starting a nonprofit

Starting a Nonprofit: What Every Founder Should Know

by Sandra Pfau Englund on Oct 29, 2019

Starting a nonprofit is an excellent way for you to give back to others. But, unlike for-profit businesses, nonprofits have special obligations. Because of the tax-exempt status of charity groups, federal and state governments require more from them. Thus, if you're seeking to start a nonprofit organization, you should make sure to understand a few of the issues that make nonprofits unique from businesses.

In this article, you will learn about a few of the issues you should consider when starting a nonprofit. Also, you'll have a chance to download your free Quick-Start Guide, which will provide you with more information. Hear more of my thoughts on starting a nonprofit on the Successful Nonprofits Podcast, Episode 77. While founding a nonprofit can be very rewarding, it takes a lot of work and effort. For instance, one of the biggest challenges for nonprofit founders is finding fundraising dollars for their mission. It takes a lot of knowledge and outreach to get funding for nonprofit groups, which is why many organizations operate with limited dollars.

Issues to consider when starting a nonprofit
Why start a nonprofit organization?

The first thing any founder has to consider is why you want to start a nonprofit? There are a few questions that will help you think through whether or not you want to start a charity. For instance, you should ask yourself what you see as a need that you can alleviate in your community? What is the purpose and mission of your group? What is the mission of your nonprofit you'd like to create? Also, a critical question that you want to address is whether or not anyone else is filling the same need. If so, what would make your nonprofit different from the others?

Understand the IRS and state requirements for your charity

As you consider the start of a nonprofit organization, you will have to complete federal and state forms. Again, because of the tax-exempt status of your nonprofit group, the IRS and state require different filings. These filings are crucial. Last year, the IRS revoked the tax-exempt status of almost 50,000 nonprofit groups. And, if you want to create a chapter or affiliate nonprofit organization down the line, there are more filings. You also must to develop policies and procedures for the operation of your nonprofit. Thousands of nonprofit groups have gotten started with myRENOSI. Take a look at the Quick-Start Guide for more information on compliance.

Funding for your nonprofit

As was mentioned above, funding is a challenge for nonprofit start-up groups. Meaning, funders want to invest in charities that will perform. For example, they want to know that the board members and executive team have experience and knowledge that benefit the group. And, donors also want to know other funders supporting your cause.  That said, there are places that you can find seed funding for your new charity. For instance, an excellent place to start is with Candid. Candid is the combined organization of the Foundation Center and Guidestar. You can also use Google to research local foundations providing start-up funding as well as

Also consider funding your organization with membership dues and fees for services.  Funding other than donations offer a more consistent and reliable sources of funding.  

Ensure an excellent team when you start a nonprofit

If and when you decide to start a nonprofit organization, you'll want to make sure to surround yourself with outstanding people. So, first, start with your board. Ensure that you have people on your nonprofit board who will advocate for you. Look for experts in finance, marketing, fundraising, and entrepreneurship. People with these skills will bring you valuable expertise.

Regarding your nonprofit team, you may have to do a lot of stuff in the beginning yourself. But, when you get the funding to operate, make sure you have on your team people with program knowledge. The metrics of your program are crucial in helping you raise more money. As you recruit a team, look for people who are passionate about the cause and want to work hard.

Ongoing compliance

After you start a nonprofit and receive the IRS letter designating your group as a nonprofit, you'll have to comply with many local, state and federal laws and regulations each year. It's vital that you also ensure that you meet the standards of your state and local governments. One of the easiest ways to get more information about the state requirements is to review the myRENOSI State-by-State Requirements map. In it, you'll find information including Articles of Incorporation, Annual Reporting, tax registration, and charity registration. Again, compliance is essential every year for you and any nonprofit chapters you create.

Finally, after you start a nonprofit, you'll want to get very good at telling your nonprofit story. Remember that funding is critical to ensuring you have the money for your programs. The way to get people to give is to tell them your story. But, before you get to the point where you are a nonprofit leader, you first must begin with the basics. So, don't forget to take a look at the Quick-Start Guide as you consider becoming a nonprofit founder.

RENOSI is the leader in helping national organizations set up and manage affiliate chapters. Setting up local, regional and state affiliate chapters is an excellent way to grow your national organization. Managing hundreds and even thousands of chapters, however, is time-consuming and difficult.

Since its inception, RENOSI has provided a simple and stress-free solution to help obtain and maintain tax-exempt status for over 5,500 nonprofits. With the interactive myRENOSI dashboard, our partners can organize their state and federal registrations, allowing our team of experts to help ensure your tax-exempt status is not revoked.