McLennan County Nonprofit Resources

Before You Start A Nonprofit

So, you’ve identified a need in the community and are looking for a way to serve? Great news! Our community needs visionaries like you now more than ever.

Before you fill out that nonprofit paperwork though, be sure to conduct an assessment of your target community’s needs as well as the resources already available to help. Often, the best way to serve is to collaborate with an established organization that is already working in your focus area, as it provides an opportunity to improve local services while limiting competition for funding and other resources. You should also know how your idea and future work fits with other service providers, because no nonprofit works best in isolation.

Check out this great blog post from BoardSource on why starting a nonprofit is not always the answer.

“Do you want to make a difference? Great. Please do. But don’t start a nonprofit.

Are you concerned about what is currently happening to vulnerable populations, the environment, and media freedom? I am, too.”

Click here to read more.

Here are a few simple steps anyone looking to start a nonprofit can begin with:

Step 1: Conduct a market survey

Vital to any entrepreneurial effort (social or otherwise), a good market survey allows you to determine potential start up and engagement risks.

Considerations include:
• Whether you will be providing a service that is unique to the community (or a segment of it).
• If not, who else does what you plan to do? How many organizations are doing it? Where are they doing it? And is there room for collaboration/partnership?
• If your service is not unique but you still plan to proceed, what is different about the way you will be providing services that will allow you to attract new clients? What are your anticipated outputs and outcomes and how will you track and demonstrate impact?
• What skill sets/program elements are you planning to incorporate that other current service providers do not have?

Step 2: Conduct a funding analysis

The fund development process has become increasingly competitive, strategic and focused and those looking for institutional support need to understand what donors are interested in and how nonprofits can best partner with funders to help them reach their goals. Solid nonprofits understand that being financially healthy means being diverse. So, a strong nonprofit will have a mix of planned, corporate and individual gifts, private and government grants, earned income and special event income to ensure its livelihood.

Questions to ask that pertain to financial health include:
• What is my business plan and model for this work?
• What’s my fundraising and/or financing strategy?
• How am I going to cover the cost of salary and expenses during start-up and beyond?
• Can I reasonably expect to receive a grant award to support my work in the future?

Step 3: Identify a diverse and influential group to serve as your board of directors

A nonprofit’s success often begins and ends with a board’s ability to understand its roles and responsibilities and carry them out well. It is important to remember that among other things, each and every member of your board will need to serve as your primary fundraising and public relations agent.

Finally, it is important for you to understand that a nonprofit 501(c)(3) designation is a tax status and you still need to have a certain amount of business knowledge/skills to effectively manage the organization’s activities.

Here are a few things to consider:
• What are my staffing and volunteer needs? What policies do I need to put in place to manage what this nonprofit does?
• How will we manage our finances? What financial structures and practices should be established and when? Who will handle tax filings and salary and benefit payments?
• What internal controls processes and procedures do we need to put in place to ensure we operate with financial integrity and legally?
• What are my capital, office and administrative needs and how will those resources be acquired?