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Posts Tagged ‘ New Non Profit ’

The Making of a Nonprofit: Business Planning

Tuesday, July 12th, 2016
Create your own .org

Create your own .org

Failing to write a comprehensive business plan is perhaps the most common mistake made by those in the beginning stages of forming a nonprofit. While you are not in the business to make a personal profit; you are in the business of making a profit. Most potential board members, donors, and community partners want to see just how you intend to do that.

Your business planning process will also be the very best guide for you to satisfy the questions you must answer when applying to the IRS for tax exempt status. Adequately filling out IRS Form 1023, Application for Recognition of Exemption, requires you to think through and prepare a few of the following items: Organization Name, Organization Website, Organizational Structure, Articles of Incorporation, Bylaws, Charitable Purpose, Narrative Description of Organization Activities, List of Officers/Directors/Trustees and Five Highest Paid Employee’s with Proposed Compensation, Titles and Mailing Addresses, Financial Compensation and Conflict of Interest Policy, Narrative and Strategy of Fundraising Activities, and Three Year Financial Projection.

Prepare for your Form 1023

Prepare for your Form 1023

If your IRS application for exemption is approved, you are now open for public inspection. Your business planning materials and your business plan provides you with the audit trail required.

A typical nonprofit business planning process will address all of the critical questions asked by interested parties. The table of contents should include these seven sections:

Executive Summary: This is a synopsis of your business plan and financial snap shot.

Organizational Structure: Describe how your nonprofit is organized, including the staff and board of directors.

Products, Programs or Services: What programs or products are you offering? Include processes, the benefits of your services, future growth plans, and list anything new, on trend, or answering to a community need.

Marketing Plan: In this section describe who you are trying to reach and how you intend to reach them. List the constituencies you serve. Explain your competition and your potential partners. How will you promote your services and through what materials?

Operational Plan: Where will you be located and how will you deliver services? Explain in detail how you will evaluate your program and its services.

Spend 30 - 40 hours on your Business Plan

Spend 30 – 40 hours on your Business Plan

Management and Organizational Team: Who is on your management team? Provide information about key management staff and their expertise. List the members of your board. Detail their expertise. List financial sponsors. Include an organizational chart. Explain lines of responsibility. Provide an assessment of current and future staffing needs, including how you will use volunteers.

Financial Plan: Determine your current and/or projected financial status, thoroughly explaining sources of income. You will include an income statement, balance sheet, cash flow statement, and a minimum three-year financial projection.

Smart planning ensures your success

Smart planning ensures your success

If done well, your business plan will not only guide you to answer the IRS Form 1023 questions, it will also act as a document to present to potential major donors and grant-makers. It will help you to recruit board members and community collaborators. If you will need a bridge loan or line of credit, this document will prepare you to meet with a financial institution.

Starting and sustaining a nonprofit is in many ways much more difficult than starting a new business. Dedicate yourself to the business planning stage first, and you’ll find your journey will be a bit lighter.

Start Your NonProfit for Sustainability: Part Two Fundraising

Tuesday, June 26th, 2012

Finally, you are now in business and we can start fundraising for your organization in earnest.  Nonprofits, like most start up businesses, begin with the founder personally (and perhaps your board members) funding the organization until it can be funded with outside sources.  If you have to fund the organization yourself at the beginning, be sure to keep meticulous records of what you have put into the organization and be clear about its intent. For example, whether your funding is a gift or a loan to the organization. Here are some creative, fun and traditional ways to fund a nonprofit organization:

  1. Sell Something.  Collect and sell items on Ebay or Craigslist to raise your start-up capital.
  2. Borrow Against Life Insurance Policies.  If you have a life insurance policy, check to see if it has cash value. Most policies start accumulating cash value after a certain period of time.  When you borrow against your life insurance policy, your policy stays intact as long as you continue paying the premiums when due.  If you die while there’s an outstanding loan against your policy then the face amount is reduced by the loan amount. The nice thing about borrowing against your life insurance policy is that there’s no credit check, or income verification like most other loans. All you have to do is call you insurance company and let them know you want to borrow the cash value.
  3. Borrow from Family and Friends.  Your friends and family are a good source of capital fundraising. This might be one of the most cost effective ways to fundraise for your business—that’s if your friends or family members are not asking for interest on the loan.  You can also protect the spirit of the transaction by putting your agreement in writing and making small payments as soon as you can.
  4. Grants.  Depending on what your business is there are a number of small and large corporations that give away money in the form of grants.  Grants are usually competitive in nature, but once you receive the money repayment is not required or expected.  Grant amounts vary and some may have conditions. Once your grant period is complete, you should mail the grantor a final report clearly indicating what was accomplished with the grant money. This should be done whether or not it is required.
  5. Fundraising Registry Sites.  There are many fundraising sites that are geared toward nonprofits.  Most fundraising sites have fees or a percentage that you are required to pay based on the amount of money you raise.  The fees the site owner may charge could include a monthly user fee, or credit card fee and other nominal charges.  You should check before you start using the site.  Once you’ve set up your fundraising idea on the registry then it is up to your efforts to send your site link to everyone you know and request a donation.  Let them know how their contribution will help you and this will motivate donors. This is a fun way to raise money through your own creativity and watch your money grow on your site. Don’t forget to say “thank you”. Some fundraising registry sites to research are Network for Good and Razoo.
  6. Place a Donate Button on Website.  More and more nonprofits have a “donate” button on their websites.  If your ultimate goal is to fundraise then you need to consider a “donate” button on every page of your website. The internet technology today makes it easier for individuals to donate anytime without leaving the comfort of their home.

If you find a couple or even just one of the above idea’s to make sense and feel it will give your new organization enough cushion to seed your program – I would recommend that you also give some thought to investing in a part-time fundraising professional. Oftentimes the first investment in a fundraising professional is a consultant; which is smart as it most likely will bring in more money sooner rather than later. It is important to note that it may be more beneficial to your organization in the long run to have them on staff. Whichever direction you take, give thoughtful consideration to the level of importance those donor relationships are to offer your organization sustainability over the long-haul.

SMALL NON PROFIT? 10 Steps to Build your Fundraising Infrastructure

Sunday, June 12th, 2011

SMALL NON PROFIT? 10 Steps to Build your Fundraising Infrastructure

1.         CONTACT MANAGMENT (FUNDRAISING) SOFTWARE

You do not need a state of the art fundraising software program – but you need something. Inexpensive programs to consider are: Telosa Exceed! Basic, eTapestry, DonorPerfect Online, Sage Fundaising 50 (formerly Paradigm).

Visit my website at www.wagnerfundraising.com/resources.html to download a well done spreadsheet with pros, cons, features and cost of the most common software programs. Fundraising software allows you to keep track of all your constituents. You have the ability to generate correspondence (thank you letters, pledge reminders, e-blasts). Whatever system you use, it must allow you to track all “personal interactions” between you and your stakeholders. You need the ability to update information easily, and generate lists of constituents by affiliation (dignitaries, staff, current donors, community groups, donors giving at a certain level or frequency). As a small non profit you require an easy to use program which can produce “canned” reports; the ability to run a query is nice, but requires some skill to get it right. The software purchase must come with technical support. If there is a glitch, tech support is priceless.

Upon the purchase of your software program, proper training is essential. Perhaps more importantly, one person should be responsible for entering data. This responsibility cannot be delegated to various volunteers; there is too much room for data entry error and lack of adequate training. Without reliable data entered into the system, into the right fields, all ultimate report generation is worthless.

2.         RECONCILE DONATIONS WITH ACCOUNTING

It is rare to find a fundraising software program which integrates accounting/bookkeeping software. In fact most new non profits use Quick Books, or the Treasurer of your Board is responsible for keeping the books for ultimate IRS reporting.

Reconciling your fundraising software gifts or pledges with accounting is essential for two main reasons. First, it will let you know immediately if you are entering data incorrectly or have missed a contribution. You see, when you reconcile with a bank statement you KNOW that information is correct. Second, when you make your fundraising report to your Board you want your fundraising numbers for the month to jive with the numbers Accounting will be presenting. Otherwise, it’s an embarrassment and you will need to justify the discrepancy.

 

3.         PROCEDURES AND PROTOCOLS

Yes, you have so many other things to do, yet without two specific procedures you will be bruised from kicking yourself. Here’s why.

First, you should have a fundraising procedure on how donations are handled; and I am talking about from the moment the postman brings in your mail to the point of the check being deposited. It’s an easy procedure to put into place. The person who gets the mail should sort what looks like a donation and the procedure will explicitly state they are not authorized to open that envelope. This person will take the unopened donation envelopes to accounting/bookkeeping. Once in the hands of the bookkeeper, the gift is opened, check is endorsed and two copies made. One copy for the person managing the fundraising software for gift entry and the second copy for accounting files. This way you only have ONE person handling the “cash”. If you are audited, they will hold you in high regard for having this procedure in place.

Second, you need a procedure for entering information into the fundraising database, including frequency of sending thank you letters. This procedure will include 1) who receives copies of checks,  2) who is responsible for gift entry, 3) how to enter specific information into the database (snag this information from your training manual and, 4) to reconcile your data with accounting each month.

What I have described above is a very simplified version of your procedures; it should  be much more detailed. Each step by step move must be documented should the person who is responsible leave. It would be a luxury to hire a professional fundraising consultant to assess your systems and write these protocols and it would be money well spent.

4.         INKIND GIFT POLICY

This policy will be a part of your data entry procedures manual, as many organizations will undoubtedly receive gifts made inkind. You need to define what is and what isn’t considered an “inkind” gift. An inkind gift that is needed by your organization is considered budget relief, because the item(s) was budgeted; meaning you would have had to purchase it had it not been donated. When you receive an inkind gift that is budget relief, you must have inkind listed as one of the methods of how the gift came to you. In your fundraising database it will be part of the menu that allows you to select if it was given by Visa, Cash, Stock, Inkind. You select inkind, because the gift is treated like cash, so the donor must provide you with the market value of that inkind gift.

If you receive an inkind gift that is not budgeted, that’s great if you can use it; however it is tracked differently, it would be tracked in the comments or other similar section of the donors profile in your database – but it does not appear in that donor profile as a gift. Having said this, you need to think about how to track these as they should receive acknowledgment as well, even though it is not budget relief.

5.         DON’T CHASE THE MONEY

Many organizations are made aware of grants available that seem to fit the mission. If a prospective grant is not clearly related to your mission, but would be nice to have; give it some thought and read the fine print. Oftentimes there are reporting requirements attached to the grant and it generates more work for an already overworked staff.

Here is an example: An organization was made aware of a grant for Canopy’s that provide shade for playgrounds. For a school it sounds great, right? However the grant required the school to create a curriculum on “protecting children from the sun or the potential for skin cancer”. They also required one person to manage the program. This curriculum was not part of the school’s mission or current curriculum, nor did they have staff available to manage the program. If the school were to have accepted the grant it would be called, in my words, “chasing the money”.

Make sure that each grant written and received fits your mission and supports your established programs. You want all money received to be directly attached to what your budget requires in order to hit your year-end goal.

6. WEBSITE

When creating your website – seeing is believing. You should consider:

a. Your Mission is Clear: It should take only a couple of seconds for one to arrive at your site and know your mission.  People will expect to find the answers to their questions on  your website.

b. Be Donor-Friendly: Make it simple for people to donate. Your homepage should include one or more direct links to your donation page and they must be prominent.

c. Be Volunteer-Friendly: Oftentimes volunteers are as valuable as contributors. Create a link   or tab called Volunteers or How I Can Help. This will list volunteer opportunities and  information on how to begin the volunteer process. Always include the name, phone and email   of the person to contact directly if they want to help in anyway.

d. Be Press-Friendly: Include a link on your homepage for Media. This link takes them directly to your press kit: Include press-ready photos, pre-approved quotes by your organization’s representatives, a synopsis of your goals and how you’re accomplishing them, and a calendar of your activities. Also, provide the name, email, and direct phone number of anyone approved to represent your company. Finally, include any press coverage you’ve received on this page.

e. Add a Blog (only if you have time to keep up with it): A blog will increase your search engine ranking as well as keep visitors up to date on the goings on of your organization.  Link your blog to others of similar topic and interest; again, it will increase search visibility.

f. Include a Resources Section:  Link your site to others of similar value. It’s not a  competition,  it’s giving your visitors a great experience and sets you up as the place to go for information on  your specific mission.

g. Keep Your Content the Focus: Your website should raise money, encourage volunteers, and educate the public. To be successful,  make sure the content surrounding your mission is the most prominent aspect of your site’s design. Your site design should complement your content.

h. Update and Supplement your Website on a Regular Basis: Your site should be updated at least monthly. Otherwise it reflects poorly on your organization if content is outdated.

7. WALKING MANAGMENT

Take a half hour out of each day to walk through your offices. Ask questions, show interest, be affable (not threatening). Your daily self-tour shouldn’t be viewed as “checking up” on your employees, rather   the opposite -checking in to make sure they have all they need to do their job. Walking Management is better than an “open door” policy – you are going to your team and it creates an environment of trust and success.

8. BRAND AND IDENTITY

A non profit requires a brand and identity just as any for profit business. You define your unique look and feel which clearly reflects your mission. Once your brand is   created, stay true to it. Don’t cut corners here. Every  piece of literature online or off line looks the same –  you want to bring your organization to the point where one only has to look at the colors, design and know it’s you – the organization name doesn’t need to exist.

A larger piece of this is ensuring that all working within the organization understands what it is that you do – they know the mission. If an employee is asked by anyone, “what is it that your organization does?”, all will have the same answer. At all staff meetings, I would commonly ask everyone to write down the mission statement, and those who got it correctly received some type of prize.

9. FUNDRAISING AND MARKETING STRATEGIC PLAN

Many organizations create a 5 year strategic plan. Equally important is a yearly fundraising and   marketing strategic plan which includes a detailed, week by week calendar, along with who is responsible. This plan is review every two weeks and I consider it to be a “living, breathing” document; which means it will change and should. This plan should be in direct compliance with the organizations 5 year strategic plan and fundraising goals. For an example of a Fundraising and Marketing  Strategic Plan go to the Resources tab at www.wagnerfundraising.com/resources.html, and you will be   able to order a template.

10. DIVERSE BOARD OF DIRECTORS

Creating a functional and strong board is very simple. First, craft a job description which indicates expectations, including the amount they must donate each year. Second, host a board    training, and have each board member shadow a staff member for an hour; they will really know “their” organization after this experience. Last, have the following experts represented on your board: attorney, accountant, professional volunteer (one with resources and time), a person(s) who are   experts with regard to your mission, estate/financial planner, Employee(s) who represent your corporate donors.