fabjob guide to become a social entrepreneurthis e-book, fabjob guide to become a social...

How to Start a Nonprofit Business!

Jennifer James

FabJob Guide to

Become a Social

Entrepreneur

Visit www.FabJob.com

ContentsAbout the Author .............................................................................8

1. Introduction ...........................................................................................9

1.1 WelcometoNonprofitBusiness ...................................................9

1.1.1 DefinitionsandDistinctions .............................................10

1.1.2 WhatItTakes .......................................................................12

1.1.3 BenefitsofNonprofitWork ...............................................14

1.2 InsidethisGuide ..........................................................................15

2. GettingReady .......................................................................................17

2.1 ChoosingaMission .....................................................................17

2.1.1 StartingFromScratch .........................................................18

2.1.2 AssessingYourIdea ...........................................................20

2.1.3 CraftingaMissionStatement ............................................23

2.2 PartsofYourNonprofitIdentity ................................................24

2.2.1 BeingaCorporation ...........................................................24

2.2.2 BeingaCharitableOrganization ......................................26

2.2.3 BeingaPublicCharity .......................................................30

2.3 EstablishingYourNonprofit ......................................................32

2.3.1 BusinessNameandLogo ..................................................32

2.3.2 InternetPresence ................................................................35

2.3.3 SocialMedia ........................................................................39

2.3.4 PrintedMaterials ................................................................43

2.4 GainingCredibility .....................................................................49

2.4.1 EducateYourself .................................................................49

2.4.2 JoinanAssociation .............................................................50

2.4.3 Get Accredited ....................................................................51

FabJob Guide to Become a Social Entrepreneur

Copyright©2017FabJobInc. • www.fabjob.com • 2

http://www.fabjob.com

2.5 SettingupYourOffice .................................................................52

2.5.1 ChoosingaLocation ...........................................................52

2.5.2 EquipmentandSupplies ...................................................54

2.5.3 ApplyingforaMailingPermit .........................................56

2.6 LegalMatters .................................................................................57

2.6.1 IRSAnnualReturns ............................................................57

2.6.2 TaxesandRegistration .......................................................58

2.6.3 Insurance ..............................................................................61

2.6.4 GettingProfessionalHelp ................................................63

3. StartingaNonprofitBusiness ...........................................................65

3.1 FormingaBoardofDirectors ....................................................65

3.1.1 BoardofDirectorsBasics ...................................................65

3.1.2 Selection Criteria .................................................................67

3.1.3 TheFutureofYourBoard ..................................................68

3.2 FilingArticlesofIncorporation .................................................69

3.2.1 Who to Contact ...................................................................70

3.2.2 WhattheArticlesCover .....................................................70

3.3 WritingBylaws..............................................................................72

3.3.1 GeneralGuidelines .............................................................72

3.3.2 ConflictofInterestPolicy ..................................................74

3.3.3 YourFirstMeeting .............................................................75

3.4 ApplyingforTaxExemption .....................................................76

3.4.1 IRS Form 1023 .....................................................................76

3.4.2 FilingandWaiting ..............................................................78

3.5 ComplyingwiththeLaw ...........................................................79

3.5.1 Form 990...............................................................................80

3.5.2 PublicDisclosure ................................................................81

3.5.3 Fundraising .........................................................................83




3.5.4 PotentialPitfalls ..................................................................85

4. RunningYourNonprofit ...................................................................86

4.1 InitialPlanning ............................................................................86

4.1.1 Start-UpFunding ................................................................86

4.1.2 YourBusinessPlan .............................................................90

4.1.3 StrategicPlanning ...............................................................94

4.1.4 DevelopingPrograms .......................................................97

4.2 StaffandVolunteers ....................................................................98

4.2.1 WorkingwithVolunteers ..................................................98

4.2.2 HiringPaidStaff ...............................................................103

4.3 RaisingAwareness ......................................................................105

4.3.1 PublicServiceAnnouncements .....................................106

4.3.2 PressReleases ...................................................................107

4.3.3 PodcastsandVideos ........................................................110

4.3.4 TVandRadioInterviews ................................................112

4.3.5 EventMarketing ..............................................................112

4.3.6 OtherIdeas ........................................................................115

4.4 ManagingYourFinances ..........................................................116

4.4.1 FinancialStatements ........................................................116

4.4.2 KeepingTrackofYourFinances .....................................118

4.4.3 AcceptingPayments .........................................................120

4.4.4 Budgeting...........................................................................123

5. GettingMoneyforYourNonprofit ...............................................125

5.1 TheBasics ....................................................................................125

5.1.1 SourcesToConsider .........................................................125

5.1.2 YourFundraisingPlan .....................................................127

5.2 CorporateDonations ..................................................................129

5.2.1 TypesofDonations ...........................................................130




5.2.2 ListingPossibleDonors ...................................................130

5.2.3 HowtoApproachCorporations .....................................131

5.3 FundingfromOtherNonprofits ..............................................136

5.3.1 FoundationGrants ...........................................................136

5.3.2 UnitedWay .......................................................................138

5.4 GovernmentGrants ....................................................................139

5.4.1 FindingAvailableGrants .................................................139

5.4.2 GrantProposals ................................................................140

5.5 FundsfromIndividuals .............................................................142

5.5.1 TelephoneandMail ..........................................................143

5.5.2 SpecialEvents ....................................................................145

5.5.3 OtherApproaches ............................................................149

5.6 EarningIncome ...........................................................................150

5.6.1 SellingaProduct ...............................................................152

6. Conclusion ..........................................................................................154






1. Introduction

1.1 WelcometoNonprofitBusinessDoyoufeelinspiredtouseyourtalentstohelpothers?Wouldyouliketochangetheworld,orchangethelivesofagroupofpeople?Doyoufeelpassionateabouthumanrights,education,literacy,fightingdisease,oranothertypeofcausethatbenefitshumanity?Well,nowisthetimetostartdoingworkyoubelievein—bystartingupyourownnonprofitbusiness.

Ifyou’relikemostpeoplewhothinkaboutstartinganonprofit,you’reprobablyfeelingexcitedaboutputtingyourideaintoaction,butoverwhelmedbytheprocess.Wheredoyoustart?Whatstepsdoyou




take?Howmuchmoneywillyouneed?Whodoyoucontactinyourstateoratafederallevelformoreinformation?

Thise-book,FabJob Guide to Become a Social Entrepreneur,willanswerthesequestionsforyou,andsomuchmore.Let’sstartwithsomebasicinformationaboutnonprofits,anddefinesometermsthatwillhelpyouusethisbookeffectively.You’llfindmorein-depthanswerstoyourquestionsabouthownonprofitsworkinChapter2.

1.1.1 DefinitionsandDistinctionsNonprofitbusinessesworkforthebenefitofsocietyinsomeway.Because theyareworking tomake theworldabetterplace, theInternalRevenueService(IRS)offersthesecharitableorganizationstheadvantageofnotpayingfederalincometax.TheCanadaRevenueAgency(CRA)offerstaxexemptiontomostCanadiannonprofits.Thisway,moremoneyisavailabletoachievethevaluablegoalsofthebusiness.

According toThe New York Times (in 2014; seewww.nytimes.com/2014/03/09/business/for-nonprofits-a-bigger-share-of-the-economy.html):

Theoveralleconomyhasbeenexpandingslowly,butatleastonesectorisvibrant:nonprofits,whichhavebeengrowingatabreakneckpace.From2001to2011,thenumberofnonprofitsintheUnitedStatesgrew25percentwhilethenumberoffor-profitbusinessesrosebyhalfof1percent...Alltold,roughly1.6millionnonprofitsemployed10percentofthedomesticworkforcein2010andaccountedfor5percentofG.D.P.

Someexamplesofnonprofitbusinessesyou’veprobablyheardofatsometimeoranother:

•America’sSecondHarvest

•AmericanCancerSociety

•BigBrothersBigSistersofAmerica

•NationalWildlifeFederation


http://www.nytimes.com/2014/03/09/business/for-nonprofits-a-bigger-share-of-the-economy.html





•SalvationArmy

•SmithsonianInstitution

•UnitedWay

NonprofitbusinessescanfallintomorethantwodozendifferentIRScategoriesbasedontheirpurpose,butthemostcommonclassificationis501(c)(3).Allnonprofitorganizationstaxexemptundersubsection3ofsection501(c)oftheInternalRevenueCodemustbeoperatedforreligious,charitable,scientific,literary,oreducationalpurposes;testingforpublicsafety;fosteringnationalorinternationalsportscompetition;orpreventingcrueltytochildrenoranimals.

Thisguideassumesthatyouwillbeseeking501(c)(3)statuswiththeIRSforyourbusiness.Ifyourideaforanonprofitdoesnotfallintothesecategories,youmaywanttorefineyourgoals,asthebenefitsofbeinga501(c)(3)aresubstantial,includingexemptionfromfederalunemploymenttax(FUTA),discountedmailingrates,andevensomestatetaxexemptions.

501(c)(3)senjoytheadditionaladvantageofbeingabletoissuetax-deductiblereceiptstotheirdonors,makingiteasiertoattractfundingdollars.Inmanycases,foundationsandgovernmentsourcesofgrantmoneywillrequirethatyourbusinessisatax-exemptnonprofitinordertoconsideryourapplicationforfunding.

Ofthese501(c)(3)tax-exemptorganizations,aportionofthemqualifyaspubliccharities.Thesenormallyreceivetheirfinancialsupportfromabroadsegmentofthegeneralpublic(notonepersonorasmallgroup,likeaprivatefoundation),and/orfromgovernmentfunding.Thisguidealsoassumesthatyouwillbeseekingpubliccharitystatus,notstartingupaprivatefoundation.

Whilethisguideusestheterm“nonprofit,”theterm“not-for-profit”meansthesamethingintheindustry.Also,“nonprofit”doesnotmeanthatyourbusinesscan’tmakeaprofit.Indeed,youshouldintendtogeneratemorerevenuethanyourimmediateneeds.Thiswillallowyouroomtogrow,expandyourservices,orabsorbcutbackstofunding.Nonprofitsdohavelegalrestrictionsonhowtheirsurplusescanbegeneratedandallocated,whichwillbeexplainedinthisguide.




Forthepurposesofthisguide,wecallyournonprofita“business.”Asmuchaspossible,youshouldthinkofyournonprofitasabusiness,andrunitwithintenttosucceed.Althoughwewillreferto“yournonprofit”intheguide(asin,thenonprofityouwanttostart),unlikefor-profitbusinessnoonecan“own”anonprofit.Youcanbethefounder,theincorporator,adirector,oranofficerofthenonprofit,butyouwillneverbetheowner,youwillnevercollectdividends,andyou’llneversellthenonprofitforpersonalgain.

YouwillneedtoincorporateyourbusinessbeforeyouapplytotheIRSfortax-exemptstatus,byfilingyourincorporationarticleswithyourstate.(Otherlegalstructuresarepossible,buttheyaren’tlikelytomeetyourneeds.)Corporationsaregovernedbyspecificoperatingrulesaswell,suchasthatyouhaveaboardofdirectors,andholdregularmeetings.

Nonprofitcorporations,likeotherincorporatedbusinesses,protecttheirfoundersandofficersfrompersonalliabilityfortheactionsofthecorporation.Thebusinessistreatedasaseparateentityfromthosewhostartitandrunit.Soifsomeonedecidestosueyournonprofit,theycanonlygoaftertheassetsofthenonprofit,notyourhouseoryourretirementfund.

Somestatesrequirethatyouareatleast18yearsofagetoincorporateabusiness.Ifyouarenotyet18youmayneedtostartyournonprofitinformallyfornow,orworkinpartnershipwithanadult.Section3.2ofthisguidehasmoredetailsonincorporating,andresourcesforyoutocheckthelawsinyourstate.

1.1.2 WhatItTakesInyourresearchsofar,youwillhavecomeacrosstheterm“socialentrepreneur.”This isa relativelynewnamefora founderofanonprofitwhoseekstosolvesocialproblems,notjustthrowmoneyatthem.Thetermfirstachievedwidespreadnoticein1997,withCharlesLeadbetter’spaper“Rise of the Social Entrepreneur,“publishedbyDemosunderopenaccesslicense;youcanfindthepaperatwww.demos.co.uk/files/theriseofthesocialentrepreneur.pdf.Investopediadefinesthetermconcisely(atwww.investopedia.com/terms/s/social-entrepreneur.asp)as:


http://www.demos.co.uk/files/theriseofthesocialentrepreneur.pdf

http://www.demos.co.uk/files/theriseofthesocialentrepreneur.pdf

http://www.investopedia.com/terms/s/social-entrepreneur.asp

http://www.investopedia.com/terms/s/social-entrepreneur.asp



Apersonwhopursuesaninnovativeideawiththepotentialtosolveacommunityproblem.Theseindividualsarewillingtotakeontheriskandefforttocreatepositivechangesinsocietythroughtheirinitiatives...Themaingoalofasocialentrepreneurisnottoearnaprofit,buttoimplementwidespreadimprovementsinsociety.However,asocialentrepreneurmuststillbefinanciallysavvytosucceedinhisorhercause.

Likegreatfiguresinhistory,theideasofasocialentrepreneurareoftenuniqueandrevolutionary.Theyapproachnonprofitworkwiththesamedrivetosucceedassomeoneworkingforhisorherownbenefit,applybusinessprincipleslearnedfromthefor-profitsectortosocialproblems,andstrivetowardssustainability.

Youmaybewonderingwhattypeofpersonstartsanonprofit,andwhetheryoufitthemold.Socialentrepreneurscomeinmanyvariationsandstyles,butmanyseemtosharesomebasic,definingcharacteristics.Howmanyofthefollowingapplytoyou?

q Youarecompassionate.

q Youarean“ideas”person.

q Youareadoer,notjustatalker.

q Youarepassionateaboutthingsyoubelievein.

q Youcangetothersmotivated.

q Youareorganized.

q Youarepatient.

q Youcanexplainyourselfclearly.

q Youdon’tneeddailypraiseforwhatyoudo.

q Yousetshortandlong-termgoals.

Evenifyoushareonlyafewofthesequalities,youareofftoagoodstart.Moremaycometoyouintime,asyoubuildyourconcept,gainexperience,andmakeconnectionsinyourcommunity.




Thefactis,justaboutanyonewiththedriveanddeterminationtoseetheirdreambecomearealitycanstartanonprofitbusiness.Somepaperworkandfilingfeeswillgetyournonprofitstartedinmostcases,andthenyoucanfocusonyouruniquegoalsfromthere.AndwithAmericans’charitablegivingin2014increasingtoover$258billion(perhttp://nccs.urban.org/data-statistics/quick-facts-about-nonprofits),upfrom$229billionin2008(http://nccs.urban.org/data-statistics/quick-facts-about-nonprofits),there’sneverbeenabettertimetoraisemoneyforaworthwhilecause.

1.1.3 BenefitsofNonprofitWorkPeoplearedrawntononprofitworkfordifferentreasons.Perhapsyouhaverecentlybecomeawareofasocialproblem,ormaybeyou’verecognizedasituationforawhileandhavefinallydecidedtomakeachange.Personalexperiencewithillness,injustice,sufferingordisastermotivatespeopletowanttomakeachange,sootherscanbenefit.Herearesomeofthebenefitsofdedicatingyourselftoanonprofitcause.

HelpPeople,YourWay

Whenyourunanonprofitbusiness,youdirectlyhelpthepeoplewhoneedit.Theeffectsofyourmissionandprogramswillchangepeople’slivesandtheirfutures.Sure,youcandonatemoneytoacause…andasasociallyconsciousperson,youprobablystillwill.Butasfounderofyournonprofityouwilllaythegroundworkforhowthenonprofitwilldirectfunds,runeffectiveprograms,andbestserveitsmission.

ChangetheWorld

OnthewebsiteforAshoka(www.ashoka.org),aglobalassociationofsocialentrepreneurs,founderBillDraytonsharesthisthought:“Socialentrepreneursarenotcontentjusttogiveafishorteachhowtofish.Theywillnotrestuntiltheyhaverevolutionizedthefishingindustry.”Asasocialentrepreneur,youaredriventoaddresstherootcausesofproblems.Nonprofitbusinessesrunwellwillhavepositivelocal,regional,andnationaleffects,andquitepossiblybringaboutglobalchange.


http://nccs.urban.org/data-statistics/quick-facts-about-nonprofits

http://nccs.urban.org/data-statistics/quick-facts-about-nonprofits

http://www.ashoka.org



Hands-onInvolvement

Startinganybusiness requires thatyouget involvedwithyourorganizationonanintimatelevel.Andsincemanynonprofitsstartoutonasmallbudget,youmaybeplayingmanyroles,especiallyatthebeginning.Youmaytraveltheworldforyourcause,meetwithpowerfulleaders,orbeswarmedbycrowdsofpeoplegratefulforyourhelp.Thiskeepstheworkinteresting,andchallengesyourlimits.Forfounderswhobecomeexecutivedirectors,hands-oninvolvementandseeingtheimmediateresultsofeffortarealsogreatrewardsandmotivators.

Freedomfromthe“RatRace”

Ifyou’retiredofchasingmoneyforpeoplewhoalreadyhaveenoughofit,orfrustratedwithenforcingcorporatepoliciesthatdon’treflectyourvalues,it’stimetogetoutoffor-profitbusinessanduseyourtalentsforthegreatergood.That’snottosaythatthereisno“corporate”inwhatyou’lldo,butyou’lluseanewkindofmeasuringstickforyourachievements:onethatshowsdollarsraised,liveschanged,andpeoplehelped,insteadofquarterlyprofitsandunitssold.

MakeaDifferenceRightNow

Youcanstartplanningyournonprofitbusinessrightnow,asyoumovethroughthepagesofthisguide.Bybeginningtoformulateyourideas,refineyourmission,andlearnthestepstotake,youarealreadystartingtomakeadifferenceinyourworld.

1.2 InsidethisGuideThe FabJob Guide to Become a Social Entrepreneurtakesyouthroughtheprocessofestablishinganonprofitcorporation—andspecifically,a501(c)(3)publiccharity—intheU.S.You’llbeabletogetstartedandsucceed,armedwiththeknowledgeandresourcesprovided.Yourinvestmentinthisguidewillsetyouaheadoftheothers,wholacktheknowledgetoputtheirideasintoaction.

Chapter2(Getting Ready)putsyourplanintomotion.You’llchooseandrefineanappropriatenonprofitmission,thenlearnaboutthedifferent




partsofyournonprofitbusiness’“identity.”Thechapteralsoexplainswhatimportantpartsofyourbusinessyoushouldhaveinplaceearlyontoestablishcredibility,settingupanoffice,andlegalmattersfromfilingrequirementstoinsurance.

Chapter3(Starting a Nonprofit Business)goesintothedetailsofmeetingthemostcommonstaterequirementsforincorporation:formingaboardofdirectors,writingbylaws,filingyourarticles,etc.Italsotakesyouthroughthesubsequentstepsoffilingfortax-exemptstatuswiththeIRS,andthenexplainssomeofthelegalobligationsspecifictothenonprofitsector.

Chapter4 (Running Your Nonprofit)helpsyoulearnhowbeinganonprofitaffectshowyoudobusinessfromdaytoday.You’llgetimportantinformationaboutbusinessplanning,developingprograms,hiringstaff, recruitingandcoordinatingvolunteers,andraisingawarenessaboutyournonprofit’sworkandmission.

Chapter5(Getting Money for Your Nonprofit)focusesonhowyou’llkeepyournonprofitabletooperate:fundraisingfromindividualsandcorporations,applyingforgrants,andgeneratingincomethroughrelatedactivities.Theguideconcludeswithsomefinalthoughtsonthecurrentenvironment—andfuture—ofsocialentrepreneurshipinoursociety.

Throughouttheguideyou’llfindlinkstoonlinesamplesoftheformsandmaterialsyou’llusetostartandrunyournonprofitbusiness.Applyingwhatyoulearnhere,it’sjustamatteroftimebeforeyou’llbewhereyouwant—inarewardingcareerdirectingtheactionsandfutureofanonprofitbusinessdedicatedtomakingtheworldabetterplace.

YouhavereachedtheendofthefreesampleoftheFabJob Guide to Become a Social Entrepreneur.Toorderanddownloadthecompleteguidegotohttps://fabjob.com/program/become-social-entrepreneur/.


https://fabjob.com/program/become-social-entrepreneur/

fabjob guide to become a social entrepreneurthis e-book, fabjob guide to become a social...

Documents