How to start a not-for-profit business

not-for-profit businessStarting a not-for-profit business can be very simple. Making it a successful entity is where lies the secret.

First of all, what is your mission? This step is very important because it is what will guide every other action of your future organization. So you need to be able to put what inspires you into words, so that others can be inspired by the same dream of yours even if you are not present in the room and work hard to build and expand your original dream beyond dimensions you couldn’t even imagine in the first place.

Second, you need to make sure you are resolving an unique need. It is a not-for-profit but it also is business after all, and although you are acting motivated by a passion point of view, you need to be cold and have facts supporting your passion, otherwise you will eventually fail. So, accurately knowing what are the community needs and how much this need is actually necessary is very, very important.

Once you have done your research, it is time to prepare a business plan. Not-for-profit doesn’t mean no profits; if your organization is not profitable, being exclusively reliant on donations can jeopardize the long-term existence and the future of your creation. In order to be able to help others, you must first make sure your organization can help itself. The profit can be put aside for a rainy day or used upon expanding the organization. A good business plan will also research thoroughly all possible government grants. There are two important moments of financing your organization: first there is the start-up phase, and second there is the ongoing, everyday activity phase. It is important to knowingly quantify your capital needs in these two very diverse moments.

If everything so far seems feasible, remember you also need to file the proper paperwork in order to incorporate, and also register your not-for-profit status at the IRS and your state too. Registering with the IRS is extremely important, since this is also how donors will receive their tax write-offs. You will need to keep good records, since your organization’s tax forms will be made public. Anyone willing will be able to know know how much you and every other employee make.

Speaking of transparency, another very important issue is how you will measure the impact your organization has in your community. You need to measure it and communicate to others what you are doing. This is important because what gets measured, gets managed, done, and improved. This is also how you get new and repeat donations.

Last but far from least, remember how important the right people are. Selecting a good initial group of board members and volunteers can make or break your organization, so please make sure to select the right people for these important positions, otherwise your entire vision and planning may be ruined just because of one bad apple.

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