Questions to Ask Before Starting a Nonprofit

If you do decide to start a nonprofit, you will not be alone. The number of U.S. nonprofits has grown at twice the rate of for-profit organizations. There are an estimated 1.6 million nonprofits in the US, and it is quite likely that someone already has your idea. So, before you go ahead, try answering these questions:

Am I Cut Out for This?

Starting a nonprofit is very much like starting a business. However, you'll have to find donors and maybe even investors who are interested in making a difference, rather than a profit. However, nonprofits are expected to be run as well as businesses.

You will need a business plan plus produce measurable results. You will, just like a business owner, have to put in long hours, probably without pay, until you can get the new enterprise up and going.

Some people who start NPOs have to keep their paying jobs during the startup period, and some organizations are even completely run by volunteers. You will need not only a passion for your cause but a big dose of entrepreneurial spirit.

Do you have the skills to start a nonprofit? Running any organization requires good management and administrative skills, and a nonprofit is no exception.

You might be driven by your passion for a cause, but that will be no substitute for skill and experience. You can augment your own skill set by bringing together supporters who have the knowledge and skills you may lack. Those early supporters could become your board members or your first employees.

Can you inspire others? You'll need to convince donors to support your endeavor, and motivate staff to work hard under sometimes difficult circumstances.

When the Chronicle of Philanthropy asked readers about the qualities that people who work in nonprofits need, the top ones were passion, creativity, persistence, vision, and the ability to collaborate. Do you have these qualities?

Do I Have an Original Idea for a New Nonprofit?

Woman with light bulb over her head, representing a creative idea. — Getty Images

With so many nonprofits already in existence, it is likely that there is one, or even a few, that have already claimed your idea.

Do your research and locate other NPOs that are similar to the one you propose. If there are organizations out there that have the same mission and they do a good job, it is going to be very difficult for you to attract donors, foundation grants, or any other support.

You may be passionate about your cause, but the nonprofit "market" will not bear much redundancy.

Is a New Nonprofit Necessary?

Even though the goal for your new nonprofit is not to make a profit but to change lives, it is also a business. As such, it is important to adopt many business-like procedures.

One of those is conducting a survey or other research before you launch a product or service. In the nonprofit's case, we call this a "needs assessment" to determine if there is a need in your community for the services you propose to offer.

Here are some questions to ask during the needs assessment:

Is there another nonprofit that is providing or may provide the program or service you are considering?
Who is your audience? And, what is its demographic profile? Are they low income? Single mothers? Kids with AIDS? Are they senior citizens? Where do they live? How do they get around (public transport etc.)? How many people are there who need your service?
What are this group's needs and desires? Conduct a survey of a sample group to find out what they are thinking. You may believe they need one thing, but they may need and want something else.

There are many ways to perform a needs assessment. You can gather data about the community and other nonprofit organizations that are working on similar problems.

You can do an actual survey by phone, mail, or door to door, interview leaders in the community, and use focus groups. Using a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats), commonly used in business, can be useful and provides an easy-to-follow format.

The key is to find out if your proposed nonprofit is needed. You would never start a business without determining if there was a market for your product or service. The same goes for a nonprofit.

Will My Organization Fit the Legal Qualifications for a Nonprofit?

If you are thinking of establishing a nonprofit just because you don't want to pay taxes for your business enterprise, forget it. To qualify as a 501(c)(3) charity, your organization must serve the community.

A 501(c)(3) nonprofit cannot be operated for anyone's private benefit, support or oppose a political party or candidates for office, or have as its mission the achievement of something that is only possible by passing some kind of legislation.

Examples of acceptable charitable purposes include:

relieving the poor, distressed or underprivileged
advancing education or science
erecting or maintaining public buildings, monuments or works
lessening the burdens of government
eliminating prejudice and discrimination
promoting and developing the arts
defending human and civil rights that are secured by law

Do I Have a Clearly Stated Mission?

Environmentalist with children in the field. — Hero Images/Getty Images

Your new organization must have a clear and easily understood mission statement. Too often founders of nonprofits have a vague mission such as "help humanity." But a great and truly usable mission statement needs to answer these questions:

Why? What is the purpose? What change will happen?
What? What are the services that will be provided?
Whom? Who will be helped, who will receive the services?
Who? Who will do the helping, provide the services?
Where? What will be the geographic service area?
How? How will the services be delivered? What methods will be used?

Get acquainted with the mission statements of other nonprofits and the basics of writing a good nonprofit mission statement.

Do I Know People Who Will Support My Idea Financially and With Their Time?

Volunteers at a food pantry. — KidStock/Blend Images/Getty Images

Many founders of nonprofits have only the vaguest idea about how they will finance their new organization. Startup funds are hard to come by for a nonprofit. You might have to pony up out of your own pocket, and you will certainly need to depend on the largess of individuals who also believe in your cause. Do you know who they are?

Familiarize yourself with where nonprofits get their income and think hard about where those startup funds will come from before you begin the hard work of starting your nonprofit.

You'll also need people to serve on your board of directors and who are willing to volunteer their time. Many nonprofits begin with only volunteers until they can afford some staff. Even when you can pay staff, you'll likely still need volunteers to help deliver your services.

Find people who like your idea and feel committed to it before you even try to start a nonprofit. Solo entrepreneurs can often get a business off the ground on their own. A nonprofit needs a group of people willing to reach into their own pockets and to devote their time to the hard work of getting a good cause started.

Have I Thought About Partnering with an Already Existing Nonprofit?

If you've done your research, you already know there may be other nonprofit organizations that are working on your social issue in your area. Now ask yourself: are none of those groups adequately addressing that issue? Is the need going unmet?

Be honest in this assessment. Don't reject the efforts of others just because they might not be addressing that cause in the same way that you would, or if they are doing it in a slightly different way.

Confront the possibility that it might be better to join forces with another group. Maybe you could serve your cause better by becoming a staff member, a board member, a volunteer, or a donor to another organization. You could even bring your proposed project to the attention of that group to see if yours can be incorporated into its activities.

You could even establish a for-profit enterprise that serves a social good.

If you do decide that you have to start your own nonprofit, are you sure that you can make a compelling case to grant makers and donors to fund your organization and divert funding away from existing organizations servicing the same or similar purposes?

If you have done your research and are convinced that your idea needs to find its life in a new nonprofit, go ahead.

But, make sure you are prepared for the tough road ahead, have the energy for the first steps, and the passion for getting you over the hard spots.

Resources:
Research existing nonprofits at guidestar.org.
Find organizations that provide funds for NPOs at foundationcenter.org.