Nonprofit Kit For Dummies. Phillips Frances

Sheet, simply go to www.dummies.com and type Nonprofit Kit For Dummies Cheat Sheet in the Search box.

      You can also go to www.dummies.com/go/nonprofitkitfd5e for samples, forms, and lists of helpful websites. We mention many of these files within the chapters; we also include a file of web resources for most chapters. All digital files are labeled with the chapter number and the order in which the element appears in the chapter. For instance, the first digital file in Chapter 2 is labeled File 0201. For a complete list of digital files, turn to Appendix B at the back of the book.

      Where to Go from Here

      If you’re new to the nonprofit world, we suggest beginning with Chapter 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 your responsibilities as a board member, you can find the answers you need in Chapter 6. If you’re a new board member and want to understand the organization’s finances when spreadsheets are passed out at board meetings, we provide guidance about both making a budget and understanding financial statements in Chapter 11. If you need help to publicize and market your programs, we offer some suggestions in Chapter 12.

      If you’re like many nonprofit workers or volunteers, you want to know how to get money for your organization. Chapters 13 through 18 cover this topic, so they’re good places to begin.

      Whether you are 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.

      Part 1

      Getting Started with Nonprofits

IN THIS PART …

      Peek inside the nonprofit sector and get a glimpse of the role that these organizations play in our society and economy.

      Get an overview of everything that goes into starting and running a nonprofit organization.

      See what goes into a mission statement and get pointers on how to write one that will serve your organization well into the future.

      Discover what you need to do to incorporate your new nonprofit. After that task is completed, apply for tax-exempt status from the IRS.

      Make sure you maintain your nonprofit status by filing the required IRS reports.

Chapter 1

      Getting to Know the World of Nonprofit Organizations

      IN THIS CHAPTER

      ❯❯ Defining the nonprofit sector

      ❯❯ Getting started with a nonprofit

      ❯❯ Encouraging volunteerism

      ❯❯ Getting 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 your 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 it’s a nonprofit. 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. It’s likely that Cynthia’s preschool and the community center where the preschool rents its space are nonprofit organizations, as well. Whether we realize it or not, all of us – rich, poor, or somewhere in between – benefit from the work of nonprofit organizations every day.

      Nonprofits get 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 what they do. Other nonprofits may sign contracts with your city or county to provide services to residents. Usually, nonprofit organizations get 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 your day. It’s more like a thread of a common color that’s laced throughout the economy and our lives. No matter where we live or what we do, it’s not easy to get through the day without being affected by the work of a nonprofit organization. So, in this chapter, we help you understand exactly what a nonprofit organization is and how to start and manage one.

      

Check out File 1-1 at www.dummies.com/go/nonprofitkitfd5e for a list of web resources related to the topics we cover in this chapter.

      What Is a Nonprofit?

      People hear the term nonprofit and picture Mother Hubbard’s cupboard, as in awfully bare with a zero bank balance. But in fact, some nonprofit organizations turn profits on their operations, and that’s good, because surplus cash keeps an enterprise humming, whether it’s a for-profit business or not.

       Comparing for-profits to nonprofits

      

The main difference between a for-profit and a nonprofit enterprise is what happens to the profit. In a for-profit company like Walmart, General Motors, FedEx, 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 plowed back into the organization’s service programs, spent to strengthen the nonprofit’s infrastructure, or kept 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. But in a broad, service (not legal) sense, nonprofits do have “shareholders.” They’re the people who benefit from the nonprofit’s activities, like the people who tune in to public radio or enroll their children in a nonprofit preschool. These people are often called stakeholders because they are committed to the success of the nonprofit.

       Introducing the one and only 501(c)(3)

      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