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Strategic Planning for Nonprofit Organizations

Starting a nonprofit corporation can be a big step for business owners. Like a for-profit business, a nonprofit has its own set of rules and steps to follow. The main difference between these two organizations is that a nonprofit can get a tax-exempt status from the Internal Revenue Service (IRS), meaning it doesn't have to pay income tax. This special status helps a lot when fundraising and making a difference in the community.

Strategic planning can help a nonprofit achieve its goals. A plan will assist a nonprofit as it evaluates its assets and any challenges it may encounter. A strategic plan will also define the organization's mission, goals, and objectives and will guide the nonprofit as it sets out to accomplish its purpose. This article will guide entrepreneurs through the process of creating a sound financial plan and the proper business structure for their nonprofit organization.

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Define Your Mission

First, every nonprofit needs a clear mission. What is the purpose of your organization? Whether it's advocacy or outreach, having a clear goal helps guide the board of directors and other members. Your mission should be short, specific, and written in your bylaws.

Every nonprofit has a mission. A mission is the reason for the existence of the organization and is the driving force behind the decisions that the nonprofit will make. A nonprofit will define the purpose of the organization in a mission statement. A mission statement should:

  • Define the objective
  • Define the beneficiaries
  • Be narrow
  • Be concise

Gathering input from others involved in starting the nonprofit, from experts in the field, and from the people the nonprofit will benefit can help create a mission statement that others will enthusiastically support.

Create Goals and Objectives

With a mission in place, the next step is to create goals and objectives. Different types of nonprofits will have different goals and objectives. Goals are broad aims, and objectives are smaller steps to reach those goals. For instance, if your mission is to feed the hungry in your city, a goal might be to serve 10,000 meals per year. An objective might be to run a fundraising campaign over social media to help support this goal.

Do Your Homework

Researching the needs of a nonprofit is an essential part of creating a successful organization. Nonprofit organizations should make assessments about internal and external factors that may contribute to the success or failure of the organization. Nonprofit organizations should consider:

  • If other organizations offer similar services in the area
  • Whether you need a business license to operate
  • How many people will use the service
  • The skills of the staff
  • Whether training of the staff and volunteers is necessary
  • Will the organization receive adequate funding from contributors and grants
  • Whether the nonprofit has the necessary technology to operate
  • What equipment will the organization need to purchase
  • How to increase the number of volunteers

A nonprofit can answer many of these questions by collecting information from surveys or one-on-one interviews. Visit the IRS website to understand the Internal Revenue Code and how it applies to tax-exempt organizations. Also, look into tax rules at the state level.

Strategic Planning

After gathering internal and external information, it is necessary to analyze it by using a strategic planning process. A SWOT analysis is a common way to analyze information. SWOT is an acronym for strengths, weaknesses, opportunities, and threats.

  • Strengths: An organization's internal positive assets
  • Weaknesses: An organization's internal weaknesses
  • Opportunities: Positive indicators outside of the organization
  • Threats: Negative aspects outside of the organization

A SWOT analysis is usually completed as a group, but participants can complete it individually before making comparisons. Using a SWOT analysis helps the organization focus its resources and helps it evaluate its capacity to accomplish specific goals and objectives. The analysis will guide the organization as the nonprofit creates ways to benefit from strengths and opportunities and makes plans to diminish weaknesses and threats.

Create a Work Plan

Every nonprofit needs a plan. This can be a simple template or a detailed nonprofit business plan. A nonprofit can create a work plan, or an action plan, to list specific tasks. The work plan will list objectives and timelines for completing a job. 

A work plan is a good way to break tasks up into smaller tasks and to track progress. For instance, a work plan will typically include information about the objective, the length it will take to complete the task, the person responsible for completing it, and the resources needed.

Incorporate Your Nonprofit Corporation

Incorporating your nonprofit is a big step that gives your organization an official status as a business entity. It turns your group into a legal nonprofit corporation and is similar to incorporating a for-profit corporation. Below is a checklist to guide you through the process:

  1. Choose a business name: Your nonprofit's name is important. It should reflect your mission and be unique. Check with your state's secretary of state to make sure no other business entity has your chosen name. This can help prevent legal issues in the future.
  2. Draft and file your Articles of Incorporation: The articles of incorporation are like a small business's birth certificate. They lay out the basics like the business name, purpose, and details about the board of directors. You file articles of incorporation with your state's secretary of state, and there's usually a filing fee.
  3. Get a registered agent: A registered agent is someone who receives official papers on behalf of your nonprofit. This can be a board member, but many nonprofits use a registered agent service to make sure they don't miss important notices.
  4. Draft bylawsBylaws are the rules that guide your nonprofit corporation. They talk about things like how board members are chosen, how meetings are run, and other important details.
  5. Hold an organizational meeting: Once you've filed the articles and created bylaws, gather your board members to hold a first meeting. This meeting sets the stage for how your nonprofit will run.
  6. Get an employer identification number (EIN): Even if you don't have employees, your nonprofit needs an EIN. This number is like a social security number for your organization and will be needed for your financial statements. You get this number by completing an IRS form. You can use this EIN to open a business bank account.
  7. Apply for tax-exempt status: This is a big one. Being tax-exempt means your nonprofit doesn't pay federal income tax on their tax return. To get this status, you'll need to complete specific forms with the IRS, like Form 1023-EZ.

Remember, rules can vary by state. Always check with local experts or the state's office for business administration to make sure you're on track. Incorporating makes your nonprofit official and gives you the foundation to do great things in your community.

Assemble the Plan

A finalized plan for the nonprofit can include the organization's mission statement, its objectives and goals, its assessment of external and internal factors, a strategic plan, and a work plan. A nonprofit can then create a professional document it can submit to donors by using publishing software to add graphs and illustrations.

Hire a Lawyer To Help Your Nonprofit Strategically Plan

A lawyer familiar with charitable organizations can help your nonprofit create a viable strategic plan. A business and commercial law attorney can assist with creating goals, objectives, and a path toward your nonprofit's future.

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