STAGE ONE

Passion and commitment aren’t reason enough to start a nonprofit. Understanding that there are many ways to “make a difference” besides starting the arduous task of starting a business may save you a lot of time, money, and—quite frankly, joy.

Often, Founders start nonprofits because they are passionate about a cause and want to make a difference. But that, sadly, is not enough. Nonprofits are required to file taxes, comply with IRS rules and regulations, and operate according to Generally Accepted Accounting Principles (GAAP). If there is a staff, there are basic labor relations and human resource management principles the organization must abide by. There are several types of insurance a nonprofit organization must have: Directors and Officers and Liability; if there are company vehicles, you will need commercial auto insurance. If your nonprofit provides services to children, it will need to perform background checks on your employees and volunteers. I can go on and on, but the bottom line is that as a business, your organization needs to have a solid infrastructure built on policies and procedures, and processes by which to implement them.

Needless to say, these infrastructural requirements cost. Payroll, insurance, marketing, materials and supplies, rent, utilities, consulting services (IT, Accountant, Grant writer, Web designer, etc.) are all basic necessities a business has in order to operate. Yet, many Founders are caught off guard when it comes time for them to put these things in place in order for their nonprofits to function.

There is a lot of misinformation about what a nonprofit is, what it takes to make it successful, and what the Founder’s role is in making it all come together. 

A nonprofit is a business.

Founders need to have a solid understanding of how nonprofits function. Nonprofit organizations are businesses and in order for them to be successful they need to be ran like businesses. That means the leader needs to be able to run the organization.

A nonprofit is a business and requires its chief executive officer to have the business skills needed to be successfully run it.

If you want to help your community but find that starting a nonprofit isn’t for you, look at these alternatives to starting a nonprofit.