you can find the answers you need in Chapter 7. If you’re a new board member and want to understand the organization’s finances when spreadsheets are passed out at board meetings, we provide guidance about making a budget and understanding financial statements in Chapter 12. If you need help to publicize and market your programs, we offer some suggestions in Chapter 13.
If you’re like many nonprofit workers or volunteers, you want to know how to find and obtain money for your organization. Part 3 covers this topic, so those chapters are good places to begin.
Whether you’re new to the nonprofit world or a seasoned professional, we think you’ll find helpful and valuable information in this book to get you started or continue your good work.
Part 1
Getting Familiar with the Nonprofit Framework
IN THIS PART …
Peek inside the structure of a nonprofit organization and how nonprofits compare to for-profits.
Get an inside glimpse at what it takes to start a nonprofit organization.
Learn why building your board of directors is the first priority.
See what goes into a mission statement and vision statement and follow some pointers on how to write these two upfront organization-driving documents.
Discover what you need to do to incorporate your new nonprofit. After that task is completed, apply for tax-exempt status from the IRS.
Make sure you maintain your nonprofit status by filing the required IRS reports.
Chapter 1
Journeying into the World of Nonprofit Organizations
IN THIS CHAPTER
It’s a typical day in your hometown. Your alarm wakes you from a restful sleep and you switch on your radio to hear the latest news from your local public radio station. You hear that a research institute’s study reports that economic indicators are on the rise and that a health clinic across town is testing a new regimen for arthritis. Plato, your golden retriever/Labrador mix, adopted from the animal shelter when he was 5 months old, bounds onto your bed to let you know it’s time for breakfast and a walk. Plato is followed by Cynthia, your 4-year-old daughter, who wants to help you walk Plato before she’s dropped off at her preschool housed in the community center. You remember that you promised to bring canned goods to the food bank that’s next-door to Cynthia’s school. You haven’t even had coffee yet, but already your morning is filled with news and services provided by nonprofit organizations.
You know that your public radio station is a nonprofit because you hear its pledge drives three or four times a year and you volunteer a few hours each month for the food bank, so clearly it’s a nonprofit. But you may not know that the research institute is probably a nonprofit organization, just like the health clinic where the arthritis research is being tested and the animal shelter where you found Plato. Cynthia’s preschool and the community center where the preschool rents its space are likely nonprofit organizations. Whether you realize it or not, all of us — rich, poor, or somewhere in between — benefit from the work of nonprofit organizations every day.
Nonprofits find revenue from a variety of sources in order to provide services. Because most nonprofits serve a need in the community, tax-deductible donations are an important revenue source. Sometimes nonprofits charge a fee for the service they provide or the work they do. Other nonprofits may sign contracts with your city or county to provide services to residents. Usually, nonprofit organizations scrounge up their income from a combination of all these revenue sources.
The nonprofit sector isn’t a distinct place — it isn’t some plaza or district that you come upon suddenly as you weave your way through the day. It’s more like a thread of a common color that’s laced throughout the economy and people’s lives. No matter where people live or what they do, it’s not easy to reach the end of a day without being affected by the work of a nonprofit organization.
Perhaps your lifelong goal is to find a way to help others in your community, your state, your country, or the world. (If this statement is true of you, thank you, kind citizen.) You think about your options every day, but you haven’t the foggiest notion about the next steps to take to help you reach this admirable goal. You have so many topics to research and tasks to determine how to complete — and so much necessary funding to nail down to help you get started. Think of this chapter as the beginning of the journey. Here we help you understand exactly what a nonprofit organization is and how to start and manage one.
www.wiley.com/go/nonprofitkitfd6e for a list of web resources related to the topics we cover in this chapter.
What Is a Nonprofit Organization?
People hear the term nonprofit and picture a different type of business where the owner isn’t allowed, by tax law, to make a profit or draw a paycheck. But, in fact, some nonprofit organizations end their fiscal year with a profit, and that’s good because surplus cash (also referred to as reserves) keeps a nonprofit operating in the black versus the red.
Comparing for-profits to nonprofits
What about shareholders — do nonprofits have any shareholders to pay off? Not in terms of a monetary payoff, like a stock dividend. Rather than shareholders, nonprofit organizations have stakeholders — they’re the people who benefit from the nonprofit’s mission and services to their target population
