Nonprofit organizations are being created again at a rapid clip. After the 2008 recession, there was a pullback by people looking to develop a new group. Since the robust economic recovery, people have gotten back to seeking to help others. That’s awesome for the industry because it brings new kinds of thinking and ideas. But, it’s also useful for society because it helps us to improve the lives of people.
When someone decides to establish a nonprofit organization, they start as small operations. In today’s world, people want them to grow and become scalable. As the owner of several social enterprises, I have a few ideas on this topic. I want to share them with you in case you’re thinking of creating a nonprofit group now or in the future.
Benefits of Small Nonprofit Organizations
When you create a start-up, you have a lot of motivation. And, because of your size, your group is flexible. When few people know you, you can be as creative as you want to be. You can also make decisions at a rapid pace. Let’s say you see something crucially important to address. A small group can easily decide to focus on the issue. In turn, that sharp focus might bring awareness and even acclaim. But, regardless, there’s always a need to focus on some critical governance areas. The following should be your priorities.
1) Ignoring Policies Will Cost You Trust
It doesn’t matter if you just opened your doors. One of the first things you need to do is to create essential policies. Remember, nonprofit organizations have a position of trust within their communities. Because most of them are tax-exempt organizations, they have a place of trust. Policies help the board and staff to have confidence in the leadership of the executives. A few of the policies you should ensure you have are as follows:
- Conflict of interest
- Whistleblower
- Fundraising data
- Information privacy
- Harassment
2) Legal and Financial Risk: You Don’t Want It
Two big challenges for nonprofit organizations are legal and financial exposure. They might not have the money to pay for CPA firms or lawyers. It would be a mistake. One of the strategies your organization can use is to ask a lawyer and also a CPA to serve on your board. If they happen to work at large companies, many businesses offer pro-bono services. They do this because it shows that they care about the community where they work.
When you have a lawyer serving on your board, ask them to review contracts and agreements. Ask the CPA to help you ensure that your organization follows accounting principles. You can also ask them to help you to file your 990s and any other regulatory filings. Always comply with any federal, state and city regulatory obligations. Transparency, especially for nonprofit organizations, is vital as you build credibility in the industry.
3) Fundraising Shortcuts––The Easy Way for Nonprofit Organizations
A lot of people who start nonprofit organizations do not like to fundraise. But, it’s important to remember that the responsibility of the board and the CEO. You have to ensure that the group has the resources to fulfill its mission. That can only happen by fundraising. Lucky for you, it’s the 21st Century. You can use predictive analysis on your donor database with a company like Gravyty. There are many ways to do fundraising these days. If you want to consider more fundraising ideas, take a look at this easy fundraising guide. Remember that one of the most important things you will do as a leader is ensuring that your group has money. It’s the only way that you will be able to fulfill your mission. Becoming a fundraising expert will also be the only way you will be able to grow successfully.
4) You Need an Umbrella: Think Reserve Fund
When starting nonprofit organizations, leaders concentrate on cash flow. They also care about expenses, which is essential. While that’s important, thinking about rainy days is also crucial. You never know when there’s going to be an unexpected drop in the market or emergency. Partner with your accountant and the finance committee of your board. As a general rule, you should want to set aside at least six months of operating capital. When you create a reserve fund, you’re prepared if something comes up. You won’t face the closing of your doors. Remember, not only do employees depend on you, but so do the people that you serve. A simple way to build a robust reserve is to ask your supporters to remember your nonprofit in their wills. Restricting these kinds of contributions can create a large reserve fund.
5) Make Your Transparency a Reality
Transparency is essential in today’s digital era. When you create a nonprofit group, show everyone that you’re a transparent organization. Take the time to communicate your branding well. Find an authentic voice, and make sure it is always consistent in your communications. Ensure that your messaging supports what you’re trying to communicate to the public. Another element that you’ll want to add to any marketing plan is a crisis management plan. If you should ever face a crisis, you should have an idea on what you’ll do to be transparent about it.
It’s great to have people who are looking to do social good. But, with these five tips, young nonprofit organizations will find more success.
Author of “Not Your Father’s Charity: Grip & Rip Leadership for Social Impact” (Free Digital Download)
© 2019 Wayne Elsey and Not Your Father’s Charity. All Rights Reserved
