If you are planning to launch a nonprofit organization, be aware that it is a challenging task. Establishing a successful nonprofit requires dedication, determination, and perseverance. It also involves critical thinking and extensive effort. Navigating the process of creating a business plan can be daunting, time-consuming, and often challenging. However, a systematic step-by-step approach can help ensure success in achieving your goal. We commend your dedication to making the world a better place by starting a nonprofit organization. It takes a great deal of courage, and we recognize that!
We’ve created a comprehensive guide to aid you in the process of starting a nonprofit organization. This guide will provide step-by-step instructions on how to get started in an efficient, organized, and stress-free manner.
Once you’ve done all the footwork to start your own nonprofit organization, it can feel like you’ve crossed the finish line.
Follow this guide and use it as a reference along your journey toward launching your successful nonprofit!
What is a Nonprofit Entity?
A nonprofit organization can be defined as a type of business entity that does not pursue financial gain as its primary goal. It instead focuses on providing services to the public and is generally granted tax exempt status by the Internal Revenue Service (IRS). Consider seeking tax exemption in each state where your nonprofit will operate. These organizations are dedicated to advancing social causes or issues, such as poverty relief, education, health care access, and more.
Public charities are the most common type of 501(c)(3) organizations in the United States, with around one million registered. These organizations typically receive grants from public and private sources, as well as donations from individuals. They use these funds to provide services such as youth programs, medical research, disaster relief, human rights initiatives, poverty alleviation efforts, environmental protection activities, and much more.
Nonprofits that do not have 501(c)(3) status can be categorized into various classes, such as 501(c)(4) social welfare organizations, 501(c)(5) labor and farming associations, 501(c)(6) business leagues, and 501(c)(7) recreational clubs. These categories are used to help distinguish between different kinds of nonprofits. Each one provides unique benefits to its members or the public at large. Depending on the mission and goals of a particular nonprofit organization, it may fit better under one type than another. Most Nonprofits should research each of these classifications in order to determine which is most suitable for their operations. Understanding the differences among the categories will ensure that the organization meets the appropriate requirements for its particular field. With the right organization and understanding, any nonprofit can make a strong impact on the community.
Assessing the Necessity of Starting a Nonprofit Organization
Step one of starting a nonprofit is understanding the need to create one. Ask yourself questions such as: What mission and purpose will it serve? How will it help people or society? What resources do you have to bring this idea to life? Answering this question will be essential for your success, as it can help you identify your mission and objectives more clearly and clarify what resources and partnerships may be needed to achieve those goals. Understanding your nonprofit’s purpose from the beginning will also help you better communicate its purpose when seeking support from donors or volunteers. Additionally, it will give you the focus to determine how best to allocate funds while improving efficiency and effectiveness during operations.
To answer this important question, identify why there is a need for such an organization in your community or region, then consider who would benefit most from it. Additionally, research similar organizations that provide similar services or are working towards achieving the same purpose as you. Finally, make sure that your organization’s mission is distinct from any other existing organizations and stands out in a crowded nonprofit field. Doing so will help ensure that you differentiate yourself in the area and attract more attention to your cause.
According to the National Center for Charitable Statistics (NCCS), there are over 1.5 million registered nonprofit organizations in the United States. However, this is just a small portion of the nonprofits that exist around the world, with many more operating in other countries and regions.
There is much to be encouraged and hopeful about as the number of nonprofit organizations in the world has grown steadily. However, this also means that it could be more challenging to stand out among other similarly-focused entities and organizations. Therefore, it is essential to carefully research your field in order to truly understand how you can make an impact and differentiate yourself from countless others working towards a similar goal.
If your organization is not creating a unique solution to an existing problem, it can be challenging to secure funding. Therefore, in order to gain support, it is essential to distinguish yourself by developing something that either enhances or adds value to existing services. Without doing this, it will be harder to acquire the necessary resources.
One of the options to consider if you want to support a cause you care about is starting a registered nonprofit organization under 501(c)(3). Nonprofits that hold the 501(c)(3) designation are charitable organizations. While it can be an effective way to achieve your mission goals, be aware that the process is complicated, and the success rates of such startups are only sometimes high. Estimates vary, but many experts agree that less than half of such organizations survive beyond five years, with one-third facing financial distress. However, there are simpler alternatives available to pursue your mission.
Once you have identified why there is a need for your nonprofit, it’s time to move on to the next step.
Establishing the “need” of forming a nonprofit:
Step 1:
Analyze and determine the needs of the population you wish to serve. Consider what valuable solutions your nonprofit could provide to meet those needs, and decide whether your organization can genuinely make a difference. Have a clear picture of how it will benefit the intended demographic. This will be the foundation on which you build your mission statement and plan of action.
Step 2:
Research demographic or population data to uncover an unmet need for your services. Confirm the details of this opportunity and determine how you can meet it.
Step 3:
Analyze the competition in your industry and identify what challenges they face. Identify areas where you can differentiate yourself from them and market these points of difference to potential customers.
Step 4:
Develop an action plan that outlines how you will reach potential customers and bring them into your business. This may include creating marketing materials, developing a website, setting up social media channels, or engaging in other digital methods of advertising.
Step 5:
Set measurable goals that will help you track your progress toward reaching and serving more customers.
Step 6:
Before you make the final decision to start a nonprofit, it is essential to go through another round of reflection and discussion. Ask yourself and any board members involved in this venture if the goal can still be achieved by starting a registered nonprofit organization. Consider all the advantages and drawbacks that come with setting up such an entity. Most importantly, make sure that you are able to provide clear value and present a specific solution for a specific problem.
Establish a Solid Foundation
Creating a solid foundation for your nonprofit is essential. This should include a clear and concise vision and set of values that will serve as the backbone of your organization. Here are some steps to help you get started:
- Choose a name for your nonprofit.
- Identify the need or problem you’re trying to address.
- Develop an actionable plan to fix said need or problem.
- Define who will benefit from your work and services.
- Create a mission statement that encapsulates what your nonprofit stands for and why it exists.
- Determine a set of core values that guide how the organization operates on a daily basis.
Selecting a Name for Your Nonprofit
When forming a nonprofit organization, selecting the right name is essential. The chosen name will set the tone and shape your nonprofit’s identity for years to come, so it’s essential to take your time in deciding. Consider selecting a unique name that reflects the mission and activities of your nonprofit organization. This way, it will be easier for people to connect with your purpose and remember who you are. With careful consideration, you can pick the perfect name best suited for your nonprofit.
How to choose a nonprofit’s name?
- Brainstorm with team/friends/acquaintances to come up with inspiring and memorable names.
- Consider your nonprofit’s mission, activities, members, and location when selecting a name.
- Make sure the name is easy to say and remember; use descriptive words but avoid jargon or overly long names.
- Check for web domain availability for your organization, and if required in your state, incorporate a corporate designator (Inc., Corp., Co., Ltd.)
- Check with the Secretary of State for the availability of the chosen name.
- Check the U.S. Department of Commerce website for trademarked names.
- Demonstrate a need for the nonprofit’s services and capacity to address it (in the mission statement)
- Transcribe need, solution, and population into a clear and powerful mission statement.
Once you’ve identified the need, determined a solution, and identified the population your organization would serve (which should have already been done in Step 1), it’s time to create a strong and clear mission statement that expresses this. Additionally, you’ll want to check with your state’s incorporation web page to determine if a corporate designator such as Incorporated, Corporation, Company, Limited, or their abbreviations (Inc., Corp., Co., and Ltd, respectively) is required for your nonprofit. A nonprofit corporation is the most popular type of nonprofit tax exempt organization. These types of nonprofits qualify as tax-exempt, are protected from liability, and can qualify for grants.
Furthermore, it is important to check with the Secretary of State and the U.S. Department of Commerce website to ensure the name you select for your nonprofit is both available and not trademarked.
In order to attract funding from potential donors or sponsors, you need to prove that there is a need for the services your organization provides and that your organization is well-equipped to address this need. Additionally, it may be beneficial to check for the availability of web domains related to your name selection.
Creating a strong mission statement:
Creating a great mission statement is essential for any new nonprofit organization. It should clearly articulate the purpose of the organization and inspire staff, volunteers, and supporters. A well-crafted mission statement can also serve as a guide for decision-making and focus energy in a meaningful direction. When written with care, it can send out an impactful message about what your organization stands for.
A successful nonprofit mission statement should be clear, concise, and easy to comprehend. It should avoid technical language or jargon and focus on the purpose of the organization in simple terms. A mission statement should also serve as a guide for stakeholders and team members and invite input from all parties involved. Additionally, it should not double as a marketing slogan, contain buzzwords, or be overly general. Ultimately, an effective mission statement can provide a strong foundation upon which to build plans and attract the right people to your cause. Here are a few essential guidelines to follow:
- Make your nonprofit mission statement unambiguous, simple, and easy to understand.
- Keep it brief and to the point.
- Ensure it informs others about what you do and guides your team members and stakeholders.
- Build a Strong and Motivated Leadership Team Good people are key to running a successful nonprofit organization.
- Welcome input from everyone and review frequently.
- Share with everyone.
- Make sure you explore state regulations to get your legal structure right.
- Avoid marketing taglines, expert language, buzzwords, and generalities.
Establish Your Vision and Core Value
Clarification: Your vision refers to the future that you aspire to build, while your grand plan pertains to the approach that you will take to leave a long-lasting influence on the world. Therefore, it’s essential to clearly understand what you want to achieve with your organization so that it will be easier to set goals and objectives along the way. Additionally, determining organizational values allows you to guide decision-making on an ethical level and ensure everyone involved shares similar beliefs. If you have an idea for a short-term project that would benefit a certain community, consider partnering up with an existing nonprofit organization instead.
Here are some examples of grand nonprofit vision statements:
# The mission of the American Red Cross is to prevent and alleviate human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors.
# The World Wildlife Fund’s vision statement is, “to create a future in which people live in harmony with nature.”
# The Special Olympics’ goal is “to end discrimination against people with intellectual disabilities everywhere, ensuring they are able to take their rightful place as active members of society.”
# Unicef’s mission statement aims to “advance children’s rights and equality for girls all over the world.”
# Mercy Corps seeks to “build secure, productive and just communities” through their work in the world’s toughest places.
# Habitat for Humanity views building homes as a way of “bringing people together to build homes, communities and hope.”
# The Robert Wood Johnson Foundation works to “build a culture of health so that all Americans can live longer, healthier lives now and for generations to come.”
# The Salvation Army strives to “meet human needs in His name without discrimination.”
# Feeding America’s mission is “to feed America’s hungry through a nationwide network of member food banks.”
# The American Cancer Society has committed itself to eliminating cancer as a major health issue by doing its best “to save lives, celebrate life and lead the fight for a world without cancer.”
# The United Nations Children’s Fund (UNICEF) focuses on ensuring that all children have access to basic rights including nutrition, education, protection from violence, and health care. Their goal is “to build a world in which every child thrives.”
# The American Heart Association seeks to create “a world of longer, healthier lives” through their efforts in research, education and advocacy.
# The Bill & Melinda Gates Foundation strives to reduce inequities around the world by focusing on improving healthcare and education worldwide. Their goal is to ensure that all people have the opportunity to lead healthy and productive lives.
# Goodwill Industries International has a vision of “creating pathways to self-sufficiency and dignity through education, job training and employment.”
# The Make A Wish Foundation works to grant wishes for children with life-threatening illnesses, striving for “a world where all children affected by serious illness have the opportunity to experience hope, strength, and joy.”
# St. Jude Children’s Research Hospital focuses on providing care for pediatric cancer patients by working to advance cures and preventative treatments for childhood diseases. Their goal is “to find cures that save children’s lives now and in the future.”
# Save the Children envisions a “world in which every child attains the right to survival, protection, development and participation.”
# The American Diabetes Association seeks to reduce the burden of diabetes by working to improve health outcomes and accelerate access to care for all people affected by diabetes. Their goal is “to prevent and cure diabetes and to improve the lives of all people affected by diabetes.”
# The Humane Society of the United States works to alleviate suffering caused by cruelty, neglect, abuse or exploitation of animals through their advocacy efforts and public education programs. Their vision is “a humane and sustainable world for all animals—a world that values and respects them.”
# The World Food Programme aims to “end world hunger and bring about better nutrition for all” by providing food assistance to those who are hungry or at risk of food insecurity.
# The Special Olympics works to promote acceptance and inclusion of people with intellectual disabilities, allowing them the opportunity to demonstrate courage, experience joy and participate in a sharing of gifts, skills and friendship with their families, other Special Olympics athletes, and the community. Their goal is “to create a happier, more unified society where everyone is accepted regardless of ability or disability and where people live in harmony with nature.”
Whether you’re a startup organization or a leading corporation, CommunityForce provides fully customizable, all-in-one online grant management solutions to maximize your efficiency, simplify complex processes, and improve collaboration so you can focus on increasing your impact. We’ve helped organizations streamline their entire process no matter the size and scope of their giving.
