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Starting a Nonprofit in a Tough Economy

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Now, more than ever, the nation needs nonprofit organizations. The need is great and still growing.

Introduction

The bold, new world we have found ourselves in as 2020 comes to a slow end has given us some effects of closed, closing, or damaged businesses. As well as people out of work, make less money, or trying to make back what was lost over the past several months. Nonprofits are no different.

The decision to start a nonprofit organization is difficult in the best of circumstances. In a downright frightening economic climate, does it make any sense at all? Some experts are predicting that this economy may bring doom to many already existing charities this year; some have even gone under. However, given government’s inability to keep up with the ever-growing need, America’s charities prove on a daily basis how much more effective and efficient the private sector is. At the time nonprofits are needed the most, let’s examine the steps required to make sure your organization can survive and be successful in tight economic conditions.

First off, the steps haven’t really changed. Bad times require the same things that should have been happening in the “good” times. The difference is that now you cannot survive unless you strategically operate your program. Below are five essential considerations when planning a new nonprofit startup.

Mission

This may seem self-evident, but our experience says it’s not. Your mission is what your organization is all about. What need are you trying to fill? What wrong are you trying to right? What information are you trying to teach? If you cannot answer such a question in 50 words or less, you may not know what your mission is. Without a mission, nothing else that follows really matters.

Practicality

Will your idea fly? Is there really a need? Will the IRS consider it within its definition of 501(c)(3) tax exemption? Do you possess the ability to pull it off? Do you have a the necessary time to devote to this? “Nonprofit” does not mean you can operate without a business model. It’s still gotta work.

Leadership

The Board of Directors is the governing body of the organization and requires careful consideration when determining who should be on it. Never look at your board as a necessity of governmental compliance; they are not placeholders. Your board needs to be a source of information, energy, wisdom, action, and dedication. This includes board members being involved in fundraising for the organization and even donating their own time and money. Why? Consider this: Would you want to donate to an organization that the leadership doesn’t believe in enough to help fund? Starting a new organization, even a nonprofit, isn’t an easy one, and you will need your board for support. However, you will still need to be cautious when choosing your fellow board members to avoid any conflict of interest. No need to make things more difficult.

Viability

This sounds familiar to practicality, but it really is different. Can your program survive tough times financially? Are you and your board prepared to beat the bushes, sell your story, and be creative in fundraising? Can you stand out from the crowd? Social entrepreneurialism means entrepreneurialism geared toward a cause instead of a for-profit motive. You are starting a “social” company…and you must be able to generate more revenue than you spend. It’s simple math.

Compliance

This is not “start it and forget it.” Just like any business, your program will be accountable to state and federal agencies for compliance with regulations that govern organizations like yours. Whether it is end-of-year IRS Form 990 compliance, state charitable solicitation registration, bookkeeping, or the general parameters of 501(c)(3) restrictions, your organization must be dedicated to transparency, rigid controls, and methodologies to stay between the lines.

The above is just a sample of some of the elements crucial to starting a successful nonprofit. Now that you know, get out there and make a difference. It can be done! Americans are the most giving people on the planet. No other country impacts the world charitably like the U.S. When people see a program that is touching lives, it touches their hearts. Even in the midst of some very painful times, America still gives…especially to a well communicated vision.

What better time to start a nonprofit than when it’s needed most?

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Katie Koenig

Katie Koenig

After starting as a Client Care Specialist with our Compliance Team, Katie transitioned to Foundation Group's Marketing Team at the beginning of 2020, helping to keep our readers and clients up-to-date on important compliance, best-practice, and informational content critical to their success.

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