Have you ever thought that you can feed the hungry, or teach low-income children how to read? Maybe your next thought was, "I should start a nonprofit". The question you should ask yourself, what does it take to start a nonprofit? According to the Internal Revenue Service to be tax-exempt under section 501(c)(3) of the internal revenue code an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. This definition explains the legal aspect to which a nonprofit can form, but there are several other factors that need to be considered before starting a 501(c)(3).
If you are still interested in starting that nonprofit, I believe you should follow what I like to consider the 3 P's to ensure a successful nonprofit. They are: People, Planning, and Patience.
People are the most important entity of any organization, they are even more important for a nonprofit organization. Not every state requires multiple individuals to start a nonprofit, Virginia included, although in the state of Texas it is the law to have at least three directors, a president and a secretary. As we go along you will see the need for people. And for the purposes of this blog we will be focusing on the State of Virginia. For other states please review your states guidelines for becoming a nonprofit.
The main reason people are in important in a nonprofit start-up is because they will be the sole resource in the beginning, unless you are independently wealthy, they will also be the machine behind the development of other resources (i.e. funding, building allocation, ideas, etc.).
Where people play the most important role starts with the second P, Planning. The first step in planning is deciding if there truly is a need for your specific nonprofit organization in your community. A needs assessment of the community should be done, this does not have to be an extensive assessment, although the more information the better to ensure a successful program. A needs assessment should include some of the following elements:
Programs Provided Locally
- When deciding to start an organization of any kind, nonprofit, for-profit, or even governmental services you must assess the competition that is in the area. First thing, are other organizations currently providing services that you hope to provide? The answer to this question is not always the determinate factor of if you should start the organization or not, which leads us to the second assessment element,
Under-served Populations
- An example of this would be a community with several organizations offering after-school programming to youth. Typically when deciding to start a nonprofit you think there is a need for the service in the community because there are individuals who are not receiving needed services. During the assessment you need to determine why these specific segments of the population are into being served. Possible reasons could be location or access to transportation, cost of the program, the inability of that organization to take more individuals, and possibly cultural differences.
Resources
A community is limited in the amount of resources it has available for multiple nonprofit organizations. This includes financial resources as well as human resources. When an assessment of the community is done it should always include assessments around how an organization will be supported. There may be a strong interest for a particular program in a community but this does not mean that the community will be able to support its activities.
Before opening the doors of a nonprofit the above mentioned focus points are some of the things that need to be considered. Competition is not always a bad thing, in fact it can make programs increase the quality of their existing programs, as well as ensure a higher level of accountability from all organizations that offer these programs. However, competition can also inundate a community and cause undue stress.
After you have done an assessment of your community and determined that there is a need for your services it is time to starting thinking about a name for your organization. This seems like a simple task, however section 13.1-829 - Corporate Name of the Virginia Code for Corporations there are many regulations that are required for adherence. One of the common mistakes made by individuals forming a nonprofit is when they decide to become a corporation. Often individuals feel that they need to add an Inc., Corporation or Co. to the end of their name, to be a nonprofit you must avoid this mistake.
After determining your name, you must decide your purpose. What is the reason you want to form a nonprofit, in other words your reason for existence and what is your aim? It is very easy to get carried away when writing your mission statement, the key is to be as succinct, yet detailed as possible. The ideal length of a mission statement is a ten word maximum limit. Remember, your mission statement is something you want to have the ability to say on the spot.
After you have decided on a Name and Mission, you will need to create the by-laws of your nonprofit. Your by-laws are very important to your organizations success and operations, they serve as your organizations operation manual. It spells out how many directors will be a part of the organization, what type of activities your organization will be involved in, and the structure of your organization, etc. When writing your by-laws you should try to be as thorough as possible when detailing how things will operate. Although by-laws can be amended, it is wise to be thorough to protect directors and the organization.
The final of the three P's to consider is Patience. Creating a nonprofit can have it's ups and downs, with many challenging steps along the way. They key is to be patience, skipping steps will not get you to the finish line quicker, in fact, skipping steps can prove to be detrimental to the development and creation of your nonprofit. When a nonprofit is well planned and your dream has been realized, the rewards are limitless.
Conclusion
There are a lot of important things to consider when creating a nonprofit organization. The worst thing a nonprofit or any organization can do is to open their doors to provide a much needed service to an under-served population, and not be able to sustain the services. Once an organization begins offering services, there are many that rely on these services and as a nonprofit professional we must make certain that we are able to achieve sustainability to fulfill our mission.
