This week we continue our tips on starting your own nonprofit
You have an idea that can help others. Where do you start? First, figure out how to structure your idea. Do you want to start a nonprofit? Or a charity? Or a for-profit enterprise?
Path #3 – incorporate as nonprofit
Instead of getting angel investors, you can apply for grants from governments and foundations.
Path #4 – incorporate as nonprofit and get CRA designation
If the people you serve cannot pay you, you will need to generate revenue by collecting donations. You may be attracted to the large pool of funds available, but you will face a larger pool of competitors.
In the for-profit sector, you compete on product features. Because the purchaser uses the product (or closely connected to the user), their purchase decision is based on product features. Your competition is limited to other entities that supply your product or service.
In the nonprofit sector, you compete based on emotion. The donor (purchaser) is completely disconnected from the client (product user). They don’t know each other, don’t understand each other, sometimes they live in different countries. You don’t compete based on product features. Instead you compete on how a donation to you fulfills the emotional needs of the donor. A donor will want reassurance that you will use their money wisely – that you are able to show the impact you have. But your competition is now the 85,000 registered charities going after the same pool of donors.
Path #5 – find a charity to hire you as staff on a special project
You can avoid administration work and focus on your mission. Any donor can get a tax receipt. It is great for the nonprofit sector because you are strengthening an existing charity – there are already so many nonprofits fragmenting the sector, it would be healthier if there could be more consolidation.
But there are concerns for the charity you approach:
- Does it fit their mission? Just because you think it fits, doesn’t mean they think its fits.
- Do they have capacity? Every charity has a wish list of things they would love to do. They may have different priorities.
- Your time and ability? At your stage in life, are you going to stick around and finish the job?
- Control? You have to report to the charity.
For example, Jack.org, now a separate charity but it started as a project under KidsHelpPhone.
Your next step is to find a lawyer to help you decide on the best structure for you.
If you have any questions about non-profit start ups or want to learn more about how MAS can help, click here .