In the corporate jungle, the nonprofit is a very different animal. From its purpose and goals to its bottom line, a nonprofit organization operates in a unique manner, one that is essential to understanding, for successful entry into that specific market niche. Much of the nonprofit business plan is focused on tax issues and compliance (rather than sales and profitability), with such nuances requiring thoughtful and careful planning.
If you are contemplating the formation of a nonprofit entity, research is your best friend, followed by the crafting of a careful business plan — one that clearly states organizational direction. Is forming a nonprofit in your future? Consider the following:
Various types of companies and businesses usually form nonprofits, from educational organizations to religious entities to charities.
Many potential Nonprofits apply for, and qualify for, 501(c)(3) status.
The primary benefits to nonprofit classification are, 1) limited liability for certain management team members, and 2) assorted tax breaks.
Qualifying 501(c)(3) nonprofit corporations can take advantage of various benefits afforded them. These include, but are not limited to:
- Federal income tax exemption
- Public and private grant eligibility
- Tax-deductible donations
- Reduced rate postage
Points to Consider
The most obvious difference in designing a nonprofit business plan over a traditional business plan is that the focus is not profit-centric. From Business 101 onward, every business plan was designed to elucidate the path to profitability as the beginning and ending goal. Not so with a nonprofit, which centers almost exclusively on organizational purpose.
A nonprofit’s business plan also has a significantly different target audience — the IRS — with equally different concerns and prerequisites. In order to satisfy the parameters for nonprofit incorporation, it is vital to work with a knowledgeable partner/team in creating a realistic business plan that will provide the best chance for nonprofit acceptance.
As forming a nonprofit is such a specialized undertaking, deferring to a seasoned guide on the developmental steps is imperative to one’s success. A wealth of topics on nonprofit activities, strategies, etc. can be found here: www.incorporate.com/nonprofit_corporation.html
In researching the nonprofit model, it is essential to design a concise business plan. The internet provides a wealth of valuable resources to offer a number of nonprofit business plan templates to use as reference points. Several good examples can be found here: www.bplans.com
The fundamental differences in nonprofit business plans over traditional business plans are numerous, and require careful consideration and review. When dealing with the Federal Government, every “i” must be dotted and “t” must be crossed, then checked and rechecked for conformity to governmental guidelines. Though the prospect of forming a nonprofit may seem initially daunting, the process is not nearly as intimidating as it appears. Armed with the right information, operational strategy, and keen attention to administrative detail, you can establish a nonprofit with minimal problems.