How to Start A Nonprofit Organization?

While it’s true that businesses operate mainly to earn profit, there are a few entrepreneurs who buck this trend by forming nonprofit organizations, that are legal entities or charities that operate for the good of the public, or for social benefit in the community. 

If you are one such nonprofit entrepreneur, congratulations! We truly applaud your commitment to helping the society around you.

1. Research and Planning

The universal rule – fail to plan means planning to fail – works for all businesses, profit and nonprofit alike. In fact, nearly half of all nonprofits fail from the start because they did not plan and research enough. 

Think about whether your nonprofit fills unmet needs in your society – this will make it easier for you to secure funding, grants, support, and donations if your community feels they will benefit from the work you do.

2. Form a Strong Leadership Foundation

Think about who you want in your leadership roles. Good leaders are hard to come by, so if you find individuals that display strong leadership qualities that match your nonprofits’ mission statement, vision, and values, you know your business is going to be in great hands no matter what.

3. Create Your Business Plan

Your business plan is the single most important blueprint for your business, whether nonprofit or for profit. It is a piece of documentation that clearly shows every single aspect of your business, which is important information for anyone else who is considering lending financial or networking support for your enterprise. 

Next, you should think about your board of directors. Each individual on your board should have specific skills, resources, and networks in different areas. You should aim to have members on your board who have these skills: 

● Financial and legal expertise 

● Wide outreach with secure funding networks

● Respected community members and leaders 

Your board members can help to guide your business in the right direction as your nonprofit organization grows in size.

4. Build Your Board 

5. Create an Impactful Brand

Branding is important for any enterprise, because it is what sticks in people’s minds long after they’ve seen your ads or heard about you. It is essential that your nonprofit has a strong and impactful brand so that it can keep growing to bigger heights. 

Things like memorable slogans, a great logo, voice and tone, and brand color schemes are just some of the important things you’ll need to focus on to create a recognizable brand for your nonprofit.

6. Secure Funding and Revenue

Simply put, a business cannot run without funding. You’ll need to generate revenue for your nonprofit, either through fundraising, government grants, or sales and revenue. 

Fundraising is when you receive donations from corporate sponsors and individuals who believe in your cause – these are done through fundraising events and activities. 

Government grants are applications that you make to your local government to help fund your business operations for the year. You’ll need your business plan, and lots of other relevant documentation if you’re going down this route. 

Sales and revenue include merchandise sales, membership fees, and events, just like how a normal business would operate. The difference is, the profits from these activities will go back to your nonprofit’s mission.

Filing your official paperwork is simple, but you’ll need to follow the right steps in order to have it incorporated correctly. 

❖ File your business name

❖ Appoint your Board Of Directors

❖ Choose your legal structure (Trust, corporation, or association)

❖ Consolidate your paperwork and file with your State

❖ Receive your EIN (Employer Identification Number)

8. Recruit Staff Members

Your nonprofit won't be able to run day-to-day operations without adequate staffing, so be sure to hire enough staff members to avoid any manpower issues.

9. Use Administrative Software

Using the right software tools to run your day to day administration will free up time and labor for your organization to create more value for the society. Research and pick the best software that does CRM, membership management, and payment administration that suits the needs of your nonprofit.

10. Keep an Eye on Your Compliance

Compliance is important for any kind of business, as it deals with taxes and legal issues at the state and federal level. And since your business is a nonprofit, you’ll want to keep its tax-exempt status intact. 

Nonprofits can use a 501c3 to file a tax-exempt status. In the long run, if your business has gross receipts totaling over $50,000 you’ll need to file a 990 form with the IRS to keep compliant with the IRS pertaining to your tax-exempt status. Here’s a handy link to all the information you need for nonprofit compliance.

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