Many of us enjoy the satisfaction that comes from working with a charitable organization, but often we do not realize the substantial work that goes into forming and operating a non-profit organization. Sometimes when a group of people come together with a common charitable mission in mind, they believe that the appropriate first step is to form a non-profit organization. This is not always the right thing to do. Before deciding to form a non-profit organization, organizers should answer these 10 questions in order to see if forming a not-for-profit organization is really necessary:
- Is this a unique idea? There are so many charitable organizations already in existence that it is likely there is another organization with the same or a similar mission already in existence. Do some research to decide if there are similar organizations and how your organization might differentiate itself. Otherwise, your brand new not-for-profit may be competing for dollars with an organization that is already in existence.
- If a similar organization already exists, can your mission be better accomplished by teaming up with the existing organization? Often, it may be quicker and cheaper (and a lot less trouble) to affiliate yourself with an existing organization. Explore the possibility of becoming a local chapter of this existing organization, or perhaps affiliate yourself in some other way with an organization that is already established.
- Have you considered alternatives to forming a non-profit organization? Often it is not necessary to form a separate legal entity in order to carry out your group’s mission. Depending on your organization’s mission, complexity and activities, it may make sense to operate as an unincorporated group of individuals for a period of time, or to work with a fiscal sponsor until you have generated sufficient revenue in order fund some of the necessary start-up costs.
- Are you ready to run a business? Starting a not-for-profit organization is a lot like starting a business. You need to know the laws that govern those business organizations and charitable organizations in your area, as well as best practices for running a business and a charitable organization. Starting a non-profit takes every bit of the same amount of dedication and hard work as starting a for-profit enterprise.
- Are you ready to draft a business plan? Just as a for-profit business needs a business plan to guide its work, a non-profit organization also needs a business plan. Ideally, the business plan should cover the first 3 years of existence.
- What will be the non-profit’s charitable purposes? Take a moment to actually write out the charitable purpose of the organization. This is an important first step in understanding what your group’s mission is and making sure that the group has a common vision.
- What will be the organization’s core activities? Depending on the type of activities your group intends to engage in, this could determine what type of corporate status you will need to obtain. If your activities are simple, such as picking up trash at a local park, then a formal organization may not be necessary. However, if your activities involve fundraising, for example, then a more formal organization may be necessary.
- Who are the intended beneficiaries? Whether your organization is intended to benefit a relatively small group of people, for example, members of your immediate family only, or as big as the public at large, then this needs to be identified.
- Will you have sufficient funding to start and maintain a non-profit organization? Depending on the scope and complexity of your group’s activities, it may require quite a bit of funding in order to get your mission off the ground. You need to consider what type funding is necessary and where you plan to seek such funding in the initial stages of planning your not-for-profit. Consider sources of funding, both to start and sustain the organization.
- Who do you need to have on board? Consider what actions need to occur in order for your not-for-profit to get off the ground. Will you need legal advice? Will you need tax advice? Will you need technical expertise? Will you need the buy-in of stakeholders? You need to consider who all of the individuals are that you need to bring to the table in order to get your group off the ground. Identify those individuals and feel them out in order to determine your likelihood of success.
Volunteering your time can be a great way to give back to your community. However, before you embark on setting up an organization to formalize your volunteer activity, considering the questions above can help you form a good framework before proceeding to the next step.
Author: Laura A. Scott (bio)
Phone: 812.452.3557
email: lscott@bamberger.com
Tags: business plan, charitable organizations, Laura A. Scott, mission, non-profit