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Nonprofit Education

Nonprofit Startup Blunders

When putting together a nonprofit organization, there are plenty of things that can go right. You can assemble your nonprofit board members, fill out your paperwork correctly, register with the state and IRS successfully, and obtain your 501c3 approval with minimal to no hiccups along the way. Anyone would prefer smooth sailing over stormy waters.

However, there are plenty of blunders first-time nonprofit owners can encounter along the way. The 501c3 process can be daunting when you’re not familiar with the rhythm of it, which leaves plenty of room for unanticipated mistakes. To avoid falling into traps, you should first recognize what kind of mistakes can keep your nonprofit from taking off.

Have a Clear Message

The first and most important blunder in a nonprofit startup is not having a clear message on what your organization is about. Narrowing down what you and your nonprofit board members want to do is a crucial part of your nonprofit startup. It’s easy to say that you ‘want to work with kids’, or ‘help people’, or ‘spread the word of God’. Those are good starts, certainly, but in reality they are far too broad. Details are vital in the startup process, especially if you want your nonprofit to succeed. Do not let your mission statement or activities get lost in translation.

Explain What Your Organization Is About

Expand on everything that can be expanded upon, even if you think you are including too much. There can never be ‘too much’ when it comes to explaining what your organization is about and how you plan to use it to help others. Unclear and small messages might be able to get off the ground, but they will never take flight.

Write Everything Out

The solution to avoiding the blunder of not having a clear message is to sit down and put in writing everything your nonprofit stands for. This can be done on your own, with your nonprofit board members, or with a few friends you can bounce ideas off of.

Say that your nonprofit is an organization that is dedicated to donating scholarships to underprivileged children. Ask yourself:

  • How would you go about giving those scholarships to the children?
  • Does every child qualify, or are there specific requirements that must be met to ensure they receive a scholarship?
  • How much of a scholarship will it be?
  • Where will you get your funds?

Questions like these should encourage deep and thought-out answers, so that the message of your nonprofit is heard loud and clear. Remember, it is not just paperwork and 501c3 approval that defines your nonprofit. You need to show others why you are passionate about your organization—not only to receive donations, but to also stand out and make a true difference.

Have The Right Board

Another blunder to avoid is not having the right board for your nonprofit. In spite of what some may think, a nonprofit is never run by one brilliant mind, but an accumulation of several brilliant minds. It is a collaboration of the fullest sense between a team of people whose teamwork and cooperation will ultimately determine whether or not the nonprofit succeeds or fails. It is easy to turn to family members for nonprofit board members, as most of them are more than willing to lend a hand. What is important to understand, however, are the rules that are associated with having family members as nonprofit board members. The majority of the board has to be unrelated, so if a husband and wife are on the board, there will need to be three additional members to make up the majority of unrelated individuals for the rest of the board.

Your Board Will Lay Down The Foundation

On the other hand, if you choose not to include any family, you will need to select individuals that you deeply trust. Your nonprofit board members will lay down the foundation of the organization, and not having a strong group can result in unnecessary delays or conflict. Choose wisely when selecting your nonprofit board members, and make sure to explain every aspect of the 501c3 process clearly. Your board members need to know what is going on and what is expected of them before they can officially be part of the team. This way, they will know everything up front and can decide if they are willing to be a part of the nonprofit or would prefer to stand aside and be part of your support team instead.

Make Sure You Start Off Right

One final blunder to consider is opening your nonprofit’s door for donations the moment you decide to form it. As nice as it is to think that is possible, there are actually some serious consequences that can result from soliciting for donations right off the bat. To avoid getting in hot water with the law, it is imperative that you and your nonprofit board members not only fill out the correct forms, but also file them where they need to be filed. Knowing which forms apply to your organization and its operation will prevent the mistake of asking for donations when you are not supposed to.

One of the most important forms to avoid missing is the charity registration. A charity registration filed with your state of incorporation will make sure that you are legally allowed to solicit for donations. There are penalties associated with conducting without a charity registration, so to avoid them altogether make sure that you get your charity registration filed ASAP.

Tell The Truth

It is also important to inform others if you are pending 501c3 approval. A lot of the time nonprofit board members think that they can claim to be 501c3 approved when their application is still awaiting review at the IRS. While it would be nice to consider yourself as already accepted, it is safer and more accurate to say that you are pending approval. We understand that the process is long and tedious and that you are eager for that bright light at the end of the dark tunnel, but being truthful is the best option.

Conclusions

If you would like to know some other blunders associated with nonprofit startups, or want to know how you can complete the steps towards forming a nonprofit successfully, please contact our expert team at 407-857-9002. Alternatively, you can email us at info@bizcentralusa.com. However you reach out to us, whatever that may be for, we look forward to assisting you in any way that we possibly can.