on fundraising to fund your organization.
The plan could include a combination of various funding sources such as grants, donations, fundraising events, membership fees, and more.
It’s critical to not only identify potential funding sources but also to develop a comprehensive fundraising plan and timeline. Consider looking into partnerships and collaborations that could bring additional resources to your nonprofit.
STEP #7: CREATE AN OPERATIONAL STRUCTURE
Creating an operational structure for your nonprofit involves developing comprehensive policies and procedures to guide your daily activities. It also includes tasks such as recruiting and training volunteers and staff members who will help execute your programs and services.
Furthermore, it’s vital to establish a sound financial management system to ensure transparency and effective allocation of resources.
STEP #8: MARKETING AND PROMOTION
Building a compelling brand identity and effective promotional strategies is essential for creating awareness about your nonprofit and attracting donors and beneficiaries. This step entails creating a logo and visual identity that embodies your mission and resonates with your target audience.
In today’s digital age, having a robust online presence is crucial. A professional, easy-to-navigate website and active social media profiles can significantly expand your reach and impact.
Networking and community engagement are also vital elements of your marketing and promotional strategy.
STEP #9: LAUNCH AND MONITOR PROGRESS
Now it’s time to make the jump and launch your nonprofit. A well-planned launch event can generate a buzz and attract early supporters to your cause.
After the launch, continuously monitor and evaluate your organization’s progress against the defined goals and objectives. Regular evaluations facilitate timely adjustments, ensure that you stay on course, and drive continuous improvement.
The journey of setting up a nonprofit demands patience, persistence, and a great deal of planning. However, the reward of seeing your passion translate into action that positively impacts lives makes it all worthwhile.
If you’re considering starting a nonprofit, it’s worth investing in yourself by learning the ropes. Consider enrolling in Johnson & Wales University’s online MBA in Nonprofit Management.
This program will equip you with the necessary skills and knowledge to start and run a successful nonprofit. Turn your passion into action and make a significant difference in your community or the world at large.