A nonprofit organization can simply be defined as an organization that promotes or wants to obtain a worthwhile cause. While the definition of a nonprofit is simple, operating and maintaining a nonprofit is far from simple.
There are many items that need to be handled with diligence in order to avoid problems once a nonprofit has been formed. Many of these items are focused on efficient operations and legal issues, such as adhering to state and federal laws in order to maintain the nonprofit status.
One reason for establishing a nonprofit is to receive the tax-exempt status from the government that these organizations receive. In addition, many people form nonprofits in order to receive protection from personal liability. This protection usually extends to trustees, but can be extended to officers and employees, as well.
In addition, establishing a nonprofit allows the organization to raise a greater number of funds. Donors are more likely to give money to a nonprofit in support of a worthy cause because their donation will be tax deductible. This alone is a tremendous reason why many donors in higher tax brackets give money to worthy causes. However, failure to file the correct paperwork with the government and IRS, or by neglect on behalf of the trustees, can result in a loss of nonprofit status.
There are many items that should be considered before deciding to start a nonprofit. Corporations require many documents and paperwork, such as bylaws, articles of incorporation, and minutes, and nonprofit organizations are no exception. Records must be maintained, annual filings must be completed, and nonprofits still need the professional advice of accountants and lawyers. This can sometimes be a disadvantage because of the increases in fees and expenses.
Board of Directors
Nonprofits can and do provide contributions to society and can be vastly important to the communities in which they operate. In order to have the correct people overseeing a nonprofit organization, a board of directors should be selected that have high standards of quality and are extremely efficient.
Here are some points for potential candidates to consider before joining a board. In selecting a member of the board of directors, organizations should verify that candidates will follow through on them.
- Be selective about the nonprofit board on which you will serve as a member.
- Before accepting the invitation to join a board, fully understand the number of meetings each year, expectations to attend events connected to the board, and know the fundraising goals of the organization; know the term of membership, if applicable.
- Investigate the nonprofit thoroughly to confirm that your goals and aspirations align with the organization.
- Participate in the board member orientation program; if an orientation for new board members hasn’t been developed, make this your priority.
- Understand the financial commitments that board membership requires.
- Be fully committed to making a leadership gift to the nonprofit each year; consider an estate gift, as well.
- Encourage other board members to support the financial goals of the organization.
- Show up for meetings of the board, including committee meetings; your attendance conveys the importance of the organization to fellow board members and supporters.
- Put the nonprofit’s interests before your own.
- Trust the staff members of the nonprofit, but ask important questions.
- Help to identify new board leadership; seek experts in the field that could lend their services and communicate the value of the organization.
- Always remember that, as a board member, you are the face of the organization to everyone you come in contact with, so put your best effort into making a good impression.
- Always know the nonprofit’s mission and goals, and be prepared to make a case for new programs, existing programs, and the fundraising needed to achieve the goals.
Don M. Green is the CEO and Executive Director of the Napoleon Hill Foundation and has held this position for twenty years. Don is also a trustee of the University of Virginia’s College at Wise and is President of the Foundation Board at the College. Previous to his career with the Napoleon Hill Foundation, Don worked in the banking industry and served as a bank president for nearly twenty years. http://www.naphill.org/
This article is reprinted from Issue #10 of Nonprofit Performance Magazine. Subscribe today so that you won’t miss other actionable articles that will help you run your nonprofit organization with less pain and more gain!
Join Hugh Ballou and Russell Dennis and their guests on our weekly Tuesday afternoon Nonprofit Exchange at 2 pm Eastern time.
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The Nonprofit Exchange on Tuesdays at 2 pm ET has been quite beneficial for many participants and we have enjoyed sharing thoughts and tips for moving past the stuck places we all find in leading an organization to achieving its mission.
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As the famous British Composer and Conductor Ralph Vaughan Williams once said, “Music does not reveal all of its secrets to just one person.” If you replace the word “Music” with the word “Leadership” or “Team” or “Strategy” etc., then we all give and receive value from others. That’s the spirit of the Tuesday afternoon Nonprofit Exchange encounters, sponsored by SynerVision Leadership Foundation’s “Community for Community Builders.”
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