Robert Duea

How to Start a Nonprofit Organization: Questions to Ask Yourself Before You Make the Leap

posted by
Robert Duea,
Professional in Residence
ASU Lodestar Center
and
Pat Lewis,
Senior Professional
in Residence
ASU Lodestar Center

So, you're thinking about starting a nonprofit organization. You have a fantastic idea, but are you ready? Do you have everything you need before you begin? Is starting a nonprofit the right path for you?

Before you begin your nonprofit journey, you should ask yourself two very important questions. So, let's dive in, and see if you're ready!

1. "Why do I want to start a nonprofit organization rather than a for-profit organization?"

Both types of organization could be the right choice for you. After all, both are businesses, and both can help you provide the service you want to share. So, what is the difference? There are a number of similarities and differences. Here are few:

  • Nonprofit organizations are concerned primarily with social good; for-profits focus on profitability.
  • Nonprofit organizations must adhere to a rule of non-distribution whereby profits, or any excess at the end of the fiscal year, must be re-invested in the organization and its programs and may not be distributed to individuals; for-profits exist to distribute profit to owners and shareholders.
  • Nonprofit organizations comprise paid staff and volunteers; for-profits typically only have paid staff members.
  • Nonprofit organizations are governed by a board of directors; for-profits are governed by the owner(s) and, if a corporation, also a board of directors.
  • Nonprofit organizations are granted federal exemptions of certain taxes; for-profits are taxable.

These are a few of the key differences that can help you make the right choice for your organization. So, let's say you've chosen the nonprofit route. The next question you should ask yourself is: