Creating a non-profit

By Catalogs Editorial Staff

What should you know about starting a non-profit business?

There has been a rapid increase in the number of non-profits in recent years and this can?t help but raise questions about the need for so many organizations and about the difficulties many of these new enterprises will experience in seeking the necessary resources to support their work. The very first step in creating a non-profit is the establishment of an organization that conforms to the laws of the state in which it exists. Only after this step is done can an organization apply for federal tax-exempt status.

Creating a non-profit is not without significant risk and many advisors suggest testing the waters so to speak by joining forces with an existing organization. An arrangement such as this is known as a ?fiscal sponsorship.? The way it works is that the sponsoring organization charges a small fee to cover costs during the start up phase. During that time, the sponsor oversees all the financial affairs of the new enterprise and vouches for its integrity to the powers that be. If you go this route, make sure that you pick a sponsor that is both well known and serves your community well.

What are some tips for creating a non-profit?

1-Do your research before creating a non profit

Creating a non-profit is creating another version of a business. As is the case with any business, there must be at least as much money coming in as going out in order to even survive, much less succeed. A wing and a prayer may work once in a while, but a well thought-out plan stands a much better chance. Passion always has its place and here is no way to fake it if it isn?t there, but if there is little need for your particular cause, it will not fare well. You must be realistic and thoroughly research the need for the cause you seek to represent.

2-Develop a mission and vision statement

Any new enterprise, non-profit or no, need a mission and a catchy vision statement. It should read like a mantra with the goal of inspiring, encouraging and attracting backers to your door. A one-liner is often the best way to go with this. A successful example might be: The United Negro College Fund?s ? A mind is a terrible thing to waste.? A mission statement should define a company?s purpose in 30 seconds or less. Check out the mission statements of other companies to get some ideas for your own.

3-Develop a preliminary fund-raising plan before creating a non-profit

People respond to those causes that tug on their heartstrings. Effective fund-raising needs to tap into this psychological trigger and that is why it is such a sophisticated and complex (not to mention competitive) process. A non-profit will fail if its creators think they will fund their organization with an occasional bake sale or fancy dinner. Ongoing funding is necessary as it is for any business.

Community partnerships greatly increase your chances of obtaining grant money. An important source of fund raising will also be the volunteers who will serve your organization. They will bring in donors through their personal and professional affiliations and can become a vital resource that will always serve you well.

There are many things to know and pitfalls to avoid when creating a non-profit. Take the time to research them as much as you can before you get too involved to turn back without a significant loss. Remember that creating a non-profit is a lot like that old Russian proverb, ?believe in your cause, but keep rowing to shore,? (or something like that).