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5 Things to Consider When Starting a New Nonprofit Organization

Written by prositesfinancialJul 10 • 4 minute read

starting a nonprofit

Whether you want to serve your community, address a need, or fight for a cause, you may have considered starting a nonprofit organization. Launching a nonprofit can be fulfilling and incredibly rewarding, but it also requires following some strict guidelines.

Because of the tax-exempt status of nonprofits, starting one is not quite as simple as starting a for-profit corporation. With a for-profit corporation, you would simply register your business with the state, obtain the necessary licenses and permits, and open your doors. With a nonprofit, there is a lot more to consider.

1. Do Market Research Before Getting Started

As with any new organizational venture, it is crucial to do advanced market research into your target niche to see how many others have already begun. With a for-profit enterprise, you may be able to compete in a crowded space through competition and market or product differentiation. However, with a nonprofit entity, things aren’t quite that easy, as you are not selling a product or service.

Instead, you are asking people to donate their money, time, or goods with no expectation of receiving anything in return. If your new nonprofit competes with similar organizations in the same area, or even with a similar government services, it can be challenging to find the donation dollars you need to keep your nonprofit afloat.

2. Evaluate Viable Alternative Solutions to Address the Need

Once you’ve done the initial market research and determined the other competitors, it’s time to evaluate them. You will want to determine if it is still worth creating an entirely new organization or not, based on what you now know about the space.

For instance, if you find out that there is already a well-established nonprofit organization serving the need you are interested in, you might consider joining that organization instead. You could become a volunteer, staff member, or board member of the other organization, and make a big difference there. This information could potentially save you a tremendous amount of time and effort, while also preventing two nonprofit organizations from fighting each other for the same donations and grants.

Another thing to consider is the existence of any national or international organizations that work to fill the need. Many of these organizations have multiple chapters, sub-groups, or geographically dispersed locations to serve the needs of each respective area.

If any of these organizations have the option to create local chapters, you might consider opening one instead of setting out on your own. In this way, you could benefit from the established infrastructure and support of the larger organization. This support could give you a jump start in serving the need and some added credibility with potential donors.

3. Establish the Driving Purpose of Your Organization

After doing your market research and studying competing organizations, it is time to establish its purpose. What areas of need do you wish to address with this new organization? Try to define these needs clearly and concisely so that others can rally behind them. It can sometimes be helpful to address a broad area of needs with your organization to maximize support and create unity behind your cause.

This focus can help bring new volunteers and donors on board. However, be sure that the scope of your organization’s purpose has a viable plan to meet those needs. The goal here is to address as many related appeals as possible without overcommitting and stretching resources too thin.

4. Create a Compelling, Concise, and Accurate Mission Statement

A mission statement can help clarify the purpose of your organization and is crucial for attracting both volunteers and donors. Your mission statement must be more than merely a statement. It should function as a guiding beacon around which you base your day-to-day operational decisions.

A mission statement clarifies your purpose, goals, and objectives. It serves to remind you, your volunteers, and your donors of why you exist and what your priorities are. A mission statement can also help to keep your organization focused and on track for many years. Without one, it is easy to become distracted by short term goals and projects and stray far away from your initial goals.

5. Draft Your Business Plan

It might be tempting to think that a nonprofit organization does not need a business plan, but this could not be further from the truth! A business plan can help ensure that your new nonprofit does not fail early on due to a lack of funds or improper management of resources. Not only that, but a business plan can motivate donors to come on board and become regular contributors. This plan can help by serving as a form of accountability and transparency with donors, letting them know what you plan to do with their money and time.

If your organization will be applying for grants from government agencies, your business plan is crucial. Any potential issuer of a grant will likely examine your mission statement and your business plan to see if the organization is deserving of funds before addressing the details needed to make a final decision.

With these first steps completed, you will be well on your way to establishing your new nonprofit. From there, it will be time to get into filing with your state, promoting the organization, and raising funds from donors!

Are there any other tips that you would suggest to those starting a nonprofit for the first time? Feel free to share them in the comments below!

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