Listen to this article now |
When you think of a nonprofit organization, you might immediately call to mind large charities such as the American Cancer Society, the ASPCA, or religious societies. Nonprofits exist in almost every sector: education, health, law, politics, art, and sports. Even companies such as Meta and Tesla have extensive nonprofit arms.
A nonprofit doesn’t have to be a large charity. It can be more like a small club to support individuals in a community, or even an educational arm to complement your business.
According to the National Council of Nonprofits, 92% of nonprofits have annual revenues of under $1 million. Think of booster clubs, financial aid groups, and even your local PTA – all small but necessary nonprofit organizations.
Here are the top 9 reasons why you should start a nonprofit organization:
9. You likely have limited liability
If your nonprofit is designated as a 501(c)(3) and in compliance, your organization’s founders and employees are protected from legal action. This means that you are not personally responsible for any debts incurred by the nonprofit, nor are your trustees or employees.
8. You can spin off a nonprofit from your business
Do you focus on education as part of your business? Or do you regularly meet with groups who could use some support? Form a nonprofit for this area and take advantage of the benefits of nonprofits while maintaining your regular business.
Your business will enjoy greater market visibility and penetration, as it sponsors the nonprofit. You can also attract funding from large companies or foundations that treat companies with nonprofit arms more favorably.
7. You are eligible for financial benefits
Many business suppliers, landlords, and service providers offer discounts or sponsorship to nonprofits. Services such as e-mail marketing may be provided free of charge.
In addition, nonprofits can be eligible for federal and state grants that for-profits cannot use. You can use these grants, which do not have to be repaid, to fund overhead and operating costs besides the charitable service. Nationwide, almost 32% of nonprofits’ revenue comes from federal grants.
6. You can register as a tax-exempt organization
This gives you special tax status under federal law. You can collect tax-deductible contributions, be exempt from federal unemployment tax, and even enjoy reduced postage rates.
The IRS maintains a page for tax-exempt organizations, with webinars, FAQs, and informational pages.
5. You can increase your business’ visibility
People are likely to pay more attention to a business with a non-profit arm. They see it as more trustworthy and more honest.
Nonprofits often make the news when they sponsor a new initiative or law, open a center or other building, or have a fundraising drive. You have a chance to create donors from customers and vice versa.
4. You can help drive the economy
Nonprofits’ payrolls are greater than most other industries, including construction, transportation, and finance. The nonprofit sector employs over 12 million people.
This has a knock-on effect – nonprofits themselves employ people. The people they serve may be able to rejoin the economy and contribute to their own and their community’s well-being financially.
3. You can gain leadership and organizational skills
Many business leaders got their start working at nonprofits. Nonprofit entrepreneurs are also famous in their own right as successful leaders, social advocates, and savvy businessmen and businesswomen.
For example, Nobel Prize winner Muhammad Yunus founded the for-profit Grameen bank based on microfinance. He has since built a string of nonprofits based on microcredit and other social issues.
Nonprofits attract employees who are talented, eager to learn, and want to put their skills to use for the common good. They gain experience and serve a greater cause at the same time.
2. You can take charge of issues close to your heart
Creating a nonprofit enables you to support a cause you care about in a greater way than with an individual donation. The same business skills and tactics used in for-profits apply to nonprofits.
You don’t have to know all the details of establishing a non-profit, as long as you have the drive and desire. Many organizations will walk you through the steps in creating a nonprofit, offering resources to help you concentrate on your vision.
1. You can create a legacy
Being involved in a nonprofit shows other businesses, financiers, and the public that you care about a social issue, not just the bottom line. You are improving the economy along with making a real difference in people’s lives.
In addition, you have the satisfaction of creating something greater than yourself that will evolve to have a life of its own because of your efforts. One of the oldest nonprofits in the US was started in 1636 – Harvard University!
When you consider the financial, economic, and social benefits of starting a nonprofit, you can see why there are over 1.2 million of them in the US alone. Add your strengths in business to the nonprofit sector, and leave your stamp on the future.
Non Profit Orgs are much more complicated than for profits. The government regulation can eat you alive. insolvency can become the financial responsibility of the founders. NFPs must be operated under the auspices of a board of directors, with fundraising responsibility. Reporting is annually and can not be missed without possible penalities. Getting a 501C3 can take years.