So you want to start a nonprofit? Read this first.
Updated: Apr 15, 2021
While speaking with Amy Gatzeymeyer, one of the founding members of the yoga military nonprofit, TRIBE, on the Go Find Out Podcast (which you can listen to here), I couldn't help but think back to when I formed a nonprofit to provide free career services to veterans and their spouses. My conversation with Amy really drove home all the things I should have considered before even starting the paperwork process to form the nonprofit. Doing so might have kept me from dissolving the nonprofit less than a year in or might have made me reconsider forming the nonprofit in the first place.
So before you go through all the trouble of creating a business plan and filling out paperwork for your nonprofit, take a look at the following suggestions and make sure that creating a new nonprofit is the right step for you and your goals.
1) Check to see if there is already a nonprofit doing the same thing your nonprofit would do
I admit: I read this suggestion about 8,000 times before starting my nonprofit... yet I always mentally countered with, "But our nonprofit will be different." The problem was, I couldn't say exactly how it would be different. So before you do anything else, ask yourself: is your nonprofit truly filling an unmet need or is it just duplicating a nonprofit that's already in existence?
It's okay to have some overlap if the need is great enough. Or to overlap with a national nonprofit if you're more focused on providing services/assistance on a smaller, more individualized scale than those national nonprofits can. But if you're creating a nonprofit to fill a need and that need is already being met by an existing nonprofit, then you'll probably struggle to find "clients" since they are currently getting their needs met by that other organization. However, if you know that there are more clients available than the other nonprofit can handle, then starting a new nonprofit might be okay. A better idea would be to look into the option of opening a new chapter of that existing nonprofit. That way you'll likely fall under their charitable organization status and can avoid the IRS paperwork headache. Just keep in mind that if you go with this option, it means abiding by that organization's mission and bylaws.
Another issue you're likely to encounter by duplicating services already being rendered by another nonprofit is that of competing for donations. This is especially true if you are in a small town or if you're vying for very specific federal or state grants. If the other nonprofit is well-established, then donors are more likely to choose that organization over donating to a newer, less established nonprofit.
2) Make sure you have a solid group for your board members
Selecting your board members is one of the most important decisions for your nonprofit. These are the people who are going to drive the overall decision process for your organization. It's important for them to have the nonprofit's best interests in mind. Make sure they understand and believe in the organization's mission. Also the more passionate your board members are about your mission, the more likely they are to stay on as a board member and will more naturally act as a spokesperson for the organization when speaking with friends, family, or colleagues.
You'll also want to ensure that each board member understands what's expected of them. They need to know how often you expect to meet. How many hours they will be expected to spend on the organization. If they'll be expected to raise funds or work on other projects. You'll also need to ensure you understand their expectations for the role. Is the role unpaid or do they expect to be compensated? (You'll need to see what your state's laws are in relation to compensating board members.)
One major takeaway from my interview with Amy was that all of TRIBE's founding board members communicated upfront what each of their time commitments would be to the organization. Then, as each of their life situations changed, so too did their duties to the organization. By maintaining that open communication, they were able to shift the organizations duties and responsibilities back and forth between board members to ensure that the nonprofit received the attention and dedication it needed to thrive.
Consider whether this kind of shifting or ever-adapting arrangement would work for your board members or if a more set list of duties or expectations would be a better fit.
3) Determine what you actually want to accomplish in the first year
It's difficult to achieve a goal if you don't sit down and figure out what your organization's goals are. When creating goals for your organization, you'll want to make sure that they are SMART goals. That is: Specific, Measurable, Achievable, Realistic, and Time bound. (Here is a helpful article on setting SMART goals.)
You don't want to start off by saying you're going to raise $1 million in funding in the first 3 months and then bank on that occurring in order to pay staff members you hired too soon.
Start with small, smart, achievable goals and scale up as you go. And remember, this is just for your first year of operation! You don't need to do everything in that first year. Consider what goals will truly help you achieve the nonprofit's mission and which goals might be vanity goals. For example, does your organization really need an office space? Opting to work from home or even occasionally renting a space for meetings can save your organization a ton of money. Determine if a physical location is truly necessary during your first year. If not, you can cut that from your list of goals (and reallocate those funds to a different goal where they will better help the organization achieve its mission.)
4) Determine how much funding you'll actually need to accomplish those goals
Okay. In the last step you created a list of first year goals for your nonprofit. Looking at these goals should help you get some idea of how much funding you'll need for the first year.
There are a lot of free resources out there is you're willing to do your research, so consider what areas you could compromise in to save money. For example, if you've decided you need an office, perhaps purchase the office furniture second hand or look around to see if anyone is willing to donate their old furniture to your nonprofit.
Remember that the less money you spend on periphery items like office furniture, the more you can spend on things that directly affect you achieving your organization's mission.
5) Determine how much time/effort you want to donate to the cause
This is a big one. You might be excited about your organization's mission right now, but are you passionate enough to continue putting in the work even if you don't get a paycheck for the first year or two?
It's completely okay if you need to get a paycheck somewhere else while you build the nonprofit, but it's important to be realistic about how many hours you can dedicate to the organization each week while working elsewhere.
While these suggestions for what to consider before starting a nonprofit might seem overwhelming, looking at them now can keep you from becoming overwhelmed after forming your nonprofit.
And if you're feeling a little lost in the process, connect with your local Small Business Administration (SBA) to see if they have any free resources to help you in your journey of starting a nonprofit.
Want to hear first-hand from someone who started a nonprofit? Check out this episode of the Go Find Out Podcast!