Many nonprofit founders start their organizations because they see an unmet need and have the skills or resources to fill it. The process of securing 501(c)(3) status is tedious, and many people assume THAT’S the big barrier they’ll face in starting a nonprofit. But consider the paperwork, red tape, and frustration still to come! (Sorry. You’ll also encounter lots of inspiration, camaraderie, and celebration -- I promise!)
Five operational support resources will help you succeed -- some you might have within your own skill set, others you might find among friends and family, and some you will have to outsource. But don’t launch a nonprofit without thinking through how you’ll handle each of the following:
IT & Technology. Cybersecurity is a necessary priority for everyone. As soon as you send your first organizational e-mail, you’re creating a digital presence for your nonprofit and taking on responsibility for the security of your online interactions. Creating a cybersecurity protocol and choosing your vendors carefully are important first steps. The Nonprofit Technology Enterprise Network (NTEN) is a vital source of tech info for nonprofits. They offer great resources and training opportunities, and their blog is a must-bookmark for nonprofit leaders.
Speaking of sending e-mail and choosing vendors, your IT needs will evolve as your nonprofit grows. You’ll need to pick a domain name, create a social media presence, and acquire a system to securely collect client and donor data. Choosing platforms that will grow with you translates into huge time-savings over the next few years to come.
HR & Payroll. Before you hire staff, think through the policies and procedures that will affect them. Human Resources is a huge area of risk for nonprofit leaders; you must follow HR laws, and you should follow ethical practices; if you don’t you could face lawsuits, bad publicity, unforeseen expense, and gaps in service delivery. Using an online payroll company is a good place to start, as they will ensure that you collect necessary documentation and complete all state and federal requirements for the employees on your payroll.
Remember the recent outrage over illegal freelance positions being posted on Twitter? Avoid any similar misstep by making sure you understand which category (employee or contractor? full time or part time? exempt or non-exempt?) new team roles will fall into before you advertise positions.
Insurance. For many small nonprofits, Directors & Officers liability insurance and general liability policies are sufficient. The nature of your activities might make your liabilities more complex. Do you supervise children? Recruit volunteers? Transport participants? Your insurance agent will need to confirm that your policies are focused on participant safety and that you, your staff, and volunteers are all trained on those policies and follow them faithfully. A good agent will talk through this with you and help you find the appropriate product. The Nonprofit Insurance Alliance can help you compare quotes and connect with an agent who specializes in nonprofits.
Taxes & Accounting. “Aren’t nonprofits tax exempt?” “Yes, BUT.”
In order to remain tax exempt, nonprofits are expected to file an informational tax return, called a 990, with the IRS. If your nonprofit’s annual income is less than $50,000 this form is so simple it fits on a postcard. Just please don’t skip this simple task, or you might be setting yourself up for a major headache.
As a tax exempt organization, you will solicit donations to cover expenses related to your mission. You have a responsibility to track your income and expenses, and your board of directors should be overseeing a faithful accounting of the cost of running your organization. As your organization grows in complexity, so must your accounting system. Funders may require an attestation (or documentation) that funds were spent only on allowable expenses, and you have a responsibility to ensure that your donors’ funds are spent responsibly. Many early stage organizations keep their books in spreadsheets, then move to a more sophisticated system like QuickBooks, and finally outsource or hire a professional accountant.
Marketing & Social Media. You might be doing something AMAZING for your community, but if no one knows about it you’ll soon run out of steam. And funds. Nonprofit marketing can encompass both recruiting participants for your programs and engaging donors, volunteers, and cheerleaders for your work. You’ll need to study your community to figure out the best ways to share information and get them involved. Whether it’s community bulletin boards or Facebook, your message needs to get in front of the people who are 1) interested, and 2) able to participate. If you love social media and you’re already active on multiple platforms, then what you need to calculate is the amount of your time this will take. But if you’re already craving a break from social media, taking on this role is going to be exhausting and stressful. In this case, recruit a savvy and dedicated volunteer or contract with someone to handle your nonprofit’s social media communications.
Running a nonprofit means running a business. This can be a bitter pill to swallow for people who want to make the world a better place but don’t necessarily love spreadsheets and fillable PDFs. Building a supergroup board of directors or raising funds to outsource these areas will help you cover your bases. If this level of complexity seems disproportionate to your needs, check out our blog post on alternatives to starting a nonprofit. (Just do what you’re doing, start a mutual aid project, expand the capacity of an existing nonprofit, find a fiscal sponsor, or create a social enterprise)