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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Learn the ins-and-outs of managing, funding, and handling the accounting for a nonprofit Nonprofits are not like other businesses. They're special. It doesn't matter if you're launching a career as part of a multi-million dollar organization or a volunteer running your local little league, you'll need special know-how to navigate the accounting practices and funding needs of a not-for-profit. Nonprofit Management All-in-One For Dummies is your guide for know-how on making a nonprofit organization operate properly. This beginner-friendly reference helps replace your shelf of nonprofit how-to books with a single reference to answer your questions on how to manage a mission-focused organization, build budgets, and raise funds while staying within the confines of the laws governing nonprofits. You'll also find advice on valuable skills like marketing that benefit your organization. * Learn how to run a nonprofit organization * Find funding for your organization and stay tax compliant * Get a grasp on nonprofit accounting principles * Market your organization and fulfill your mission This 5-books-in-1 Dummies guide is excellent for volunteers who step up to run a nonprofit that's near and dear to their hearts or would-be professional non-profit managers who need advice on how to manage and grow an organization.
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Nonprofit Management All-in-One For Dummies®
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Library of Congress Control Number: 2023933818
ISBN 978-1-394-17243-6 (pbk); ISBN 978-1-394-17244-3 (ebk); ISBN 978-1-394-17245-0 (ebk)
Nonprofit Management All-in-One For Dummies®
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Table of Contents
Cover
Title Page
Copyright
Introduction
About This Book
Foolish Assumptions
Icons Used in This Book
Beyond the Book
Where to Go from Here
Book 1: Bringing Your A-Game to Nonprofit Management
Chapter 1: Journeying into the World of Nonprofit Organizations
What Is a Nonprofit Organization?
Embracing and Sharing Your Inspiration
Honing Your Mission Statement
Imagining Your Future with a Vision Statement
Finding the Resources to Do the Job
Chapter 2: From the Top: Examining the Nonprofit Management Structure
Managing a Nonprofit: A Bird’s-Eye View
Appreciating the Governing Board’s Role and Responsibilities
Redefining the Nonprofit Founder's Role
Adding an Advisory Board
Expanding to Take on an Executive Director
Chapter 3: Strategic Planning: Embracing the Ongoing Process
Understanding the Importance of Planning
Making Your Organization’s Strategic Plan
Putting Plans into Action
Planning for Programs
Chapter 4: Evaluating Your Work: Are You Meeting Your Goals?
Knowing the Importance of Evaluation
Working Through the Evaluation Process
Conducting Your Evaluation
Analyzing Results and Putting Them to Work
Chapter 5: You Can Count on Me! Working with Volunteers
Knowing Why People Volunteer
Designing a Volunteer Program
Searching for Volunteers
Interviewing and Screening Volunteers
Managing Your Volunteers
Showing Appreciation for Your Volunteers
Chapter 6: Working with Paid Staff and Contractors
Determining Your Staffing Needs
Getting Your Nonprofit Ready for Paid Employees
Preparing to Hire
Making the Hire
Onboarding a New Hire
Managing Employees
Working with Independent Contractors
Book 2: Fundraising for Your Good Cause
Chapter 1: Developing Your Case Statement: Winning with Words
Stating Your Case
Making the Case Compelling
Developing a Case Statement: A Step-by-Step Guide
Giving Life to an Outdated Case Statement
Sharing Your Case Statement
Chapter 2: Creating a Fundraising Plan
Drafting the Perfect Fundraising Plan
Avoiding Plan-Busters like the Plague
Budgeting Your Fundraising Efforts
Using Affordable and Functional Fundraising Software
Chapter 3: Mining for Donors
Finding Your Stakeholders
Recognizing Your Bread and Butter: Individual Donors
Doing Business with Corporate Donors
Finding Foundations That Care
Asking Your Board All the Right Questions
Checking Out Potential Donors
Researching on the Internet
Keeping Track of Your Organization’s Donors and Their Contributions
Maintaining Confidence: The Issues and Ethics of Handling Personal Data
Chapter 4: Meeting Your Donor with Grace and Grit
Evaluating the Importance of a Visit
Preparing to Meet Potential Donors
Examining the Giving Relationship between the Donor and the Organization
Considering Your Donor’s Context
Cultivating the Initial Donor-Organization Relationship
Chapter 5: Cultivating Major Givers
Seeking a Major Gift Today for Tomorrow
Finding the Holy Grail of Fundraising: The Major Gift
Recognizing Major Donors for Their Contributions
Chapter 6: Making the Major Gift Ask
Pushing through the Fear by Focusing on the Greater Goal
Choosing the Right People to Make the Ask
Developing the Mechanics of Asking
Moving Beyond “No”
Rating Your Yes-Ability
Following Up after “the Ask”
Book 3: Applying for and Winning Grants
Chapter 1: Grant-Writing Basics for Beginners
Orienting Yourself on Grant-Seeking Basics
Recognizing the Purpose of a Funding Development Plan
Sleuthing Out Funding Sources
Getting Acquainted with Grant Submission Requirements
Making a List and Checking It Twice
Tracking Your Submission Status
Jumping for Joy or Starting All Over?
Chapter 2: Preparing for Successful Grant Seeking
Grant-Seeking Readiness Priorities for Nonprofits
Creating a Grant-Funding Plan
Increasing Your Chances for Grant-Seeking Success
Waiting Patiently for Next Steps
Chapter 3: Venturing into Public-Sector Grants
Looking for Local Funding First
Analyzing the Types of Federal Funding Available
Chapter 4: Navigating the Federal Grant Submission Portals
Navigating the Grants.gov Website
Understanding Grant Applicant Eligibility
Registering as an Organization on Grants.gov
Viewing Tutorials in the Grants.gov Workspace
Accessing Application Package Instructions
Reviewing Some of the Mandatory Government Grant Application Forms
Chapter 5: Researching Potential Private-Sector Funders
Finding Foundations and Corporations with Grant-Making Programs
Scouring GuideStar for Foundation Funders
Using Candid’s Online Grant-Research Database
Scoring a Match to the Funder's Grant-Making Criteria
Knowing Whom to Contact First
Chapter 6: Finding Federal Grant Opportunities That Fit Your Needs
Dissecting the Notice of Funding Availability (Over and Over Again)
Scrutinizing the Review Criteria
Chapter 7: Winning with Peer Review Scoring Factors
Complying with the Technical Review Requirements
Understanding the Peer Review Process
Writing to the Peer Review Requirements
Validating Needs and Implementation Strategies
Using Third-Party Evaluators
Chapter 8: Preparing Preliminary Documents
Complying with Mandatory Application Package Requirements
Drafting a Cover Letter (If Requested)
Shuffling Through Funder Information Requests
Knowing What the Feds Want in a Form (SF-424)
Saving the Abstract or Executive Summary Narrative for Last
Crafting the Table of Contents When Required
Chapter 9: Sharing Your Organizational History and Developing the Narrative
Adhering to the Funder’s Guidelines
Creating Organizational Capabilities as a Grant Applicant
Sorting Out Relevant Programs and Activities
Presenting and Validating Your Target Population for Services
Validating Your Statement of Need with a Compelling Narrative
Chapter 10: Incorporating Best Practices to Build the Program Design Narrative
Reviewing the Components of a Good Program Design Section
Starting with a Purpose Statement
Plotting Goals and SMART Objectives
Providing a Comprehensive Implementation Plan
Confirming Narrative Content Connectivity in Your Logic Model
Creating the Evaluation Plan for Your Program Design
Chapter 11: Preparing Project Management Plans and Sustainability Narratives
Presenting the Project Management Team’s Credentials
Articulating Qualifications
Connecting Accountability and Responsibility to the Implementation Process
Demonstrating Federal Compliance in the Personnel Selection
Writing the Sustainability Statement
Chapter 12: Creating a Budget That Includes All the Funding You Need
Understanding Budget Section Basics
Plotting Ethical Expenses
Projecting Multiyear Expenses for Grant-Funded Programs
Building Credibility When You’re a New Nonprofit
Chapter 13: Checking Off the Mandatory Requirements for Compliance
Triple-Checking All Required Components
Assembling the Proper Attachments in the Right Order
Meeting Submission Requirements
Chapter 14: Waiting on the Grant Maker’s Decision
Keeping Accessible Copies of Electronic Files
Staying Connected and Providing Updates to Your Stakeholders
Tracking the Status of Your Submitted Application
Handling Funding Status Communications from Grant Makers
Handling Multiple Grant Awards
Failing to Get a Grant Award
Book 4: Being Smart about Nonprofit Bookkeeping and Accounting
Chapter 1: Starting with Basic Bookkeeping and Accounting
Understanding Accounting and Bookkeeping
Choosing Your Accounting Method
Running Numbers on Your Assets
Keeping an Eye on Your Assets
Chapter 2: Setting Up the Chart of Accounts for Nonprofits
Identifying and Naming Your Nonprofit’s Main Types of Accounts
Coding the Charges: Assigning Numbers to the Accounts
Chapter 3: Recording Transactions and Journal Entries
Choosing Your Basis of Accounting
Navigating the Accounting Process
Recording Journal Entries
Posting to the General Ledger
Reaching the Trial Balance
Chapter 4: Balancing the Checkbook: Donations and Expenses
Getting the Lowdown on Your Checkbook Register
Adding and Tracking Nonprofit Donations
Subtracting Your Expenses
Tie It Together: Balancing the Checkbook
Smoothing Out and Avoiding Errors
Chapter 5: Balancing Cash Flow: Creating an Operating Budget
Understanding the Importance of Having a Budget in the Nonprofit World
Getting Off to a Good Start: Preparing to Create an Operating Budget
Coming Up with an Operating Budget
Chapter 6: Staying in Nonprofit Compliance
Understanding Why Being Compliant Is Important for Your Nonprofit
Staying in Compliance: The How-To
Following Accounting Standards
Chapter 7: Accounting for Payroll and Payroll Taxes
Setting Up Payroll Accounts for Nonprofit Employees
Deducting the Right Amount of Taxes
Calculating Specific FICA Payroll Taxes and Deductions
Paying Quarterly Payroll Taxes with Form 941 and Electronic Funds Transfer
Completing End-of-Year Forms
Chapter 8: Doing the Accounting for Tax Form 990
Choosing the Right Form: Which One Do You Need?
Knowing What Happens If You Don’t File Form 990
Understanding the Minimal Requirements: Form 990-N (e-Postcard)
Filling Out Form 990-EZ
Filling Out Form 990
Completing Form 990-T (Reporting Unrelated Business Income)
Chapter 9: Analyzing the Statement of Activities
Understanding the True Meaning of the Statement of Activities
Evaluating the Data
Chapter 10: Reporting Financial Condition on a Statement of Financial Position
Grasping What the Statement Says about Your Nonprofit
Creating and Reading a Statement of Financial Position
Evaluating the Numbers
Chapter 11: Eyeing the Statement of Cash Flows
What the Statement of Cash Flows Can Tell You about Your Nonprofit
Understanding How to Create and Use a Statement of Cash Flows
Analyzing Cash Flow Indicators
Chapter 12: Organizing the Statement of Functional Expense
Classifying Functional Expense
Using the Statement of Functional Expense to Calculate Ratios
Chapter 13: Closing the Nonprofit Books
Understanding the Need to Close Your Nonprofit’s Books
Adjusting, Closing, and Reversing Entries
Completing the Notes to the Financial Statements
Putting Last Year Behind You and Looking Forward
Book 5: Speaking on Behalf of Your Nonprofit
Chapter 1: Getting Started with Public Speaking
Dealing with Issues That Stand in Your Way
Improving Your Body Language
Adjusting Your Pace: Perfecting the Pause
Supporting Your Breath
Boosting Confidence through Preparation and Training
Honing Your Delivery
Dealing with the Audience (and Hecklers)
Chapter 2: Crafting a Captivating Speech
Planning and Preparing
What’s Your Point?
Hooking Your Audience
Supporting Your Point: The PIE Method
Writing in Your Own Voice
Show, Don’t Tell: Painting a Picture in the Audience’s Mind
Crafting Your Narrative: Story Time
Chapter 3: Using Visual Aids
Augmenting Your Speech with Slides
A Picture’s Worth a Thousand Words
Mastering Essential Slide Show Skills
The Do’s and Don’ts of Audio
Using Video … If You Must
Chapter 4: Practicing Your Speech
Practicing Out Loud
Recording and Critiquing Yourself
Mark My Words: Adjusting Your Script for Emphasis
Slowing Down: Speed Kills
Chapter 5: Overcoming Performance Anxiety
Staying Loose: Tension Can Ruin a Speech
Chin Up and Don’t Slouch
Using Your Body to Battle the Fight, Flight, or Freeze Response
Cutting Yourself Some Slack
Shifting Your Focus to the Audience
Book 6: Spreading the Word through Social Media Marketing
Chapter 1: Launching SMM Campaigns
Defining Social Media Marketing
Discovering the Types of SMM Campaigns
Recognizing What Makes a Good SMM Campaign
Creating Your SMM Roadmap
Participating: Four Rules of the Game
Keeping Your Supporters Engaged
Monitoring Conversations
Responding to Criticism
Chapter 2: Developing Your SMM Voice
Figuring Out Why You Need an SMM Voice
Defining SMM Voice Characteristics
Distinguishing between SMM Voices and Brand Voices
Outlining SMM Voice Objectives
Choosing the Owner of Your Organization’s SMM Voice
Crowdsourcing SMM Voices with Guidelines
Chapter 3: Finding the Right Platforms
Choosing Social Media Platforms
Evaluating Your Resources
Assessing What Each Social Network Offers You
Chapter 4: Practicing SMM on Your Website
Focusing on the SMM-Integrated Website
Making the Campaign and the Website Work Together
Rethinking Your Website
Tips and Tricks for Website SMM
Index
About the Authors
Connect with Dummies
End User License Agreement
List of Tables
Book 1 Chapter 1
TABLE 1-1 Visioning the Future while Looking at the Present
Book 1 Chapter 3
TABLE 3-1 Organizational Goal to Outcome
TABLE 3-2 Sample Work Plan: Create an Appeal Letter
Book 1 Chapter 5
TABLE 5-1 Sample Volunteer Task List
Book 2 Chapter 2
TABLE 2-1 Method Comparison Worksheet
TABLE 2-2 Markets and More
Book 2 Chapter 3
TABLE 3-1 Data on Level-Four Donors
Book 2 Chapter 4
TABLE 4-1 Reasons for Giving … and Not Giving
Book 2 Chapter 5
TABLE 5-1 An Example of a Giving Club
Book 3 Chapter 14
TABLE 14-1 Office of Management and Budget Circulars
Book 4 Chapter 3
TABLE 3-1 Understanding Normal Balances of Accounts
Book 4 Chapter 7
TABLE 7-1 Due Dates for Quarterly Filing of Form 941
Book 4 Chapter 8
TABLE 8-1 Tax Thresholds for Form 990
Book 4 Chapter 9
TABLE 9-1 Comparing Prior Year Data to Current Year
Book 6 Chapter 2
TABLE 2-1 Brand versus SMM Voice
List of Illustrations
Book 1 Chapter 1
FIGURE 1-1: A strong mission statement is an organization’s heartbeat.
Book 1 Chapter 2
FIGURE 2-1: Organizational chart of a typical larger nonprofit agency.
Book 1 Chapter 4
FIGURE 4-1: Sample logic model.
Book 2 Chapter 2
FIGURE 2-1: Use a giving pyramid to plan how many gifts in different sizes you ...
Book 3 Chapter 2
FIGURE 2-1: An example of a funding plan.
FIGURE 2-2: Make a chart to track multiple potential funders for one program.
Book 3 Chapter 3
FIGURE 3-1: Figuring out differences among types of federal grants.
FIGURE 3-2: Search for grants.
Book 3 Chapter 4
FIGURE 4-1: Get started on your workspace application.
Book 3 Chapter 6
FIGURE 6-1: A sample NOFA.
Book 3 Chapter 8
FIGURE 8-1: A fully developed cover letter leaves the funder feeling connected ...
FIGURE 8-2: The abstract or executive summary draws critical details from diffe...
FIGURE 8-3: A sample table of contents for a federal grant application.
Book 3 Chapter 10
FIGURE 10-1: An example of a timeline of activities.
FIGURE 10-2: The logic model depicts your organization’s planned work and inten...
Book 3 Chapter 11
FIGURE 11-1: A sample management plan table.
Book 3 Chapter 12
FIGURE 12-1: The personnel section of a budget summary.
FIGURE 12-2: The travel section of a budget summary.
FIGURE 12-3: The equipment section of a budget summary.
FIGURE 12-4: The supplies section of a budget summary.
FIGURE 12-5: The contractual line of a budget summary.
FIGURE 12-6: The City of Oz Project’s entire federal grant application budget s...
Book 3 Chapter 13
FIGURE 13-1: A table neatly lists other funding sources, amounts, dates sent, a...
Book 3 Chapter 14
FIGURE 14-1: The Track My Application Package on Grants.gov.
Book 4 Chapter 1
FIGURE 1-1: A comparison of the straight-line and double-declining depreciation...
Book 4 Chapter 2
FIGURE 2-1: A typical chart of accounts.
Book 4 Chapter 3
FIGURE 3-1: The accounting process.
FIGURE 3-2: A sample journal entry.
FIGURE 3-3: A sample general ledger page.
Book 4 Chapter 4
FIGURE 4-1: A nonprofit’s checkbook register.
Book 4 Chapter 5
FIGURE 5-1: A sample operating budget.
Book 4 Chapter 9
FIGURE 9-1: A sample statement of activities.
Book 4 Chapter 10
FIGURE 10-1: A classified statement of financial position.
FIGURE 10-2: Asset section of an unclassified statement of financial position.
Book 4 Chapter 11
FIGURE 11-1: An example of a statement of cash flows using the indirect method.
FIGURE 11-2: An example of a statement of cash flows using the direct method.
Book 4 Chapter 12
FIGURE 12-1: Sample statement of functional expense.
FIGURE 12-2: A simple timesheet helps you track employees’ hours.
Book 4 Chapter 13
FIGURE 13-1: Working Trial Balance worksheet.
FIGURE 13-2: A sample notes of disclosure.
Guide
Cover
Title Page
Copyright
Table of Contents
Begin Reading
Index
About the Authors
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Introduction
It may sound corny, but we feel a certain sense of mission when it comes to nonprofits. We’ve started them, directed them, raised funds for them, consulted for them, volunteered for them, given money to them, and written about them. We’ve worked with nonprofits in one way or another for more years than we care to remember.
Why have we continued to work for nonprofit organizations? Yes, we care about others and want to see the world become a better place — our values are important to us. But, to be honest, that’s not the only reason we’ve worked for nonprofit organizations for so many years. We believe the reason is that we can’t think of anything more interesting or more challenging to do.
Starting a new program is exciting. Securing your first grant is thrilling. Working with the multifaceted personalities that come together on a board of directors is fascinating. Learning a new skill because no one else is there to do it (even bookkeeping!) is fun. Seeing the faces of satisfied clients, walking along a restored lakeshore, hearing the applause of audiences — all are gratifying.
That’s why we do it.
About This Book
This book is a generous conglomeration of material from a number of For Dummies books, carefully selected to cover the gamut of nonprofit management — everything you need to know to start and manage a charitable organization, from applying for your tax exemption to raising money to pay for your programs to handling the accounting to feeling comfortable speaking publicly or posting on social media about the cause.
To make the content more accessible, we’ve divided it into six minibooks:
Book 1:
Bringing Your A-Game to Nonprofit Management
Book 2:
Fundraising for Your Good Cause
Book 3:
Applying for and Winning Grants
Book 4:
Being Smart about Nonprofit Bookkeeping and Accounting
Book 5:
Speaking on Behalf of Your Nonprofit
Book 6:
Spreading the Word through Social Media Marketing
We try to be honest about the difficulties you’ll sometimes face. You probably won’t be able to achieve everything you set out to accomplish, and you’ll always wish you had more resources to do more things. Still, we can’t imagine doing anything else. Maybe you’ll feel the same way after you jump into the nonprofit world.
Note: When we refer to nonprofit organizations, unless we say otherwise, we’re talking about organizations that have been recognized as 501(c)(3) nonprofits and are considered public charities by the IRS.
As you’re reading, you may note that some web addresses break across two lines of text. If you’re reading this book in print and want to visit one of these web pages, simply key in the web address exactly as it’s noted in the text, pretending the line break doesn’t exist. If you’re reading this as an e-book, you’ve got it easy — just click (or tap) the web address to be taken directly to the web page.
Foolish Assumptions
When writing this book, we made some assumptions about who may be interested in reading it. Here are some of the readers we imagined:
You have an idea that will help solve a problem in your community, and you believe that starting a nonprofit organization is the best way to put your idea into action.
You serve on a board of directors and wonder what you’re supposed to be doing.
You may be anyone from a full-time staff member to a volunteer charged with fundraising tasks.
You care about the mission you’re raising funds to support and want to make a positive difference.
You’re seeking research and education on grant-writing sources and approaches.
You direct or manage a midsize nonprofit and want to understand a little more about how to manage day-to-day operations and take care of your own books.
You’re interested in keeping the books of a nonprofit organization.
You may be required to speak publicly about your nonprofit.
You’re using social media sites (such as Facebook or Twitter) to promote your nonprofit.
You don’t have time to waste; you need to get to work right away with ideas and tools that can help you succeed.
If any (or all!) of these describe you, we’re confident this book will answer your questions and give you the information you’re seeking.
Icons Used in This Book
We use the following icons throughout the book to flag particularly important or helpful information.
The Remember icon emphasizes important information that you should be ready to put into practice.
You may not need this technical stuff today (and can skip over it), but — who knows? It may be invaluable tomorrow.
This icon is posted next to little hints and suggestions gleaned from our experience over the years. Put these ideas to good use to save yourself some time, energy, or money.
Warnings are just what you think they may be. We alert you to information that can help you avoid problematic situations.
Beyond the Book
In addition to the material in the print or e-book you’re reading right now, this product comes with some access-anywhere goodies on the web. Check out the free Cheat Sheet for fundraising resources for new nonprofits, e-grant tips, ways to make keeping the books a little easier, and a list of top tools for your social media marketing efforts. To get this Cheat Sheet, simply go to www.dummies.com and type Nonprofit Management All-in-One For Dummies Cheat Sheet in the Search box.
Where to Go from Here
One of many handy features about this book is that it’s modular, which means you can start reading anywhere you like! If you’re new to the nonprofit world, we suggest beginning with Book 1, where you find fundamental information to get you moving in the right direction. If you’re familiar with nonprofits already but want to better understand the responsibilities and activities associated with fundraising, grant writing, or bookkeeping and accounting, you can find the answers you need in Books 2, 3, and 4, respectively. Book 5 provides valuable information on becoming a more effective public speaker — skills that can help you no matter what level your involvement is with a nonprofit organization. If you need help to publicize and market your programs via social media, we offer some suggestions in Book 6.
Whether you’re new to the nonprofit world or a seasoned professional, we think you’ll find helpful and valuable information in this book to get you started or continue your good work.
Book 1
Bringing Your A-Game to Nonprofit Management
Contents at a Glance
Chapter 1: Journeying into the World of Nonprofit Organizations
What Is a Nonprofit Organization?
Embracing and Sharing Your Inspiration
Honing Your Mission Statement
Imagining Your Future with a Vision Statement
Finding the Resources to Do the Job
Chapter 2: From the Top: Examining the Nonprofit Management Structure
Managing a Nonprofit: A Bird’s-Eye View
Appreciating the Governing Board’s Role and Responsibilities
Redefining the Nonprofit Founder's Role
Adding an Advisory Board
Expanding to Take on an Executive Director
Chapter 3: Strategic Planning: Embracing the Ongoing Process
Understanding the Importance of Planning
Making Your Organization’s Strategic Plan
Putting Plans into Action
Planning for Programs
Chapter 4: Evaluating Your Work: Are You Meeting Your Goals?
Knowing the Importance of Evaluation
Working Through the Evaluation Process
Conducting Your Evaluation
Analyzing Results and Putting Them to Work
Chapter 5: You Can Count on Me! Working with Volunteers
Knowing Why People Volunteer
Designing a Volunteer Program
Searching for Volunteers
Interviewing and Screening Volunteers
Managing Your Volunteers
Showing Appreciation for Your Volunteers
Chapter 6: Working with Paid Staff and Contractors
Determining Your Staffing Needs
Getting Your Nonprofit Ready for Paid Employees
Preparing to Hire
Making the Hire
Onboarding a New Hire
Managing Employees
Working with Independent Contractors
Chapter 1
Journeying into the World of Nonprofit Organizations
IN THIS CHAPTER
Defining the nonprofit sector
Getting started with a nonprofit
Encouraging volunteerism
Identifying the key components of a strong mission statement
Creating an effective mission statement with the help of your board
Acquiring the resources your nonprofit needs
It’s a typical day in your hometown. Your alarm wakes you from a restful sleep and you switch on your radio to hear the latest news from your local public radio station. You hear that a research institute’s study reports that economic indicators are on the rise and that a health clinic across town is testing a new regimen for arthritis. Plato, your golden retriever/Labrador mix, adopted from the animal shelter when he was 5 months old, bounds onto your bed to let you know it’s time for breakfast and a walk. Plato is followed by Cynthia, your 4-year-old daughter, who wants to help you walk Plato before she’s dropped off at her preschool housed in the community center. You remember that you promised to bring canned goods to the food bank that’s next-door to Cynthia’s school. You haven’t even had coffee yet, but already your morning is filled with news and services provided by nonprofit organizations.
You know that your public radio station is a nonprofit because you hear its pledge drives three or four times a year and you volunteer a few hours each month for the food bank, so clearly that’s a nonprofit, too. But you may not know that the research institute is probably a nonprofit organization, just like the health clinic where the arthritis research is being tested and the animal shelter where you found Plato. Cynthia’s preschool and the community center where the preschool rents its space are likely nonprofit organizations. Whether you realize it or not, all of us — rich, poor, or somewhere in between — benefit from the work of nonprofit organizations every day.
Nonprofits find revenue from a variety of sources in order to provide services. Because most nonprofits serve a need in the community, tax-deductible donations are an important revenue source. Sometimes nonprofits charge a fee for the service they provide or the work they do. Other nonprofits may sign contracts with your city or county to provide services to residents. Usually, nonprofit organizations scrounge up their income from a combination of all these revenue sources.
The nonprofit sector isn’t a distinct place — it isn’t some plaza or district that you come upon suddenly as you weave your way through the day. It’s more like a thread of a common color that’s laced throughout the economy and people’s lives. No matter where people live or what they do, it’s not easy to reach the end of a day without being affected by the work of a nonprofit organization.
Perhaps your lifelong goal is to find a way to help others in your community, your state, your country, or the world. (If this statement is true of you, thank you, kind citizen.) You think about your options every day, but you haven’t the foggiest notion about the next steps to take to help you reach this admirable goal. You have so many topics to research and tasks to determine how to complete — and so much necessary funding to nail down to help you get started. Think of this chapter as the beginning of the journey. Here we help you understand exactly what a nonprofit organization is and how to start and manage one.
Check out File 1-1 at https://www.wiley.com/en-us/Nonprofit+Kit+For+Dummies%2C+6th+Edition-p-9781119835745#downloads-section for a list of web resources related to the topics we cover in this chapter.
What Is a Nonprofit Organization?
People hear the term nonprofit and picture a different type of business where the owner isn’t allowed, by tax law, to make a profit or draw a paycheck. But, in fact, some nonprofit organizations end their fiscal year with a profit, and that’s good because surplus cash (also referred to as reserves) keeps a nonprofit operating in the black versus the red.
Comparing for-profits to nonprofits
The main difference between a for-profit corporation and a nonprofit corporation is what happens to the profit. In a for-profit company like Amazon, Google, United Parcel Service, or your favorite fast-food chain, profits are distributed to the owners (or shareholders). But a nonprofit can’t do that. Any profit remaining after the bills are paid has to be invested into the organization, whether into its service programs, infrastructure, and so on, or stored in reserve for a rainy day. Profit can’t be distributed to individuals, such as the organization’s board of directors.
What about shareholders — do nonprofits have any shareholders to pay off? Not in terms of a monetary payoff, like a stock dividend. Rather than shareholders, nonprofit organizations have stakeholders — they’re the people who benefit from the nonprofit’s mission and services to their target population (those in need, from animals to humans). These people are often called stakeholders because by being committed to the success of the nonprofit, they have a stake in it; stakeholders include board members, volunteers, community partners, and the people whom the nonprofit serves directly and indirectly.
Introducing the coveted 501(c)(3) status for nonprofits
When we use the term nonprofit organization in this book, for the most part we’re talking about an organization that has been incorporated (or organized formally) under the laws of its state and that the Internal Revenue Service (IRS) has classified as a 501(c)(3) and determined to be a public charity. If the term 501(c)(3) is new to you, add it to your vocabulary with pride. In no time, “five-oh-one-see-three” will roll off your tongue as if you’re a nonprofit expert.
Private foundations also have the 501(c)(3) classification, but they aren’t public charities. They operate under different regulations, and we don’t cover them in this book.
Other kinds of nonprofit organizations do exist; they’re formed to benefit their members, to influence legislation, or to fulfill other purposes. They receive exemption from federal income taxes and sometimes relief from property taxes at the local level. (These types of organizations aren’t discussed in this book.)
Nonprofit organizations classified as 501(c)(3) receive extra privileges under the law. They are, with minor exceptions, the only group of tax-exempt organizations that can receive contributions that are tax-deductible for their donors.
The Internal Revenue Code describes the allowable purposes of 501(c)(3) nonprofit organizations, which include serving religious, educational, charitable, scientific, and literary ends.
Check out File 1-2 at https://www.wiley.com/en-us/Nonprofit+Kit+For+Dummies%2C+6th+Edition-p-9781119835745#downloads-section for a more detailed list of the activities that 501(c)(3) nonprofits take on.
A SECTOR BY ANY OTHER NAME
Not everyone thinks that nonprofit sector is the best name. That’s because of the array of organizations with different types of nonprofit status. Some of these organizations are formed to benefit their members — such as fraternities and labor unions — and don’t share a broad public-serving intent. Another reason nonprofit sector may not be the best choice of terms is its negative connotation. After all, what’s worse than not making a profit? But, as we point out earlier, and we remind you again in later chapters, not making a profit isn’t the determining factor. Here are some alternative terms you may hear:
Voluntary sector: This term emphasizes the presence of volunteer board members and the significance of voluntary contributions and services to the work of 501(c)(3) organizations. In this definition, the organizations alone don’t represent the meaning of nonprofit; the definition includes the vast web of supporters who participate as volunteers and donors.Independent sector: This term emphasizes the public-serving mission of these organizations and their volunteers and their independence from government. (Independent Sector is also the name of a nonprofit organization that provides research, advocacy, and public programs for and about the nonprofit sector.)Charitable sector: This term emphasizes the charitable donations these organizations receive from individuals and institutions.Third sector: This term emphasizes the sector’s important role alongside government and the for-profit business economy.We use the term nonprofit sector throughout this book, but we want you to understand its limitations and be familiar with other commonly used terms.
Being a nonprofit organization doesn’t mean that an entity is exempt from paying all taxes. Nonprofit organizations pay employment taxes, employee salaries, and wages just like for-profit businesses do. In some states, but not all, nonprofits are exempt from paying sales tax and property tax, so be sure that you’re familiar with your jurisdiction’s laws and nonprofit reporting requirements. Also, check with the appropriate office in your state to see whether you’re required to apply for a state tax exemption or a license to solicit funds.
Embracing and Sharing Your Inspiration
The nonprofit sector is exciting. It encourages individuals with ideas about solving social problems or enhancing arts, culture, the environment, or education to act on those ideas. It creates a viable place within our society and economy for worthy activities that have little chance of commercial success. Nonprofit organizations combine the best of the business world with the best of government social-service programs, bringing together the creativity, zeal, and problem solving from the business side with the call to public service from the government side.
Speaking from experience, volunteerism is inspiring. Everyone has heard stories of tightly knit communities where neighbors gather to rebuild a home that was lost to a fire or a hurricane. That spirit of pitching in to help is the best part of living in a community in which people share values and ideas.
Communities have become more diverse and are populated with neighbors who come from a wide variety of places and cultures. The nonprofit sector provides institutions and opportunities where everyone can come together to work toward the common good. Volunteerism gives everyone the chance to pitch in to rebuild “the house and make it a home again.”
Applying the term voluntary sector to nonprofit organizations came about for a good reason. The U.S. Census Bureau reported that 77.3 million people volunteered at least once in 2020.
When you’re working in a nonprofit, you’ll likely be supervising volunteers — and they’ll likely supervise you. What we mean is that (with few exceptions) nonprofit boards of directors serve as unpaid volunteers. And if you’re the executive director, your supervisors are the trustees or board members of the organization. At the same time, you likely depend on volunteers to carry out some or all of the activities of the organization. You may serve as a volunteer yourself.
The word supervision sounds harsh, and we don’t mean to suggest that nonprofits are or should be run with an iron hand. The board of directors does have ultimate responsibility, however, for the finances and actions of a nonprofit organization, and, therefore, people serving in that capacity have a real duty to make sure that the organization has sufficient resources to carry out its activities and that it’s doing what it’s supposed to be doing.
We prefer to think of nonprofits as organized group activities. You need to depend on others to reach your goals, and they need to depend on you. We talk about boards of directors in Chapter 2 of this minibook and working with volunteers in Chapter 5. If your nonprofit employs paid staff or hopes to someday, Chapter 6 provides some guidance in hiring and managing employees.
Honing Your Mission Statement
The mission statement is an organization’s heartbeat (see Figure 1-1). In anatomy, your heart is the engine that fuels your entire body. For your nonprofit, the mission conveys the passion in your existence. Your mission statement impacts every stakeholder and is the reason your staff shows up at work. It’s the reason your board members work hard to support the nonprofit’s work in the community. The mission statement is the driving mantra for your volunteers who show up day after day to roll up their sleeves and carry out their job descriptions. Finally, your mission statement is the living, breathing, actionable reason that other organizations in the community want to be partners and step up, when needed, to fill gaps in services. Most importantly, a succinct and compassion-filled mission statement speaks to the hearts (and wallets) of potential donors.
A mission statement should state what the organization’s reason for existence is, how the mission will be achieved, and who will benefit from the organization’s activities. The mission should be
Memorable:
You want to carry the statement around in your mind — at all times. Stakeholders should be able to remember it with ease and help your organization live it in their daily contributions.
Focused:
You want the statement to be narrow enough to focus on the reason your organization exists but broad enough to support organizational growth and expansion.
Compelling:
You want to communicate the need your organization addresses and the importance of doing something about it. (Bonus points if it also attracts potential board members to want to join your board and be a part of ongoing inspiration and change.)
FIGURE 1-1: A strong mission statement is an organization’s heartbeat.
Easy to read:
Your statement should be written in plain language so that folks don’t need a set of footnotes to decipher it. Be sure to limit your use of adjectives, and try to avoid jargon.
After you decide on your organization’s mission statement, you can use it as your go-to reference when making decisions about your nonprofit’s activities. Add your mission statement to your Form 990 tax report to the IRS, in brochures, and in grant proposals. You may even print it on business cards for your board members and staff.
For more about drafting your mission statement, see Book 2, Chapter 1.
Keeping your mission statement short and sweet
Times have changed from when nonprofit organizations had long, drawn-out mission statements that spanned pages and read like a rambling fact sheet. Instead, we suggest keeping your mission statement short and succinct — aim for one or two memorable sentences that speak about the present and can be easily remembered by your board members, staff, volunteers, and community stakeholders. That way, everyone can remember why your nonprofit organization exists, what it does for the community, and how they can help it stay on focus daily. Save your lengthy writing for the vision statement.
Here’s a sample mission statement with the most important words bolded to amplify the nonprofit’s reason for existence, intent, and focus:
The mission of the Grant Writing Training Foundation is to educate, empower, and enlighten nonprofit staff through affordable professional development training.
What do your board members need to remember when they’re out and about in the community? “We educate, empower, and enlighten your staff through affording training programs.” This is short, sweet, and memorable — and it makes sense when the full mission statement is shortened.
Think of your mission statement as a one-minute elevator speech. You have 60 seconds to describe your organization’s purpose and activities. Doing so is easy if you have a clear, short mission statement. Even if you have a longer mission statement, develop a 50- to 75-word spiel that you can recite from memory. Say just enough to capture the attention of listeners. After that, give them a business card with the nonprofit’s contact information (on the front) and the full mission statement (on the back).
Stating your mission — the goal for services
When thinking of your organization’s reason for existing, think of your desired end result. What would you like to see happen? What would the world (or your community) be like if your organization were to succeed?
To say that you have to have a mission to change lives seems almost too basic. Maybe you’re thinking, “Of course I have a reason for forming my nonprofit. Why do you think I bought this book? I want to start a nonprofit to [fill in the blank].” We bring up this point because clarifying the reason for your nonprofit’s existence is basic to creating your mission statement. Why should your nonprofit exist?
For example, you may know that you love cats and dogs and have always wanted to work with them, but that isn’t the same thing as identifying a nonprofit organization’s reason for existing. The mission statement for a fictitious humane society might be written this way:
Friends of Animals provides temporary shelter and medical care for homeless puppies, dogs, kittens, and cats until responsible, loving homes can be found.
This sentence doesn’t describe the shelter’s facilities or how it recruits and trains volunteers, but it does clearly state which animals it serves and that it doesn’t intend to foster them as long as they live but rather to place them in good homes. And if someone visited Friends of Animals with a ferret, a pony, or a tarantula, its staff would know to refer that person to another shelter.
Knowing and understanding your organization’s purpose is essential to making important organizational decisions. It’s also a fundamental tool to use when asking for money, recruiting additional board members, hiring and motivating staff, and publicizing your activities. Also, remember that your governing board’s input in developing the mission statement is not an option. Buy-in begins with inclusion!
Specifying who will be served by the nonprofit
After you and the governing board have determined the nonprofit’s purpose, the primary beneficiaries of its services are documented and included in the mission statement. Their needs — whether they’re kittens or refugees — make your mission compelling and achievable. Defining who will benefit from your nonprofit helps to focus your organizational activities and is an essential ingredient in the mission statement.
Some organizations have a more general audience than others. If your nonprofit’s focus is preserving historic buildings, the beneficiary of this activity may be current and future residents of a city, a county, or even a state. It may also be the workers you train in the crafts needed to complete the building restorations.
Explaining how you’ll accomplish your mission
After you know your organization’s mission and its beneficiaries, the next step is deciding how to make it happen. Mission statements usually highlight a phrase describing the methods your nonprofit will use to accomplish its purpose. Think about the activities and programs you’ll provide to fulfill your mission. Take a look at these examples:
To indicate how it will accomplish its mission, the Friends of Animals’ mission statement may say, “Our mission will be accomplished by veterinary professionals and dedicated volunteers who provide temporary shelter for homeless animals.”
The mission of a human-services nonprofit organization may state, “Our mission will be accomplished by providing juvenile offender reentry recidivism counseling-and-support services for minority probationers exiting the Nassau County Juvenile Detention Center.”
When describing how your organization addresses its purpose, you don’t want to be so specific that you have to rewrite its mission statement every time you add a new program. At the same time, you want the mission statement to be concrete enough that people reading it (or hearing you recite it) can picture what your organization does.
Incorporating diversity, equity, and inclusion (DEI) into your mission statement
What does it mean to incorporate diversity, equity, and inclusion (or DEI) into your mission statement? Let’s look at who’s involved and how to add language that is direct and memorable.
It takes a village! Involve the founder and/or executive director and the governing board in articulating a brief but striking DEI statement.
Remember that adding DEI to your mission statement is core to the organization’s values and the way it will conduct business (programs and services).
Use positive words like
inclusive, celebrate, grow, freedom, experience,
and
commitment
or
committed
.
Now let’s revisit this mission statement and start adding the DEI language:
Our mission is to provide juvenile offender reentry recidivism counseling-and-support services for minority probationers exiting the Nassau County Juvenile Detention Center by ensuring that our programs are inclusive to all and committed to celebrating diversity, equity, and inclusion for youth and their families during detention and post-detention.
As you can see, not all the parts of DEI have to be included. However, the parts you do include must have an impact on your service population.
Imagining Your Future with a Vision Statement
Simply put, a vision statement is your dream — your broadly described aspiration for what your organization can do. Vision statements can describe a future desired condition as a result of the organization’s activities, but they’re more typically applied to the organization itself. Usually, the statement includes phrases like “the best” or “recognized as a leader.”
Table 1-1 provides an example of this future-visioning process.
TABLE 1-1 Visioning the Future while Looking at the Present
Who We Are Now
Where We See Ourselves in Five Years
New nonprofit
One of the best social enterprise nonprofits
Limited financial resources
Endowed
Small footprint in our neighborhood
Recognized statewide as a leader
Hoping to move chronically homeless single mothers with children into Alternative Dwelling Units (ADUs)
Pioneer in changing zoning policies to permit ADUs in multiple residential neighborhoods enabling single-parent homeless families to live in permanent safe housing
Capturing your vision statement
A vision statement can be long or short. We recommend that you assemble a group of internal stakeholders (founder, board members, staff, and volunteers). Start by spelling out the basic components in a vision statement. Here are the most important aspects a vision statement should convey (or communicate) to the public at-large, including your stakeholders:
Project what your nonprofit organization will do over the next five years.
Write in future tense.
Provide directional language.
Be descriptive.
Dare to be audacious or bold in your prediction!
Here’s an example of a vision statement from a fictitious nonprofit organization serving a Tribal nation in the Pacific Northwest region of the United States:
By 2026, the Native Cultural Food Preservation Institute will encourage Native youth to adapt and embrace the food preservation techniques of their ancestors. Over time, fishing, hunting, and foraging for berries and herbs will result in the restoration of Tribal health-and-wellness practices to reduce obesity, hunger, and debilitating health. The Institute’s Native herbal research projects and position statements on American Indian Cultural Food Preservation will be widely circulated to our sister Tribes across the nation and Canada. We will be a conduit for improving Native health. The future of Native health and wellness will be managed via robust education programs, cultural food preservation reclamation initiatives, and an embrace of the ways of our ancestors.
Notice how this vision statement reflects the cultural essence of the organization’s purpose and direction.
Asking “Where are we going?” and “Why?”
If your nonprofit organization is small and at this point has only a founder and two or three board members, you can simply convene that small group and ask, “Where are we going and why?” Here are three statements you’re likely to hear in this first round of asking the same question over and over:
“We’re going to change the world!”
“We’re going to become the largest nonprofit in our state!”
“We’re going to be debt-free!”
