The start of your business says a lot about how well it’ll survive. For startups and nonprofits alike, the first 5 years can make or break it for success. If you want to know how to start a nonprofit organization, it’s best to first know what you’re up against.
Only 50 percent of small businesses are still running by their fifth year. Experts suggest the number is lower among nonprofits.
With everyone vying for our attention 24/7, nonprofits need to be smart about how they get their message across and hook in potential supporters. The web and social media have made it increasingly easy for many social changemakers to create meaningful campaigns in the communities that matter to them. And while there is easier access to your target market, there is also a bigger chance of losing their attention. The key?
Create an experience your members can’t deny.
So, how can you ensure you make the most of the digital real estate available to you, hook in members, donors and friends and create your dream nonprofit organization? Here are four questions to get you started.
4 questions to answer before you start that nonprofit
Coming up with a great idea for a nonprofit is the easy part. The harder part is staying afloat. Answering these questions will help.
What’s your story?
What’s your pitch?
What’s your plan?
What’s your status?
Too many nonprofits fail because of lack of planning. Plan to succeed by answering these questions — even before you ask for your first donation.
1. What’s your story?
First things first:
- Why a nonprofit?
- Why now?
- Why you?
While a business plan, registering with the state and filing for tax-exempt status is important for any new charitable venture, your most valuable asset will be your story. Why are you creating this community and why will it matter to your members?
People buy from people. Good stories move us to action.
Get to know who you hope to serve, what their needs are and what you can do to fulfill those needs. Get to know what story your nonprofit cause is creating, and the legacy it hopes to leave behind.
Start with your members
What motivates them? What are they passionate about? Make them real, get to know their ages, location, gender, what hobbies and interests they enjoy, where they hang out online, what social issues are really at the heart of who they are (and where that might intersect with what your organization does).
Research the numbers
At this stage in the game, you also want to get familiar with the numbers. Dig deep, and do the research to find out what data can tell you about the unmet needs of your community. Applying that knowledge to who you want to attract and beginning to think strategically about your digital presence will be your ticket to securing funding, and creating a viable network of people who will support your organization through the long haul.
Have a clear vision of what your nonprofit stands for to begin creating a thriving community.
2. What’s your pitch?
Once you know your why, get clear on what sets your nonprofit apart. Who’s your competition? Are there similar organizations? During your research, you might uncover that you and another association are aiding similar causes. Don’t get discouraged.
Now’s the time to figure out what differentiates you, and what you can specifically offer your members that other nonprofits can’t.
It might, for instance, mean forgoing a membership fee if that’s what’s most common among your type of organization. Or it might mean taking a more creative approach to the identity of your alliance and giving your branding a more modern appeal. Learning from the best, in this case established communities, will give you a deeper look at how you yourself can meet the specific needs of your tribe.
Choose a name
This is also a good time to pick a name (get tips here)! One way to approach this is to describe what your nonprofit will do (e.g. Feeding America) or who you plan to help (e.g. Children’s Cancer Research Fund).
Don’t forget to register a custom domain name to use for your nonprofit website and email account.
Go ahead! See if the web address you want is available now:
Get serious about social
You might think it’s too early to start a social media plan but actually this is a good time to attract members and rally funds behind your cause.
Social media for nonprofits is huge. It’s how you’ll reach your network and get the extra intel on how to set your organization apart. The big three to get started on are:
Show your members the human side with Facebook, use LinkedIn to connect with other brands that believe in your cause and start thoughtful conversations about what your organization believes in on Twitter.
And don’t be afraid to get creative!
Use the digital space to give your nonprofit a voice. Join your members in their established circles (Facebook Groups, Reddit threads, MeetUps, etc.), create your own think pieces to attract members and thought leaders, and let friends and family know you’re starting a charitable group (and ask them to invite people who might be interested).
Creating buzz for your nonprofit — before you file for tax-exempt status or register with the state — can help you get to know your audience.
Crowdfunding platforms like Kickstarter, GoFundMe and Patreon enable today’s leaders and creators to fund their visions with a campaign. This can create strong connections as well as sharpen your focus before shelling out the money to file as a nonprofit.
3. What’s your plan?
Writing a business plan might sound scary, but it’ll be a useful tool in your arsenal. There are many resources that help nonprofits and beginning entrepreneurs create a detailed plan for success.
The Small Business Administration has a thorough guide on writing a business plan, with sample templates to get you started.
Before putting fingers to keypad or pen to paper (if you’re old-fashioned), establish a mission statement. Your mission statement should go into detail about your nonprofit’s purpose, the people you serve, how you plan to serve them and where funding will come from. Ironing out the details now gives you the chance to decide what services and products you’ll offer. Remember to check back in on your research, to see how you can stand out among your competition.
Potential sources of revenue could be:
- Membership dues
- Event ticketing (networking events, conferences or retreats)
- Professional workshops and services
Your donors, potential investors and board members will want to see all of this, so it’s worth the time and effort it takes to write a thoughtful business plan.
Physical or virtual?
Now’s a good time to think about the structure of your organization, too. Will you serve a community through physical clubs and associations? Or are you more of an online network that provides educational resources and support? When filing with the IRS, you’ll be hit with a hefty $800 fee (more or less) depending on your state’s rules and regulations. Having a plan ahead of time not only lets you use the power of the internet to your advantage, but can help you decide if you’ll be hiring staff (and how to pay them) or if you can cut costs by keeping your community virtual.
Estimating startup costs
In addition to office space, what kind of startup costs should you be budgeting for? Will you need office supplies? Will your nonprofit need software to be operational? Will having a physical space also mean securing a package delivery service? These are all things that will go into your business plan’s financial estimates and will be important to know before filing with the IRS.
4. What’s your status?
Armed with your business plan, you can now move into the real meat of your venture: becoming official. Filing for tax-exempt status can take anywhere from 3-12 months (so you’ll be ahead of the game if you take advantage of an early digital presence).
Deciding on a legal structure — and whether to incorporate or not — will be your first major decision. One benefit of incorporating will be earning tax-exempt status, which will allow your organization to not pay annual taxes, and refund your mission. As I mentioned earlier, filing for 501(c) tax-exempt status will cost you hundreds. Here’s where early social media efforts, business plan and research can be a saving grace.
Types of nonprofits
Another thing you’ll want to consider before marching up to the IRS and registering with your state? Where under 501(c) your nonprofit falls. Charitable, religious, scientific and literary organizations fall into the most commonly known classification, the 501(c)(3). But, there are other options. You could, for instance, be a:
- Social welfare organization, or civic league 501(c)(4)
- Social and recreational club 501(c)(7)
- Group legal services plan organization 501(c)(20)
Browse this list of the most common nonprofit classifications and decide where your cause falls.
Registering with the state’s agency, such as an Attorney General, is one of the final steps in how to start a nonprofit organization. Looking to get contributions outside of your state, too? Then you’ll want to register there as well. Remember to track all of your expenses from the start, as you’ll need this for annual reporting and for future records.
Once you’ve gotten through all four steps, you’ll be on your way to a thriving community!
How to start a nonprofit organization in a nutshell
Starting a nonprofit isn’t for the faint of heart. From figuring out exactly who you want to serve to why they’d be interested in taking part in your mission, you might at times find your spirit burning out. Stay strong, leaders! Surround yourself from the start with people who believe in your mission, and believe in the work you’re doing. While there are more ways to stay connected than ever, the real key is in finding the people who will relate to your story. So keep your why top of mind and keep fighting the good fight.