How to Successfully Run a Non-Profit Corporation

Studious readers of our MyCorp blog may recall that, back in June, we covered non-profit corporations in a ‘Business Basics’ post, and answered a few simple questions like what a non-profit corporation was and how to form one. This week, we felt it would be a good idea to tackle one of the most often asked questions about non-profits – how do you run a successful non-profit corporation? Now, it’s impossible to distill what makes a non-profit successful into a 700 word post, but we can point out a few things you can do to help your non-profit succeed.

Draft, and adhere to, a solid mission statement
When you form a non-profit corporation, you have to clearly identify your mission. What, exactly, do you hope to accomplish with this organization? Who do you hope to help? What type of a vision do you have?  You may have a few fuzzy answers to these questions running through your head, but you have to absolutely solidify every idea and goal you have before you ever hope to begin raising money. If your ‘elevator pitch’ is a jumbled mess of ideals with no, clear, actionable goals, no one will want to donate to your non-profit. The IRS will also review your mission statement when they decide whether or not to grant your group tax-exempt status.

Donors, volunteers, employees, and the government will all look to your mission statement, so don’t just copy some broad statement you found online. Instead, take the time to write one out that focuses on the people you hope to serve, and identifies a clear, attainable goal – a statement you can use to guide your organization and judge its success.

Follow the rules
The state and federal government expect a lot from registered non-profit corporations, and you will really have to work to defend your non-profit status. Corporate and financial records should be kept on hand and updated whenever necessary. All financial transactions have to be recorded using a double-entry system, and non-profits must file a report with the IRS every year. On top of all that, there is a laundry list of banned activities and behaviors. Non-profits can never donate to political campaigns, may not be organized to financially benefit the executives or directors (though a reasonable salary is acceptable), and cannot derive a substantial amount of income from activities unrelated to the mission of the non-profit. The IRS takes the abuse of non-profit status very seriously, and will come down hard if they suspect you’re not toeing the line.

“Think globally, but act locally”
Okay, so this saying is a bit cliché, but it is useful when trying to run a successful non-profit. There are a few multi-national charitable groups that pervade the news and solicit donations from across the world, but you aren’t one of them – at least not yet. Many non-profits are organized to tackle local issues, like helping the homeless or beautifying the community. The majority of your donations and your volunteers are going to thus come from your local community, so remember to really work on reaching out to that community and involving them in the non-profit’s work. It is easy to develop a bit of tunnel-vision when you have a particular goal in mind, but there is no reason to try and tackle that goal alone. Your community will be your most valuable asset.

Running a non-profit corporation can be very stressful – you will have a lot of eyes on you, making sure that you don’t slip up or abuse the group’s tax-exempt status. In fact, sometimes you can help solve a problem without forming a non-profit corporation. But, if founding and running an established non-profit seems to be the best method to fixing a serious societal or environmental issue that you want to address, then go for it. Just remember to adhere to all filing and reporting rules, stick to your mission statement, and involve your local community as much as possible. If you do those three things, you will be well on your way to running a successful non-profit corporation.