rel="nofollow" href="#litres_trial_promo">Chapter 17 takes you through the process of crafting a grant proposal.
Fundraising works better if people know you exist. That knowledge also helps get people to your theater or to sign up for your programs. Here’s where marketing and public relations enter the picture. Chapter 12 helps you figure out what your message should be and how to circulate it to the world.
Chapter 2
Deciding to Start a Nonprofit
IN THIS CHAPTER
❯❯ Considering the benefits and drawbacks of starting a nonprofit
❯❯ Starting off your nonprofit on the right foot
❯❯ Understanding who owns a nonprofit
❯❯ Surveying the different types of nonprofit organizations
❯❯ Comparing and contrasting nonprofits and for-profits
❯❯ Enlisting a fiscal sponsor to help you provide a service or complete a project
Maybe you’ve been thinking about starting a nonprofit organization for years, or maybe an idea to solve a social problem or provide a needed service just popped into your head. It could be time to make your idea a reality. But before you file your incorporation papers, you need to understand the positive and not-so-positive factors that can make or break your new organization. Like opening any business, starting and managing a nonprofit organization isn’t a simple matter.
Take a look at the economy around you. Are existing nonprofit organizations in your community thriving, or are they struggling to find financial and volunteer support? In addition, are you equipped to manage money and raise funds – which isn’t an easy task even when business is booming – and can you inspire others to work with you whether they’re board members, staff, or volunteers?
In this chapter, we pose some questions that you should think about (and answer) before you begin the process of incorporating and applying for tax exemption. If some of your answers point to the conclusion that your idea is worth pursuing but that you want to test the idea first, we suggest you consider using a fiscal sponsor. As we point out later in this chapter, the benefits of fiscal sponsorship are many.
Weighing the Pros and Cons of Starting a Nonprofit
Before you jump headfirst into making your nonprofit dream a reality, you need to understand some basic facts about nonprofit organizations. We begin with some of the pros:
❯❯ You’ll receive exemption from taxes on most income to the nonprofit.
❯❯ For most nonprofits formed under section 501(c)(3) of the IRS Tax Code, you’ll have the ability to receive contributions that are deductible for the donor.
❯❯ You’ll have the opportunity to receive grants from foundations and corporations.
❯❯ You’ll get the feeling that you’re contributing to the solution of a problem or to the improvement of society.
Just about everyone would consider these facts to be positive, but they aren’t the whole story. If you’re thinking of starting a nonprofit to get rich or to avoid paying taxes, consider the following list of cons:
❯❯ Nonprofit employees’ salaries are subject to income tax like all other types of compensation and the organization must pay employment taxes.
❯❯ You’ll be required to file an annual report with the Internal Revenue Service (IRS). The complexity of the report increases as your nonprofit income increases. (See Chapter 5 for more information about reporting requirements.)
❯❯ You can’t start a nonprofit organization to benefit a particular individual or family member.
❯❯ Competition for grants from foundations, corporations, and government agencies is tough, and so is getting donations from individuals. You’ll be up against more-established nonprofits with successful track records.
❯❯ If you decide to move on to other pursuits down the road, you can’t take any assets accumulated by the organization you’ve built with you. Others will need to continue running the nonprofit or it will need to be dissolved.
Doing Your Homework First
Beyond thinking about the challenges you’ll face in starting and running a nonprofit organization, you also need to apply some common sense. Nonprofits don’t operate in a vacuum, and neither should you. Personal commitment and inspiration can take your organization far, but you also need to find out how your community will receive your particular idea. So before going full steam ahead, investigate your competition, get community support, decide how to fund your organization, determine whether you’re really ready to run a nonprofit, and develop a game plan. Read on to find out how to get your nonprofit off to a great start.
Assessing the competition
Just as if you were starting a business, you should examine your competition before starting your nonprofit organization. If you wanted to open a grocery store, you wouldn’t choose a location next to a successful supermarket, because the market can bear only so much trade. This principle holds true for nonprofits, too. You may have the best idea in the world, but if someone else in your community is already doing it well, don’t try to duplicate it.
On the other hand, if your area doesn’t have a similar program, ask yourself why. Maybe your community doesn’t have enough potential clients or audience members to support the project. Or maybe funders don’t perceive the same needs in the community as you do.
❯❯ Online surveys or written questionnaires to a random sample of residents in your community
❯❯ Interviews with local
