Nonprofit Kit For Dummies, 6th Edition
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Creating and running a nonprofit organization can be a gratifying and worthwhile endeavor. Success depends on developing a good idea that meets a real need, testing that idea, planning (and planning some more), and inspiring others. Though the work is demanding, it’s also deeply rewarding.

How to secure nonprofit status

Before you can begin operating as the kind of nonprofit organization that receives tax-deductible gifts from donors, you need to secure 501(c)(3) nonprofit status in the eyes of the Internal Revenue Service (IRS) and your state. Follow these steps to gain that nonprofit status for your organization:

  1. Choose a name for your nonprofit. While you’re at it, select and reserve a web domain name.
  2. Form the incorporating board of directors. Often, only three people are needed, but more are recommended, and the total number of board members should be an odd number, such as 5, 7, or 9.
  3. Check with the IRS to determine the requirements in your articles of incorporation, and then check with your state government to see what’s required. Then blend the two. Some states may not require the nonprofit dissolution article; however, the IRS does require this clause. Expect to pay a fee for the state filing. Be sure to authorize someone to submit the articles of incorporation.
  4. Wait for a response from your state. In some states, you can expedite the process by paying a surcharge.
  5. Obtain a federal employer identification number (EIN). To do this, you submit IRS Form SS-4.
  6. Develop organizational bylaws. These are the rules by which you will operate. Record the date when the bylaws are adopted.
  7. Hold your first board meeting. Remember to prepare the meeting minutes.
  8. Review IRS Publication 557. It’s titled Tax-Exempt Status for Your Organization.
  9. Read the instructions! Carefully read the instructions for completing and filing IRS Form 1023 or Form 1023-EZ if you’re applying to become a 501(c)(3) tax exempt organization (preferably within 15 months of the date of incorporation).
  10. After filing the form, make a list of potential financial donors from your family and friends. Tell them your filing accomplishments, and get their commitment to provide contributions designed as seed money to get your nonprofit started. Celebrate when your letter of determination arrives and notify your potential donors!
  11. Register as a charity within your state. While you’re at it, check your state’s laws: Some require you to apply for a separate (in addition to federal) tax exemption. If you’re planning to fundraise among the general public, check to see if your state requires a charitable-solicitation registration.

Roles and responsibilities of a nonprofit's board of directors

Every nonprofit organization is overseen by a group of people called the board of directors. These generous board members agree to accept responsibility for making sure the nonprofit organization remains true to its mission and purpose.

A board’s primary governance responsibility is fiduciary, or to uphold the public trust. The board must:

  • Pay close attention to what’s going on and make decisions based on good information
  • Put the welfare of the organization above other interests when making decisions
  • Act in accordance with the nonprofit’s mission and goalsActive governance as a board member involves these tasks:
  • Reviewing the mission statement and goals of the organization on a regular basis
  • Participate in strategic planning
  • If the organization has paid staff, hire the executive director and review their job performance
  • Review the organization’s budget and keep well-informed of its financial situation
  • Review the performance of the organization’s programs
  • Raise money for the organization
  • Set, evaluate, and — if necessary — revise policies
  • Serve as an ambassador for the organization — make more people aware of its work
  • Recruit additional board members and volunteers

How to raise money for your nonprofit organization

Every nonprofit organization needs to raise money. Whether applying for grants, searching for individual donors, or throwing fundraising events, you’re always looking for new ways to bring in funds. These tips can help your nonprofit successfully raise money:

  • Set clear and reasonable yet ambitious fundraising goals based on a clear assessment of your organization’s likeliest supporters.
  • Plan to depend on more than one grant, one event, one donor, or one approach. Balance your resources among multiple sources.
  • It costs money to raise money, and some approaches cost more than others. Make a fundraising budget.
  • Remember that individual donors represent the largest total source of private contributions.
  • Write a strong case statement for your organization, telling its story in terms of how it benefits the people (or trees…or salamanders) it’s designed to serve.
  • Ask. If you don’t ask for a contribution, you won’t get one. Remember to create an elevator speech (maximum three minutes) for impromptu presentations to strangers who may have money!
  • Make it easy to respond to your request. Provide self-addressed, stamped envelopes to mail individual donors and an easy-to-use Donate Now feature on your website.
  • Begin by asking for support among those closest to your nonprofit — its board, volunteers, clients, and staff. Work outward from that core group, building a network of supporters through your first donors’ personal connections and those benefitting from your nonprofit’s work.
  • Put the fun in your fundraising. Special events can win friends and inspire new supporters.
  • The most important step in grant-writing is research. Examine each potential grant maker’s interests, focus, limitations, and policies. Adhere to their published guidelines for how to approach them the first time.
  • The key to a compelling grant proposal is demonstrating the needs of the constituents your nonprofit wants to serve and presenting a clear, detailed plan for addressing those needs that includes validated reference citations to support your narrative. Acknowledge the work of others in your field and represent your organization’s distinct mission and approach.
  • Organizations need capital — annual funds, buildings, endowments, cash reserves — to offer strong programs. Fundraising for capital campaigns and fund drives involves both large and small contributions. A standard campaign depends on one lead gift totaling at least 10 percent to 20 percent of the total money to be raised, and on 80 percent of the money being raised from 15 percent to 20 percent of the donors.
  • If ask is the number-one rule of fundraising, thank is number two. Acknowledge your donors’ support, and work to deepen their involvement in your organization.

How to make customer service a daily habit in your nonprofit

The trick to providing exemplary customer service for your nonprofit is to work at it in little ways all the time. Every staff member and volunteer needs to be aware of the importance of customer service. Here are five key areas to address if you want to improve (or maintain) your service levels:

  • Telephone and video calls: Talk to all staff and volunteers about how to answer the phone politely and otherwise use it to maximum effect. Provide a cheat sheet with lists of extensions, instructions for forwarding calls, and any other useful information. Simple additions to a greeting, like “May I help you?” or telling the caller the receptionist’s name can set a friendly, professional tone.

    Make a rule for yourself to return all calls within 24 hours or, if that’s not possible, within one week. Let callers know, by your voicemail greeting, when they can expect to hear from you. If you’re selecting a voicemail system, make sure it’s user-friendly for callers.

    When you’re speaking with a donor by video call, it’s all about the tone of your voice and your facial expressions. Turn off your mobile phone and any video background screens. Close the office door. Make the client or donor feel as though they have your full attention. Don’t let donors and clients see clutter in your office.

  • At the door: Someone needs to (cheerfully) answer the door. If you’re in a small office with no receptionist and the interruptions are frequent, you can rotate this task among staff members or volunteers. If visitors must use a buzzer or pass through a security system, try to balance the coldness of that experience with a friendly intercom greeting and pleasant-looking foyer.
  • Before and after a sale or donation: If you have tickets to sell, make them easy to buy. Accepting only cash is far too restrictive. The banker managing your business account can help prepare you to accept credit card orders. Also, consider selling tickets over the web; a number of web services assist small businesses and nonprofits with web sales and online donations.

    If a customer is dissatisfied with your service, invite the person to give feedback, and then listen carefully. Offer a partial or complete refund. Doing so wins loyalty.

  • With a note: Keep some nice-looking stationery and a rough draft of a standard message handy so that writing thank-you notes is easy. Handwritten notes are more personal and often make a stronger impression than formal, typed letters or email messages. However, expressing your appreciation in a timely way is more important than the form of that appreciation. Use email if you can get to it more quickly. If your organization receives donations — like a theater group that receives play manuscripts or a natural-history museum that accepts scholarly papers for publication — have an acknowledgment email ready that confirms the item’s receipt and states when the person submitting it can expect to hear from you.
  • In the details: An old saying suggests that the devil lurks in the details, but that’s also where you find the heart and soul of hospitality and service. Keep notes about the interests and connections of your board members, donors, volunteers, and constituents. Find out the names of your board and committee members’ significant others and be prepared to greet them personally at events and on the phone.

About This Article

This article is from the book:

About the book authors:

Beverly A. Browning, MPA, is a grant-writing course developer who has been consulting in the areas of grant writing, contract bid responses, and organizational development for more than 40 years. She has assisted clients throughout the United States in receiving awards of more than $430 million. Learn more at bevbrowning.com. Stan Hutton is a senior program officer at the Clarence E. Heller Charitable Foundation.

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