It’s a non-profit BUSINESS!
When you take part in providing necessary goods and/or services you are in business. When in business, the goal is to provide these necessary goods and/or services efficiently and effectively. When you provide these necessary goods and/or services efficiently and effectively, your balance sheet shows a profit.
When your balance sheet shows a profit the result is:
For-profit businesses – pay dividends to stockholders and owe taxes
Non-profit businesses – invest more in your programs and owe no taxes
Non-profits are usually started by caring, well meaning, compassionate people with big hearts. They often start their non-profit business on hopes and dreams, short of cash, and without a comprehensive plan. The thought is often, “I don’t need a plan. I’m a non-profit.”
To make and keep a non-profit successful, it is important to engage in all aspect of running a for-profit business. Remember “non-profit” has to do with paying dividends and taxes not lack of good business practices. Your non-profit wants to make a profit if it can, so that you can put those profits into your programs.
When your heart is telling you to do it, start by asking yourself some basic questions:
• Is this non-profit really necessary?
• Are others doing what I want to do?
• How would I be different?
• Would it be better to join with another non-profit?
Is this non-profit really necessary? / Are others doing what I want to do?
What you are looking for in answering these questions is evidence that what you want to provide is really needed, because these goods and/or services are not being offered at all. If they are offered, evidence that there is a need for more goods and/or services or something is missing from what is currently available.
If you have an unequivocal “yes,” then you move on to the next pair of questions.
How would I be different? / Would it be better to join with another non-profit?
To raise funds for your non-profit, you need to be able to prove need and results. New non-profits often have trouble raising money, because they have no track record. So finding funders who will donate “seed money” to help you get started is important.
Another consideration is the possibility of finding a non-profit that does the same work and wants to expand or does related work where you can bring your expertise, interest, and passion.
Once you have facts and figures that prove the need, look into other non-profits. Go visit ones that are doing similar work. Volunteer there to experience what they do, and figure out if this is really something you want to do full-time, and what is the something special you can bring. Once you decide you want to move forward, talk with the Executive Director and the Board Chair to see if there is a way to work with them instead of starting a new organization.
An example could be a non-profit that provides on-site meals for homeless and low income people. You want to provide clothes for those same people. There are multiple ways this can be done, but seeing if you can work together either in the same location or very close to each other would be a benefit for those you serve. You could become part of their non-profit or start your own non-profit. Again, there is more than one way to do this.
So, you think you want to start a new non-profit. Here are some simple things to remember:
• The non-profit needs to be for the Benefit of the Public
• Write a Mission Statement that gives you clear direction on what you want to accomplish
• No One owns the non-profit or its assets
• It is governed by the Board of Directors acting as a group to see that it fulfills its Mission
Always remember when you start a non-profit, you may donate your time and treasure; but you don’t own it, and the Board of Directors has the final say. So before you start, consult with an attorney and accountant to understand the positive and negative aspects of your involvement including your legal and financial responsibilities.
When you decide to proceed:
• Develop a Business Plan* just as you would when you start a for-profit business
• Speak to people about being on the Board of Directors
• When your Board is in place, develop a Strategic Plan*
• Select a name
• Create a simple direct “mission statement”
• Incorporate your non-profit in your state
• File for your IRS tax-exempt status
• Once recognized by the IRS, back to your state for their tax-exempt status
This establishes “Who & What.”
Who is in charge on a daily basis? Who else is doing this? Who are you serving?
What do staff members bring to the organization? What do you have others don’t?
This establishes “How & When.”
How will you fulfill your Mission, Vision, Values? How will you deal with Issues?
How will it be decided who is involved and what they will do?
What is the time frame? When will these things be done?