Starting a charity enables you to pursue a certain cause and make a difference in the society. With a strong ability to attract donors, and given the fact that nonprofits are typically exempted from paying income taxes, a charity can be an efficient vehicle for organizing and fulfilling a specified public-benefit mission. Even from an entrepreneurial perspective, owning a charity can help to grow your brand. Multiple studies have established that socially-responsible brands have a greater ability to build stronger relationships with consumers.
Like for-profit organizations, the registration and management of charities is regulated by competent government authorities.
Here are the simple steps you must follow when starting a charity, as well as tips on how to avoid common pitfalls you are likely to encounter during the process.
1. Brainstorm the Type of Charity You Would Like to Form
The first step is to decide on the type of charity you would like to create. You could start an animal, environmental, education, healthy, arts and culture charity or even an international non-governmental organization. In most cases, people start charities to pursue causes that’re very close to their hearts. For instance, if you’re very passionate about animals, you will certainly find it irresistible to start an animal one.
Beyond passion, the issues that affect your neighborhood or community can also influence your choice. For example, a person who runs a business located in a community where residents live in a polluted environment may find it more meaningful to start an environmental charity, even if he doesn’t give a hoot about the environment.
After identifying the type of charity you would like to form, determine whether to narrow down its focus or pursue a broad cause. In the case of an animal one, you can decide whether the entity will tackle issues affecting several animal species, or a particular species, like cats.
2. Choose a Name for Your Charity
More often than not, a name gives the first impression of what a charity is all about. It impacts how people view the organization, and can go a long way in building its outreach capacity. As such, choosing a name for your non-profit organization in an important step that requires thorough brainstorming.
Here are a few tips on choosing a good name:
- Relevance to the cause – An ideal name should be descriptive and relevant to your cause. If your aim is to save Pandas, a name like Let’s Save the Panda or the Panda Conservation Network can do.
- Uniqueness – Your first name choice will probably be very similar in wording to an existing charity, so it is essential to ensure your preferred name is unique and available for legal and domain registration. A unique name also helps to distinguish your charity from others that serve a similar purpose.
- Simplicity— Avoid lengthy names that are hard to pronounce or memorize.
- Acronymization – Some of the best charities in the world today are primarily known by their acronyms (think UNICEF, AMREF and UNHCR). After crafting a name, ensure the resulting acronym or abbreviation isn’t offensive when written or read out.
3. Craft a Mission
Developing a mission for your charity involves describing its purpose to potential donors, stakeholders and the public in general. Tell people what it intends to do, for who and where. Deliver safe, clean water to families in rural areas? Get the homeless off the streets? Save endangered species – like the Panda –from going extinct? Provide sanitary towels to young girls in the developing world? Regardless of the good you want to do, your mission statement should be concise, clear and memorable.
Alongside the mission, you should also develop the values or principles by which the organization the entity will guided. These values should be shared by the members of the board of trustees, managers, support staff and volunteers.
4. Build a Board of Directors
Another important task charity founders must tackle is creating a board of directors that will perform functions such as developing organizational policies, appointing management personnel, overseeing fundraising initiatives and ensuring implementation of programs. With such crucial duties, the competence of a board of directors can either make or break your idea.
When recruiting members to your board, focus on finding individuals who are not only passionate about your cause, but who also have strong ties to the communities the charity intends to serve. Ensure the board is diverse in terms of gender, race, occupational background and religion, and that it meets the legal requirements for minimum members.
5. Write a Business Plan
Even though charities are not in the business of turning out a profit, they too need a business plan. While for-profit plans are written with investors in mind, nonprofit plans are written with donors in mind. Therefore, your plan must give potential donors all the information they need to know about the charity. In general, the document should include:
- Organization details – Name, physical address, phone number and email of the charity, as well as names of trustees.
- Organizational purpose (Objects) – Mission, values, activities or services to be delivered, and goals to be achieved within specified timeframes.
- By laws – Rules outlining how the entity will be run.
- Performance monitoring and management strategies.
- Promotion and advertising strategies.
- Fundraising strategies.
- Income and expenditure forecasts.
6. Choose a Legal Structure
Although the registration requirements for charities vary from jurisdiction to jurisdiction, many require owners to choose a legal structure. In the UK, for example, you can set up a trust, charitable incorporated organization (CIO), charitable company (limited by guarantee), or an unincorporated association, and in the US, your charity can take the form of a trust, corporation or association.
The legal structure will affect many of aspects of your charity, including whether it will qualify for tax exemption, be allowed to operate locally, nationally or internationally, or be recognized as an independent legal entity that can sue and be sued. Each structure has its pros and cons, so be sure seek professional advice from a nonprofit attorney or accountant.
7. Register the Charity
After figuring out your preferred legal structure, head over to the registering authority in your jurisdiction and submit all the required documents. In general, you will need the identification details of your entity (name and address), governing documents/business plan, names of trustees and articles of incorporation. In some jurisdictions, like the US, you will also need to separately apply for tax exemption to the competent authority.
Important note: In other jurisdictions, like the UK, not every charitable organization has to seek registration before commencing operations. Charities with an annual income of less than £5,000, for example, are exempt from registration.
8. Build a Website
With the competition for funding support increasing, charities need a strong online presence to reach more potential donors and increase project awareness. Having a good website is one of the best ways to build this presence.
Hire an experienced web developer to design and build a website that enables you to not only post information about your programs, but also accept online donations. In addition to having a website, leverage the power of social media by setting up an account for your charity on Twitter, Facebook and other popular social networking platforms.
9. Start Fundraising
Now that the non-profit organization has obtained a legal status and the board is in place, you can start fundraising to raise the money to pursue your charitable passions. The following are some of the most effective ways to fund your charity:
Founder Donations
As a founder, donating to your charity not only helps to reduce your taxable income, but also demonstrates commitment to your cause and motivates potential donors to chip in. Your personal donations will help to keep the organization going, especially in the early days when it’s yet to gain traction.
Crowdfunding
Crowdfunding for a social cause is another perfect strategy for raising money. Online platforms like Causes and StartSomeGood provide tools that enable non-profits to raise awareness about the initiatives, launch campaigns and raise the funds they need to create change.
Community Events
Organizing community events such as runs and walks, music concerts, dinners, day camps, and golf and soccer tournaments can also be an effective fundraising strategy. Prospective attendees typically pay a certain amount of money or purchase merchandise sold by the charity to take part in the event.
Corporate Sponsorships
Corporations like supporting charitable organizations as a way of giving back to the community, and also as a way of lowering the tax bill. Charity founders and their board members can use their professional or business networks to secure sponsorships from established companies.
Government Funding
Governments recognize the crucial role charitable organizations play in tackling the various issues that affect the society. As a result, many administrations provide funding support to qualifying charities. Find information about grants offered by your national or local government and submit an application that competently demonstrates why your charity should be funded.
Whichever funding strategy you choose, it’s important to ensure it’s cost-effective to implement, and that it aligns with your mission. For instance, if your charity’s purpose is to fight climate change, it would be contrary to your mission and values to accept donations from corporations whose operations damage the environment.
Finally, starting a charity is a simple, straightforward task. Keeping it focused to the cause is the hard part. Hopefully, this article has shed light on not only how to get it started, but also build one that can live up to its mission.