Do you want to start a small nonprofit organization? Perhaps you want to give back to your community, but do not want to oversee a national organization. Maybe you are in retirement and have an idea for giving back to your community. Whatever your reasons are, small nonprofits play an important role in charitable giving and community growth.
So how do you start one? There are fees, legal matters, and people you are going to need to navigate. Before you begin, be sure that this is what you want to do. If you hope to benefit your community or support a cause, is there another way you can do it? Can you volunteer your time, efforts, or money to an organization that already exists? Can you open a state or local branch for one? If not, and a currently non-existing organization is the only way to address what you want to address, and you are prepared for the personal and financial commitments it will require, then go ahead and proceed.
Research an unmet need you want to fill. Lots of charities do multiple things, so make sure an existing organization does not already cover what you are aiming to, even if the organization is seemingly unrelated. Also, ask yourself: will people support you? Can you reach them? Competition between nonprofits is a different animal than between for-profit companies, and you need to put the cause first.
Once you have decided on your organization’s focus, it’s time to lay the foundations for building a brand. A brand is a business’s identity, both for-and-nonprofit, so you need a catchy name, a recognizable and straightforward yet elegant logo, and a slogan. There are online tools you can use to help with this part if you are having difficulty being creative. You want something that reflects your purpose and inspires people to donate to you.
Like any startup, you will need a business plan. Check out other organization’s business plans to see what should be in yours, which will include an executive summary (which is a brief overview), a description of your products and services, your operational structure, and financial strategy. You will also need to compose a market analysis and plan: marketing can make or break a nonprofit, so do not convince yourself that you can survive on word-of-mouth alone. A SWOT analysis is an excellent idea (which stands for Strengths, Weaknesses, Opportunities, and Threats) that will help you strategize.
Every organization needs a legal structure. Many people establish themselves as a “nonprofit corporation,” but you can also become a B-Corporation, a Nonprofit LLC, an L3C, an Unincorporated Nonprofit Association, a Trust, or Prepare & Files Articles of Incorporation. Consult with a lawyer or accountant to determine which option you think is appropriate.
The fees and other legalities
As a nonprofit, you may qualify for tax exemption. Before you apply for 501(c)3 status, however, you will need to pay a fee related to your budget size. It should be about $400 if your budget is under $10,000. You will also have around 15 months to file a 1023 form, which is necessary for 501(c)3 status and assesses your organization’s structure for an $850 fee (approximately), and you will need an EIN by submitting a Form SS_4 to the IRS.
It’s all on you
Every nonprofit organization needs a Board of Directors. Recruiting willing members will take some assessment and relationship building, especially because they will have a variety of legal responsibilities. While your board is essential, starting a small nonprofit means that much of the fundraising work and daily operations are going to fall on you and your staff’s shoulders (if you choose to hire staff at all).
When hiring staff, you need to consider how much you will be able to pay them and how much work needs accomplishing. Wild Apricot notes that many organizations have managers for membership, communications, fundraising, and events. Depending on how much time is on your hands, will you be able to perform these functions? If not, you will need at least a small staff to carry the burdens of dealing with social media, outreach, soliciting donations, and executing your organization’s programs.
Be sure you know where your revenue sources will be. It’s easy to get caught up with how much of a difference you are going to make, but the behind-the-scenes is imperative. Will you charge membership fees? Host auctions or dinners? Will you apply for government grants? Fundraising is more than asking for money; you often need to tug on a few heartstrings and offer incentives.
Nonprofit organizations are lovely outlets for charity, big and small—but running one requires many moving parts. What small nonprofit are you dreaming of starting?