Starting a Nonprofit? Do These 5 Things First!

Starting a nonprofit is not for the faint-of-heart.  Starting any kind of new business is a brave venture that requires strategic thinking, bold determination, hard work, and broad shoulders.  Simply put, it’s not for everyone.

But for those with the mettle to put your ideas out there, it makes sense to understand the requirements and best-practices first.  The landscape is littered with the wreckage of those who take the “Ready-Fire-Aim” approach instead of “Ready-Aim-Fire”!

Here are 5 key things you simply must do if you are going to start a nonprofit.

Most businesses, including nonprofits, are started by people you might call Visionaries.  I know, because I am one of those.  As a personality type, we’re wired for ideas.  We tend to view what’s ahead of us from 30,000 feet above the ground.  We see things that others often just can’t imagine.  Visionaries tend to see the need, opportunity, and outcome in one mental gaze.

But if I’m honest, we’re terrible at details…like, truly awful.  That’s bad.  It’s the details (and the proper execution of them) that spells the difference between success and failure.  The first place to get the details right is in planning your new nonprofit.

Identifying Your Mission and Vision

First things first, you need to figure out what your nonprofit is all about. What cause are you passionate about? What need do you see being left unmet or opportunity not pursued? What do you hope to achieve? Is it achievable? If so, is it achievable by you and your idea?  It doesn’t have to be easily achievable, but it should at least be possible.

Conducting Market Research

Before you dive in, it’s a good idea to do some homework. Look at similar organizations to see what they’re doing well and where there might be gaps. This will help you position your nonprofit uniquely and effectively address unmet needs.  It is absolutely essential to make sure your mission aligns with the needs of the community you want to serve.  If it doesn’t, then your nonprofit will turn out to be little more than a vanity project that will frustrate you in the end.

Creating a Strategic Plan

A strategic (business) plan is like a roadmap for your nonprofit. Set both short-term and long-term goals, and outline the steps needed to achieve them. This plan will keep you focused and on track.

Don’t assume this is your job alone.  In fact, we would counsel you that if you are at the strategic plan phase, you already need a few good people around you to help you think through the mission and program plan.  Unless you are a strategic genius…a delusion many visionary founders cling to…you need help with this.  Again, details matter.

This is the part we know best.  Our flagship nonprofit formation service, SureStart™, has helped tens of thousands of nonprofit founders launch well over the past 30 years.  It’s a complex process that involves a number of steps, all of which you must get right.  We’ll cover them below, but keep in mind we have oversimplified these for the sake of brevity.  Reach out to us if you need help.

Choosing a Legal Structure

The right structure will provide a solid legal foundation for your activities.  Nonprofits can take various legal forms, like a trust, association, or corporation. The overwhelmingly vast majority choose to incorporate, and for good reason.  Any of the other options typically involve very specific use cases.  Forming a trust, for example, when it isn’t necessary will likely cause major headaches down the road.

Filing for Incorporation

Assuming you choose a corporate structure (recommended!), the first step is getting legally established as an entity.  Incorporating your nonprofit involves submitting specific documents to your state’s government. This usually includes drafting articles of incorporation (or a charter) and paying a filing fee. Incorporation gives your nonprofit legal recognition and can offer liability protection for your board members.  Your board members will thank you for that.

Obtaining Tax-Exempt Status

To qualify for tax-exempt status under IRS 501(c)(3), your program plan must first satisfy an exclusively charitable purpose.  If you did you planning well, hopefully that’s already a given.  It is interesting, however, that approximately 75% of the startups we work with each year have elements of their initial plan that are problematic with regard to getting approved as a 501(c)(3).  We are able to advise them about the problem components and help them course-correct prior to applying to the IRS.

Getting recognized as a 501(c)(3) requires filing Form 1023 with the IRS.  It is a complex process that can take from a few weeks to a few months, but it is the most critical part of the technical steps.

Compliance and Reporting Requirements

Once your nonprofit is up and running, you’ll need to comply with ongoing legal obligations. This includes annual reporting to the IRS and your state, and maintaining accurate records.  For larger nonprofits, it may even involve conducting regular audits. Staying compliant ensures your nonprofit remains in good standing.

Recruiting Board Members

We’ve talked a lot about the importance of having good board members.  A strong board of directors is essential for your nonprofit’s success.  You are legally required to have a board, but a tragic mistake many founders make is putting do-nothing, placeholder people in the seats.  Sometimes it’s because the founder wants ultimate control.  Other times, it’s because they feel like they can’t find anybody else willing to pitch-in.  Don’t do this!  Choose well!

Identify the skills and expertise needed to guide your organization and actively seek individuals who are passionate about your cause. Effective recruitment strategies include networking, personal invitations, and leveraging professional associations.

Roles and Responsibilities

Clearly define the roles and responsibilities of your board members. This includes setting expectations for their involvement, such as attending meetings, participating in committees, and supporting fundraising efforts. Clear roles help ensure accountability and effective governance.  Clear roles also have the uncanny ability to weed out do-nothings from the get-go.

Board Governance and Meetings

Now that you have a board, you need to effectively govern with it.  Establish best practices for board governance, including regular meetings, transparent decision-making processes, and conflict-of-interest policies. Conducting productive board meetings with well-prepared agendas and active participation is key to effective governance.

I mentioned in the beginning of this article how important it is to align your mission with community needs.  Assuming you’ve done this well, the next part of the equation is effectively engaging with your community.

Important sidenote:  Community isn’t necessarily defined geographically, though it certainly can be.  Your “community” could be defined by common need, not proximity to you.

Building Community Relationships

Strong community relationships…no matter how you define your community…are vital for your nonprofit’s success. Network with local organizations, leaders, and stakeholders to build partnerships and collaborations. These relationships can provide valuable support, resources, and advocacy for your cause.

Marketing and Outreach

Develop a strong brand and message that resonates with your target audience. Utilize various marketing channels, including social media, email newsletters, and community events, to raise awareness and engage supporters. Consistent and compelling communication is key to building a loyal following.

In fairness, this is harder than it sounds, and it won’t happen overnight.  The good news is that there are many online tools at your disposal that can help you with these things.

Volunteer Recruitment and Management

Not every nonprofit needs volunteers.  But for many, volunteers are their lifeblood. Implement strategies to attract and retain volunteers, such as offering meaningful opportunities, recognizing their contributions, and providing a positive experience. Tap into those who have a passion for your mission.  Effective volunteer management ensures a motivated and dedicated team.

This is the part that gives founders the most heartburn.  Without cash, your idea is going nowhere fast.  But where are you going to find financial support?  The answers are out there, and resources like Fundraising TV can help.  But there’s a lot to consider.

Developing a Fundraising Plan

A comprehensive fundraising plan identifies potential funding sources and outlines strategies to achieve your financial goals. This plan should include a mix of revenue streams, such as individual and corporate donations, events, and program revenue to ensure financial stability.

Grant Writing and Applications

Grants are great, but they aren’t guaranteed.  In fact, they’re pretty tough to get, especially in the earliest phases of your nonprofit startup.

Research grant opportunities that align with your mission and prepare compelling proposals. Successful grant writing involves clearly articulating your needs, demonstrating impact, and following application guidelines meticulously. Persistence and attention to detail are key.  If you don’t win a grant this year, try again next year.  Our friends at Get Fully Funded might be able to help, as well.

Individual Donors and Major Gifts

For many nonprofits, individual donors and the occasional major gift will be the primary source of sustaining revenue.  For this reason, building relationships with individual donors is crucial for long-term sustainability. Develop strategies to engage and cultivate donors, such as personalized communication, donor recognition programs, and stewardship activities. Major gifts can significantly impact your nonprofit’s capacity to achieve its mission, as well.  So don’t miss opportunities to effectively engage those whose big gifts can make a big difference.

Corporate Sponsorships and Partnerships

Many nonprofits overlook the opportunity to financially engage the business community.  While Mom-and-Pop businesses probably don’t have the financial resources to help you out financially in a meaningful way, you may still find support there.  Bigger corporate businesses, however, often have charitable giving programs that you might tap into.

Approach businesses for sponsorships and partnerships that align with their corporate social responsibility goals. Create mutually beneficial opportunities that provide value to both the sponsor and your nonprofit. Strong corporate partnerships can enhance your credibility and expand your reach.