by Danielle Berman
So you have decided to make a difference in the world and start a nonprofit. You want to build your brand off the field and want social impact to be a major part of it. You’ve analyzed all the factors that go into the nonprofit industry and feel completely prepared for your next challenge. While we all wish that was true, that is pretty much impossible in the business of nonprofits. The nonprofit world is a confusing industry with many different players and not enough awareness. There are many things you should consider before starting a nonprofit. We broke them down for you here. You’re welcome.
Step 1: Should you start a nonprofit or find one?
Many times we think of a cause or idea for a nonprofit but we haven’t looked to see what is already out there. Maybe there is already a fantastic organization out there that could use your support, whether through financial donations, marketing and awareness initiatives or volunteering. There are several websites that offer lists of nonprofits to comb through and see if any meet your requirements. Guidestar, GlobalGiving, Project World Impact and Charity Navigator are all great databases for nonprofit information and research. If you pour through these sites and decide that you still need to get your cause out there, move on to step two.
Step 2: Determining What Kind of Nonprofit Organization You Will Be
Wait, there’s more than one? Actually there’s 27. The one you’re most familiar with is a 501c3, which is how organizations like Habitat for Humanity, American Red Cross, American Cancer Society and many others are registered. 501c3s also include your churches, synagogues, mosques and temples, schools and universities… you get the idea. There’s also 501c6s, or business leagues, Chambers of Commerce, real estate boards, etc. The NFL used to be a nonprofit under the 501c6 model until 2015 and the MLB was a tax-exempt nonprofit until 2007. These leagues were trade organizations, receiving tax exemptions until it became more of a PR nightmare than a money saving tactic. There’s 501c19 status which identifies organizations that work with former or current members of the military. There’s 501c13s for cemetery companies. The list goes on and on.
Under the 501c3 model, there are also many several types of organizations, including private foundations, private operating foundations and public charities. There are family funds, private trusts, community action funds, and donor advised funds. Does your head hurt yet? Ours do. To read more on this, check out our article on Different 501c4 Nonprofit Organization Structures. If you don’t want to subject yourself we don’t blame you, but then step 3 is even more important.
Step 3: Get Help.
Before you make the decision on what kind of nonprofit to set up, call up a lawyer and an accountant. You may already have these on the payroll, but make sure you ask them about their expertise in nonprofit law and nonprofit tax law. Your team may not have the specific nonprofit experience you need to ensure you are protected when creating your organization. You should try to get a referral to someone who works in nonprofit law or accounting that can review everything and give you good feedback on what kind of organization you should create and how to manage the process.
Step 4: Create the Organization
Here’s where your help comes in. Your nonprofit lawyer and accountant should work with you every step of the way to ensure that everything is done correctly and filed to the right government departments, etc. They can also help you follow up on deadlines to file financial information, review and refresh legal documentation, and complete tax information each year. Remember that if you set up a public charity, your legal documents are accessible by anyone interested in your organization, where the money is going, legal status, etc. It’s important to keep these up to date and accurate.
Step 5: Plan It Out
You should immediately start listing your goals for the organization once you get it started. Year one- what do you want to accomplish? Do you want to hold an event to raise awareness for your cause? Host a press conference to share your mission with the world? Or maybe you want to start designing and slowly implementing programming in various communities? The most important things to list out are the things you’ll need to reach that goal. Then keep listing- year two, year three, year four, year five – even year ten if you can. This helps you stay grounded and focused on what’s important. Things can be adjusted over time, but things always run more efficiently when you have a goal to achieve. This also comes into play when it’s time to start marketing your organization.
Step 6: Marketing and Differentiation
Is this a business or a nonprofit? Trick question. A nonprofit is a business and you should think of it that way when you create one. You need to have a marketing plan that helps you achieve your goals. You need to show the world why they should support your cause by differentiating yourself from others. Example: why should anyone donate to your cancer awareness fund vs. the many others out there? Obviously your professional athlete status can give you an advantage here, but it’s not enough to ignore the branding aspects of marketing your organization. Make sure you have a specific focus and call to action, encouraging people to join the movement in whatever way you have designed for them.
Step 7: Fundraising and Finding Donors
Just like any public corporation or start up, a nonprofit needs donations and fundraising to continue moving forward. It’s hard to make an impact in the community if you don’t have a budget to host events or implement community programs. Just like a sales position, you need a development team member that can actively work to secure donations from interested parties. That person might be you the first couple years!
No matter what kind of nonprofit you create, you need to take it seriously. Nonprofits are a business, and a poorly run business doesn’t ever lead to any good results. All reports and filings are public knowledge, so if your foundation slips up on a legal requirement or money goes to the wrong place, people will know. It’s not easy running a nonprofit, but it is an extremely rewarding venture.
