Nonprofit Kit For Dummies. Stan Hutton

alt="Tip"/> Assessing the needs of your area is a good way to evaluate the potential market for your nonprofit’s services. You may want to use some or all of the following methods to determine your community’s needs:

       Online surveys or written questionnaires to a random sample of residents in your community

       Interviews with local foundation program staff and civic officials

       Focus groups with people who are likely to benefit from the organization

       Recent community needs assessments (from researching and reading) to look for gaps in services

      For more details on assessing your community’s needs, see Chapter 8.

      Identifying the right people to help you

      Your chances of success increase if you begin with support from others, and the more help you have, the better. Sure, you can probably find an example of a single-minded visionary who battles alone through all sorts of adversity to establish a thriving nonprofit, but starting and running a nonprofit organization is essentially a group stakeholder activity.

      When starting a nonprofit, find people, known as stakeholders, who will serve on the board of directors and support your efforts with donations of money and volunteer time. The first people you usually identify as supporters are family and friends. How can they turn you down? In the long run, however, you need to expand your group of supporters to others who believe in the organization’s mission (and not because you personally created it) and can give substantial financial contributions to a new nonprofit.

Identify and select the right people to join you in your mission. Some people hesitate to share their idea with others, because they believe that someone may steal it. We think this fear is largely unfounded. No matter what your idea is, you’re better off inviting others to join you in making it a reality.

      To find people to help you and support your organization, take every opportunity to speak about your idea before civic groups, religious groups, and service clubs. You can pass out fliers or set up a booth at a volunteer fair. Set up Facebook and LinkedIn profile pages and invite your contacts to spread the word. Talk to your friends and coworkers. Put on your salesperson’s cap and convince the community that it needs your program and that you need their volunteer and financial support.

      

If you’re having a difficult time drumming up support, it may be a sign that you need to refine your idea or that others view it as impractical. You may need to go back to the drawing board. Ask yourself, “Is this something that I would pull out my wallet for and donate to support its mission?”

      Figuring out how you’ll survive financially

      Funding your nonprofit organization is a big issue. Even if you begin as a volunteer-run organization and work from a home office, you still need funds for securing a website, assigning a dedicated telephone number, and purchasing technology, Internet access, supplies, postage, and insurance. You also have to pay filing fees for your state incorporation and IRS tax-exemption application. Many nonprofit start-ups are funded by the founder in the beginning. Are you able to pay all start-up expenses before revenues start flowing to your new nonprofit?

      MY STORY: A CALCULATED RISK

      What are you willing to do to create a financially sound nonprofit organization? I (Bev) am a baby boomer (born between 1946 and 1964 — I’ll leave it at that), and I started my own nonprofit organization knowing that surviving the start-up process and securing early-on funding would not be easy. So, I decided to live off my monthly social security income for two years and not burden the new nonprofit with a salary expense. I’m happy to report that the nonprofit is still in operation and financially stable and that it has created a reserve bank account for rainy days ahead. You may not need to go without a paycheck for months or years, like I did, in order to get your nonprofit off the ground, but it’s important to consider salaries when you’re planning your first-year operating budget with the board of directors.

Putting together a budget can help you determine whether the start-up expenses are manageable for you. You’ll create lots of budgets sooner or later, so you may as well get an early start. Flip to Chapter 12 for details on budgeting and other financial issues.

      If you can’t fund the operation by yourself in the early months, you need to make a compelling case that your new organization will provide an important service to the community and then convince donors that you have the knowledge and experience to provide it. You can solicit contributions from individuals before the IRS grants the organization tax-exempt status, as long as you reveal that your exemption is pending (and will be deductible to the donor if the exemption is granted) and you have met state charitable solicitation registration requirements. These contributions become deductible to the donor if you file for your tax exemption within 27 months of the date you incorporated and receive tax-exempt status.

      If your exemption is denied, the contributions aren’t deductible, and you may be liable for income tax on the money you’ve received. Start-up grants from foundations or corporations are rare and next-to-impossible to obtain before the IRS recognizes your organization’s tax-exempt status, so don’t plan to receive any grants from outside organizations.

      

New organizations can avoid the awkward period between starting up and receiving tax-exempt status, by beginning as a sponsored program of an existing nonprofit organization. We discuss this arrangement, known as fiscal sponsorship, in detail later in this chapter.

      You also can try out your program on a small scale before filing for tax-exempt status by partnering with an existing nonprofit organization to test the success and need of your idea. For example, if you want to start a summer arts program for low-income children, talk to a local church or community center that serves that population and ask whether you can teach an art class one day a week for a month. Then you can try out your idea, demonstrate the need, and set up benchmarks for success.

      Acknowledging the reality of what’s ahead

      Ask yourself whether you’re the right person to start a nonprofit organization — and try to answer honestly. Undertaking this endeavor requires both a heart (for helping) and a head (for helping efficiently and effectively). If your organization offers a service, especially in the health and social-service fields, do you have the educational background, qualifications, or license necessary to provide those services? In addition to being professionally qualified, you need to consider whether you feel confident about your management, fundraising, and communication skills.

When starting and working in a new nonprofit organization, you need to be able to stretch yourself across many different skill areas. You may be dressed to the nines one day to pitch your project to the mayor or to a corporate executive, and the next day you may be sweeping the floor of your office or unplugging a clogged toilet. In other words, you need to be versatile and willing to take on just about any task that needs to be done. Nonprofit founders work from the boiler room to the boardroom. Visionaries do whatever it takes to start and manage a nonprofit organization.

      

When potential donors are evaluating grant proposals, they certainly look to see whether the organization’s leadership has the background, experience, and knowledge necessary to carry out the proposed program. This doesn’t necessarily mean that you need to be an experienced nonprofit manager, but try to assess your background to see how you can apply your experience to the nonprofit