Top 10 Mistakes You Must Avoid when Starting a Nonprofit Organization

Top 10 Mistakes You Must Avoid when Starting a Nonprofit Organization

By Thomas R. Reichtop 10 npo mistakes


1)      Do Your Due Diligence; Initial Research:  Is there a need for the mission you are passionate about in your area when starting a nonprofit.  If there is another organization providing the same service, can you partner with them?  Will your organization qualify for 501©(3) status??   Read and research everything you can on nonprofit organizations, their operation and the specific mission you wish to peruse.

2)      You must have a Plan; Make a Thorough Business Plan:  You will quickly discover, when starting a nonprofit, that a nonprofit organization is a business.  In order to survive, a nonprofit ‘business’ must have as much money coming in as it has services and expenses going out.  Have you written a realistic business plan?

top 10 nonprofit mistakes to avoid3)      Make sure you Mission is for a Charitable Purpose: Sure it’s a great idea, when starting a nonprofit, but does it qualify as a charitable cause?  The basic definition of a tax-exempt 501©(3) nonprofit organization is one that serves the public good and is organized for religious, charitable, educational, scientific or literary purpose.  If you are unsure, research similar organizations for information.

4)      You must Register:  In the US registration is required in most states when starting a nonprofit.  Some people think they don’t have to register and since they are “nonprofit” they won’t get in trouble. top 10 mistakes keep good records Wrong!  Registration of nonprofits, paid solicitors and fundraising counsels protects citizens from becoming victims of fraud and helps to maintain a responsible environment for charitable work.

5)      You Must keep good records:  As a business, the organization will be required to file various reports of business activity when starting a nonprofit.  You just can’t make things up thinking that you won’t be held responsible.  If you are not organized, learn to be before starting a nonprofit organization.

6)      You Must have a Funding Plan: Raising money is a tough and competitive requirement of most nonprofit organizations when starting a nonprofit.  If your experience with raising funds was through attending a dinner, golf top 10 mistakes keep good recordsouting, bake sale or car wash, you need help with fundraising.  Without funding, there is no way to sustain a nonprofit organization.

7)      You Must Comply with IRS Statutes:  Most nonprofits must file federal and state forms and you need to learn what government requires of nonprofit organizations when starting a nonprofit.  You receive great tax breaks by being a 501©(3) nonprofit and complying with reporting is a fair deal considering the benefits you receive.

8)      Do not Misjudge Time Required to run a Great Nonprofit:  Operating a nonprofit organization is not a hobby.  If you think, when you think about starting a nonprofit,  that you can run a nonprofit organization part-time, you need to have others helping you or you will fail.  When you consider that it is a business and is subject to filing and reporting requirements in addition to service work, you quicklytop ten reasons for a board realize it requires a full-time commitment.

9)      Building an Effective Board is Essential:  Leadership is critical when starting a nonprofit and an effective board is one that is composed of talented, dedicated and connected people are best.  Your board should add integrity to your work, offer access to funding, provide some of the expertise you need and be dedicated to your mission.

top 10 nonprofit mistakes10)   Make sure to have the Very Best Talent Involved:  At a minimum, you will need very professional help that fully understands all aspects of the nonprofit industry, when starting a nonprofit.  Some of the key specialized professionals do not need to be on staff, and can be retained only as needed.  The same is true for Fundraising efforts; you need access to professionals that fully understand nonprofit fundraising.  For key areas of nonprofit organization reporting and management you are best served hiring professionals who fully understand the legalities of reporting the collections and dispersal of funds.  Having systems set up by professionals in the nonprofit world will save you money, time and possible major violations along the way!


Luckily for you there is CharityNet USA to help you starting a nonprofit, and entire organization dedicated to solving you nonprofit back office needs.  From registration to filing for 501©(3) all the way to your fundraising plans and 990 tax filings, CharityNet USA can handle it quickly and efficiently.  After more than 13,000 clients, CharityNet USA’s systems are fully tested and proved, and the pricing is far below the competition.

CharityNet USA is offering a free nonprofit review and a free session with a nonprofit business consultant just to show you what can be accomplished when we work together for the greater good!


Join us for a FREE nonprofit webinar Wednesday July 11, 2012 from 2PM-3PM EST “The Basics of Starting a Nonprofit Organization” with Nonprofit Industry Expert Howard Walker.

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