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BUILD YOUR SKILLSThere are a number of things to think about when starting a nonprofit organization.Here is a list, along with the major steps to take.SKILLBOX: STARTING A NONPROFIT (OR NOT)Nonprofits are a means for organizing around a mission in a way that focusesinterest and effort while allowing for favorable tax treatment. As of 2015, therewere more than 1.5 million tax-exempt nonprofit organizations in the UnitedStates1or about one for every 200 people. Of those organizations, nearly 1.1million were 501(c)(3) public charities.2Clearly, nonprofits are widely used toaddress public-serving purposes. The following steps provide guidance when decidingwhether creating a nonprofit is the best route:Think Long and Hard about Why, Where, and When It Makes Sense toStart a New Organization. Remember: Most start-ups fail, whether for-profitor not-for-profit. Ask these questions:• Will this organization serve a niche that is already being served? If not,• Do enough people care about it that funding is likely? If yes,• What would the elevator speech be? This is a one minute explanation of theorganization, its purpose, activities, and its stakeholders. This will be importantfor enlisting support of funders, volunteers, and staff. If the speech comeseasily to mind then,• What funding sources are possible? If there are enough then,• What other organizations are already providing a similar service? How wouldthis organization be different? If the answer is obvious, then perhaps it is timeto proceed.Engage a Group of Interested People. A nonprofit is not owned or controlledby any one person, not even the founder. It is accountable to multipleconstituencies: its board of directors and officers, the philanthropic communitywithin which it will secure funding, the stakeholders who will benefit from theservices rendered, and the volunteers it will engage, among others. Engage representativesfrom all the constituencies the organization will touch to discuss itscreation and what its goals should be.Develop a Plan. Nonprofits need a plan, just as businesses do. The plan setsforth the vision, mission and goals, the methods or activities that will be usedto achieve the goals and pursue the mission, resources needed (financial capital,human capital, and office space), and a timeline with target dates for when keysteps will be achieved. These steps include creation of the articles of incorporation122 PART II Capitalizing on the Power of People, Money, Informationand bylaws, legal incorporation, and approval by tax authorities. The plan shouldalso include a description of start-up funding that specifies revenue sources. Additionally,in an evaluation of opportunities and threats, the plan should specify theorganizations that have similar missions and it should explain how this one willdiffer. Threats caused by competition for resources should be delineated and thereshould be an explanation of how the organization will respond. The plan shouldalso contain an incremental vision for the organization in future years.Draft the Articles of Incorporation and Bylaws. Bylaws are the organization’srulebook. They specify everything from how officers and directors areselected to when meetings are held to when the fiscal year begins and ends. Allbylaws must comply with federal and state laws pertaining to nonprofit status.Establish Leadership. The board of directors is the governing body of theorganization. Board members should be a source of information, commitment,wisdom, and often, financial support.Create a Budget. Will money come from donations, grants, service fees,contracts, or some combination? Careful planning helps to reveal sources.Establish Management. Start-ups may rely on the same people to managethe organization as to lead it. As the organization grows, the need for staff willexpand. A website and logo will need to be created and maintained that marketsthe organization, its mission, and its activities.Think Again. Is a start-up nonprofit the right solution for the problem? Isthere a better way to address it? What will be the obstacles that pose the greatestthreats? Here are some alternatives:• If starting a new nonprofit is driven by a desire to make an impact in acertain area, then consider volunteering, serving on the board, or fund-raisingfor an existing organization with an aligned mission. Such engagementsupports the interest while providing visibility into nonprofit operationsand whether an unmet need really exists.• Alternately, establishing a local chapter of an existing global, national, or regionalnonprofit, like UNICEF, the American Cancer Society, or Goodwill Industries,can be the best of both worlds. The capacity and name recognition of the largerorganization can be leveraged, while still allowing for a local grassroots focus.3• Another alternative is fiscal sponsorship, where an existing public charity“sponsors” a start-up effort or specific project. The arrangement can extendthe sponsor’s tax-deductibility for donations and qualification for grant fundingto the nascent activity, while avoiding the necessity to create an organizationthat will compete for resources.CHAPTER 4 Organizing Principles 123• Finally, the boundaries between nonprofit and for-profit organizations continueto blur. An important consideration is whether the identified socialpurpose can be served more effectively through a private social enterpriseunbound by the restrictions placed on nonprofit organizations.4Hands-On Activity: Determining the Need for a New NonprofitThe goal of this activity is to simulate the early stages of establishing a newnonprofit organization. Document the following tasks in a two-page professionalmemo written for an audience of potential funders for the new enterprise.Step 1: Identify a social need in which you are interested. The need could belocal, national, or international.Step 2: Conduct an environmental scan for organizations that work in theidentified space. In addition to their name, include some discussion of the geographicareas in which they operate and the level of organizational capacity (size,employees, programs).Step 3: Determine whether the existing organizations are sufficient to addressthe selected problem by identifying whether there are gaps in services orprograms.Step 4: Propose either a partnership with an existing organization, an extensionof a current program, or justify the need for an entirely new organization.Notes1. National Center for Charitable Statistics (NCCS). 2016. “Quick Facts aboutNonprofits.” Retrieved from: http://nccs.urban.org/data-statistics/quick-factsabout-nonprofits.2. Ibid.3. Fritz, Joanne. 2016. “Alternatives to Starting a Nonprofit: You Can Do GoodWithout Starting a Nonprofit.” The Balance. https://www.thebalance.com/alternatives-to-startin…4. Ibid.For Additional InformationFoundation Center. n.d. “Knowledge Base: Q: How Do I Start a Nonprofit Organization?”http://grantspace.org/tools/knowledge-base/Nonprof…/Establishment/starting-a-nonprofit.