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First Five Steps to Starting a Nonprofit Organization

Launching any type of business entity requires a focused effort to ensure that every base is covered. Starting a nonprofit is probably the most complicated, in part because of the federal requirements that come with securing nonprofit status, in part because you have to find a way to cover the expenses beyond what can be made through the work itself. There are dozens of steps to go from idea to launch, but here is an overview of the first five steps to take on your way:

1. Assess Viability

Before you commit significant resources to your nonprofit idea, do your due diligence to ensure the idea is viable AND that you won't be flooding your community with repetitive programs and services. Not every nonprofit idea meets the cost-benefit test -- some ideas are just too expensive for the expected outcome. This is difficult for some passionate, committed would-be founders to accept, but it is better to acknowledge that fact before you put thousands of hours and dollars into an organization that has no chance of survival. Be sure to look into other organizations targeting the same population -- while competition can be healthy, in a world where survival depends on donations from the public competing organizations can choke each other out pretty quickly.

2. Network

Get involved in your community and begin building relationships with active volunteers, nonprofit leaders, and professionals (Big 5 professionals: lawyer, accountant, banker, insurance agent, real estate agent) who are experienced in nonprofit work. You will need these resources at some point through the startup process, and the stronger your relationships, the more likely you will find the right person to help solve your problem.

3. Recruit Initial Board

You will need a strong, committed board of directors to help you slog through all the startup paperwork and planning. Look for people who complement your abilities, not just your best friends. A bunch of people who are good at the same things and look at the world from the same perspective are going to have trouble identifying opportunities and threats along the way. Differing views requires everyone to think more and justify their actions more coherently, resulting in a better developed plan and a stronger commitment to the agreed upon ideals.

4. Planning, Planning, Planning

Once you have a team committed to the same goal, the real planning work begins. Everything from programming to accounting, marketing to volunteer management should be planned out. Like any other business, every aspect matters, and the leaders of the organizations should have sufficient knowledge and understanding of every aspect of business fundamentals to be able to make reasoned, informed choices for the organization.

5. Paperwork, Paperwork, Paperwork

There are several steps to developing a nonprofit's paper trail. From registering the nonprofit corporation with the state to applying for federal tax-exemption with the IRS, every step takes time and focus, and most will have to be discussed and approved by the board. The state paperwork generally takes only a few weeks to prepare, file, and receive back, but the IRS application can take months, so the sooner you get it started, the sooner you can get to work saving the world!

About the Author

LaunchX.com is dedicated to training entrepreneurs to turn their good ideas into great companies. The LaunchX System provides step-by-step education in the mindset and skill set entrepreneurs need to succeed. Our program includes intensive seminar training, key business software, and specialized workbooks that teach you the fundamental skills you need to achieve your financial and worklife goals through entrepreneurship. Register today for our introductory course and see what LaunchX can do for you!