Greg McRay is the President and CEO of The Foundation Group, a company dedicated to helping non-profits with formation, federal tax exemption, end-of-year tax preparation, other IRS compliance issues and much more. With more than 15 years experience guiding thousands of non-profits through the 501(c)(3) process, Greg is an excellent addition to The Winn Group blog. We are thrilled to be able to share his expertise and wisdom with our clients and readers.
Questions You Must Answer Before Starting a Nonprofit
by Greg McRay
The Foundation Group
So…you want to start a nonprofit. Fantastic! That puts you in pretty good company. In any given year, as many as 75,000 applications for 501(c)(3) tax exemption are filed with the IRS. Less than half survive the process, but there is certainly no lack of interest in doing something charitable.
But what does it really take to start a nonprofit? What are the non-negotiables that simply must be in place in order to get started with any hope for success? In this post, we are going to explore 5 essential questions that need answers before you get started on your journey.
1. Why are you doing this? Let’s begin where the rubber meets the road. Are you doing this to meet a need that exists in your community? To use the buzz word of the day, are you looking to “give back” in some way? Are you looking for a more fulfilling career path? If this is a religious nonprofit, do you feel “called”? It is likely that one of these questions fits your situation…and one is not necessarily better or more “right” than another. The point is this: If you do not resolutely know the answer to this question, you are not ready to start a nonprofit.
2. What are you going to do? You would be amazed at the number of people we speak with who know why, but have not figured out what (never mind those who know what, but not why!) . It is understandable that you may not have every detail of your program nailed down, but you better have a pretty good idea of how you intend to pull off your mission. If you are one of those who are driven by the need you see around you, but are stumped on what to do, look at what other organizations are doing to meet similar needs in other places. You don’t have to be original, just effective!
3. Who is going to help you? Hang around us a little while and you will hear this over and over again. You cannot pull this off by yourself. If you think you can, you do not understand what you are getting into. First of all, you need others to assist with governance, i.e., board members. You may need employees or volunteers (or both) to assist with operating your programs. You must have people, either insiders or hired professional service providers (like Foundation Group), who can help you with compliance issues and keep your nonprofit out of trouble with the state and federal governments. It is far better to recruit help earlier rather than later.
4. How much is this going to cost and how are you going to pay for it? Yes, I know there are two questions here, but follow me on this. Crafting a budget for your organization is a formidable task, but one that you cannot avoid. Remember, you are actually starting a business here. Sit down with your newly recruited board members, get a pot of coffee brewing (or two), roll up your sleeves and get to work. Think about what you are doing. Research the costs. You may be lucky enough to find an existing organization with a similar program whose budget you can use as a starting point…or, you may be working from scratch. Next, you must have a plan for funding your program. Whether you expect your money to come from donations, grants, program fees…or some combination…you have to be very, very deliberate in your planning. Funding doesn’t just happen!
5. What is your “elevator speech”? Your elevator speech is what you would tell me about your organization if you only had 2 minutes with me in an elevator. This may sound silly, but it is actually fundamental. You must be able to clearly and concisely articulate what your organization is all about. This is NOT your purpose or mission statement (see number 1 above). Think more organically. Your ability, and that of the others in your nonprofit, to effectively communicate your message can make a huge difference in attracting the support that your organization will need.
Starting a nonprofit is a big undertaking. Think strategically in the beginning, and you will be far better positioned for success.
For more help getting started, don’t forget to register for The Winn Group’s next web clinic on Tuesday, May 24th. Space is limited, and we’ll be talking about Developing a Marketing Plan. Reserve your spot today!
Disclosure of Material Connection: The Winn Group has not received any compensation for writing this post. We have no material connection to the brands, products, or services that we have mentioned. We are disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”