Research To Do Before Creating a Nonprofit
So you want to start a nonprofit, but where do you start? The first step is research!
According to the Nonprofit Center for Charitable Statistics, there are about 1.5 million registered nonprofits in the United States. You need to do your homework to find out what differentiates your nonprofit from these other organizations, and how you can compete.
We want to provide you with different techniques to enable you to do all of your preliminary research. In this article we will cover:
Let’s get started!
The first step in researching is to find a measurable need. To do this, you will need to research current nonprofits in your area, see if your nonprofit idea fills an unmet need, and find data that supports this.
You can start by researching current nonprofits in your area. The first thing you should consider is where your organization will serve. Try to be as specific as possible, so you know how to proceed with your research.
After you have narrowed down your location you can search all nonprofits in this area to see what exists and if any of those organizations serve the same purpose. To do an in-depth needs assessment, you should consider creating a chart that analyzes the goal of your nonprofit in comparison to what other organizations in your area are doing.
Once finished with the exercises above, you will be able to determine if your idea is unique, or if someone is already serving your need. If they are, that is okay! Instead of creating a new nonprofit, focus your energy on helping this organization, or finding a way that you can collaborate with them to improve their reach. You might be able to have a greater impact, with a lot less hassle, by partnering with an organization that serves the same population.
Remember that you should be focusing this research on the problem your nonprofit is trying to solve. The first thing entrepreneurs are told when creating a business is not to fall in love with their solution, but the problem their solution is solving. This also applies to nonprofits!
If you realize in your research that there is someone already doing what you want to focus on, it’s time to change. You should be prepared to fit the unmet needs of your community by pivoting your vision to what the actual need is.
If there is not anyone in your area serving the same purpose, you can move on to the next step.
Now that you have established your need, you need to quantify it. Essentially you are looking for how many people your nonprofit organization will serve. You can either do this by collecting the information yourself or by using information that your community has available.
This will help you to ensure that your organization will help enough people that it is worth starting a new nonprofit for. In addition, this information will help you later when you are writing things like your business plan or impact report.
Now that you have determined that there is a measurable need for your nonprofit, you can move on to writing its mission statement.
A good nonprofit mission statement speaks to potential donors, volunteers, employees, board members, and partners. Before you get intimidated by this, don’t worry, we are here to help you craft the perfect mission statement!
Your mission statement should answer a few questions: who, how, and why. That is who are you serving, how are you helping these people, and why is this important.
Pro Tip: Stick to the t-shirt rule! You should be able to fit this on a t-shirt, or essentially around 15 words. JDRF is an example of this: "Improving lives today and tomorrow by accelerating life-changing breakthroughs to cure, prevent and treat T1D and its complications".
Don’t forget that two heads are better than one! Don’t be afraid to ask your colleagues or even community members for their opinion on your proposed mission statement.
Types of Nonprofits
The next step in your research for creating a nonprofit is to determine what type of nonprofit you will be. There are many different types of nonprofits, and you will need to determine which type you are to know exactly how to register your nonprofit and fill out the appropriate paperwork.
To help give you an idea before you start, the things that you considered when crafting your mission statement can help you to figure it out. It usually depends on what you are doing, who you are serving, and who is part of your nonprofit.
Most nonprofits are 501(c)(3), probably because this section covers the largest variety of organizations. The IRS describes a 501(c)(3) as Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations. All 501(c)(3)s are either a public charity or a private foundation.
Because so many nonprofit organizations are registered as 501(c)(3)s, the IRS has plenty of information on the tax exempt process. They even have a virtual workshop to help you!
There are many restrictions surrounding nonprofit organizations, including the ability to participate in political activities, and restrictions on payment to officers. Be sure to read all of the IRS fine print before deciding on one type of organization!
Pro Tip: The IRS has all the information you need to figure out what type of nonprofit you are, and what forms you need to file based on this information. If you are in doubt, we highly suggest soliciting legal advice. You can reach out to your local legal aid center or law school for a budget-friendly option.
How Much it Costs
Now for everyone’s favorite holiday dinner subject, money! Before starting this venture you need to know how much it is going to cost you.
The common costs included in forming a nonprofit include filing fees, legal fees, staff, offices, website creation, and nonprofit software. Let’s break this down a little bit.
Filing fees will vary depending on what type of nonprofit you are because the price of the tax-exempt application changes depending on the exact form you submit. Also included in filing fees are your articles of incorporation. These are filed with your state, and therefore depend on which state you are operating in.
You might want to consider seeking legal advice during the filing process to ensure your paperwork is properly filled out. As we mentioned before, there are some low cost options, including legal aid offices or law school clinics. You can also solicit this advice from a CPA or attorney, but this could cost you a pretty penny.
Depending on the size and structure of your organization, you might need to hire staff and have offices from the start. Try to think about how you can acquire office space. Many nonprofits have their offices sponsored, or even donated to them. Check with your local nonprofit group or help center to learn more about these options. As for the employees, how much of a salary can you offer them, and what benefits do they receive?
These are probably questions that you won’t need to answer at first, but you do need to keep them in mind as your organization grows.
Something that shouldn’t be put on the backburner is your website. Although in-person networking is still vital to success, your online presence is just as important. You want to make sure that if someone hears about your organization they can do a quick search to find out more about what you do.
You can get your website developed through freelance designers, a design agency, or a content management system (CMS). The price will vary depending on which option you chose. Some nonprofit software (like Springly) already have a CMS included, so this will come at no extra cost for you.
This brings us to our next subject, nonprofit software. We know what you are thinking, I just started my nonprofit, why do I need a software to manage it? The key is starting as early as possible so that you can save time and not spend precious money on extra tools. By getting a software from the start you will only have to onboard your team once. Thankfully, most software starts with a free option, so you can pay as your organization (and needs) grow.
With this in mind, be sure to choose a software that can grow with you, meaning no custom solutions. They won’t be flexible as you grow not only in success, but your needs as well!
Are You Ready?
The last thing you need to consider before starting your nonprofit is if you are ready to make this commitment. Starting a nonprofit is an exciting adventure, but one that involves a lot of unpaid work hours in the beginning. That begs the question, are you mentally and financially prepared?
If so, that’s great, go and get started! If not, that is more than okay, it is all about baby steps. Instead of starting now when you might not be financially or morally ready, re-visit it when you feel the time is right! There is never a bad time to get started.
If you have the time and are financially ready, but are not sure if you are mentally prepared, consider taking on a partner! Try reaching out to your community to see if anyone else shares the passion that you have and if they are willing to embark on this adventure with you.
Another option is to collaborate with an established nonprofit organization. You are still helping to save the world, and this will give you time and experience to prepare for the day that you are ready to create your own organization.
We hope this article has given you a better understanding of what you need to research before creating your nonprofit! Once you have done this research you can move onto the next step, creating a business plan.
Springly is trusted by over 15,000 nonprofits to help them run their organizations on a daily basis. Try it, test it, love it with a 14-day free trial!