So You Want to Start a Nonprofit?

It’s easy to find a charitable cause to support these days. From cancer research, to help for the homelessness, and even after-school programs for kids, there are a number of worthy causes that need our attention. Nonprofit organizations often lead the charge by way of bringing attention and solutions to some of the causes that impact our communities.

Sometimes entrepreneurship takes the form of starting a nonprofit rather than a for-profit business venture. Both require the same kind of resolve and a blueprint for success. However, the profit margins in nonprofits are a bit different and sometimes leave entrepreneurs questioning how they can make it work financially.  The good news is that nonprofits can be profitable, and it’s important to know how.

Here’s what you need to know to get to the mission and the money!

First, what Is a nonprofit?

Essentially, nonprofits are organizations that advocate for a social cause or belief. They exist for the common good, not for their owner’s good. They typically address societal ills and encourage charity. Because of the contributions they make to society, they are exempted under the Internal Revenue Code and do not pay taxes.

A 501(c)(3) nonprofit, in particular, exists for a public benefit and affords its contributors the added benefit of tax deductions. That’s why it is beneficial to give donate money to 501(c)(3) organizations in addition to helping to support the good they do.

The Benefit of Starting A Nonprofit

It’s not hard to understand why someone might want to start a nonprofit rather than a for-profit business. Those who start and operate nonprofits or work for them are often attracted to them because of their belief in the organization’s vision and their support for what the organization stands for.

They are interested in making a difference in their community and are passionate enough to encourage others to get involved as well. Nonprofits are mission-driven and focus on solving societal problems, such as climate control, educational equity, crime or a slew of other issues plaguing the general public. The major advantage is that a nonprofit founder is not driven by shareholder profits and leaves a legacy that has the potential to outgrow and outlast him/her.

How To Profit in a Nonprofit

Some people that avoid launching or working for a nonprofit organization are often dissuaded because the common misconception around nonprofit work is that it does not pay well.

While all nonprofits exist to meet a public need, they don’t necessarily operate in the red to do so. They are allowed to make a profit as long as that profit is reinvested back into the organization rather than rationed out to owners.

Donations, grants, and sponsorships are just a few options for nonprofit founders that are looking finance their mission. The profits obtained can be used to expand the nonprofit’s mission, offer competitive salaries to employees, invest in marketing, and procure adequate equipment and office space.

Each state has requirements for nonprofit incorporation and annual accountings. Be sure to check the requirements in your state if you’re looking to be a nonprofit founder!

Written by Mariah Williams

Mariah Williams is an advocate for social justice and cares deeply about equitable policies that address the underlying causes of racial and ethnic disparities in health and economic status. By day, she directs a health policy program and by night she is a blogger, poet, and is currently penning her first novel. Follow her on Instagram @outofmymouth.