The Realities of Starting a Non-Profit

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According to the Urban Institute, 1.5 million non-profit organizations were registered in the US last year, most of which were public charities or private foundations. Contrary to traditional companies, nonprofits are supported with donations and are exempt from tax once they obtain 501(c)(3) tax-exempt status. Do you have a passion for a cause and wonder how to start your nonprofit organization? What are the realities of starting an NGO, public charity, or private organization?


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A nonprofit is a business organization like any other


A 501(c)(3) nonprofit functions as a traditional business in many ways. Although you don’t pay federal taxes, you need to pay employee taxes such as social security and medicare.


There are five steps to start a nonprofit organization. You need to plan your project (religious, scientific, charitable), form a corporation, file all paperwork with the IRS, and comply with state and local requirements. Ensure your project quality as a nonprofit before you start the full process.


Keep Good Records Of All Documents


Nonprofits are largely regulated, like any other business. Regulations serve to protect donors from fraud and to verify the project benefits the public. Watchdogs like Charity Donator controls the transparency and allocation of funds, for instance.


Therefore, you need to be very transparent about your funding and spending strategy and maintain a good track record of your actual expenses and donations. Make sure you’re maintaining compliance throughout the year by accurately reporting your finances to the IRS.


Develop A Fundraising Strategy


Unlike a business that sells services or goods to generate profits, a nonprofit needs to sustain itself through donations. Developing a fundraising strategy requires a proper business plan. Think beyond grants as this type of funding applies to established organizations or charities.


Create a fundraising strategy detailing your mission, plan of action, and resources needed. You can talk to private investors, banks, or invest your own money. Remember to consider the costs in your strategy, such as incorporation and 501(c)(3) fees, office space, and marketing fees (website, branding, social media).


Have The Right Team On Board


You may be the founder, but what about the rest of the team? It’s imperative to assemble the best board members to launch your project. You may hire a fundraiser, a tax and legal advisor, or a marketing person to help you out with the organization. When speaking at public events, consider hiring a freelance PR person too. As long as you have the right mission and strive to make the project the reality, the right people can bring your nonprofit to life.


Wrap Up


Starting a nonprofit is exciting but can be challenging. Be sure to verify if your project can classify as nonprofit and gather all the elements you need before the launch. Ask for advice from great charities or nonprofit organizations you know, and don’t hesitate to grab some ideas in some useful leadership blogs and online magazines.


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Katie Tejada is a writer, editor, and former HR professional. She writes about the latest

developments in HR, business communication, recruiting, and CRM solutions. She also writes

about the latest developments in socially responsible (and irresponsible) tax laws.

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