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or enhancing arts, culture, the environment, or education to act on those ideas. It creates a viable place within our society and economy for worthy activities that have little chance of commercial success. We think that it combines the best of the business world with the best of government social-service programs, bringing together the creativity, zeal, and problem solving from the business side with the call to public service from the government side.

      We also find volunteerism inspiring. Everyone has heard stories of tightly knit communities where neighbors gather to rebuild a barn. That spirit of pitching in to help is the best part of living in a community in which people share values and ideas.

      Many people these days live in diverse communities with neighbors who come from a wide variety of places and cultures. The nonprofit sector provides institutions and opportunities where everyone can come together to work toward the common good. Volunteerism gives everyone the chance to pitch in to rebuild “the barn.”

      Applying the term voluntary sector to nonprofit organizations came about for a good reason. The Urban Institute estimates that in the United States, 62.8 million people volunteered at least once in 2014.

      When you’re working in a nonprofit, you’ll likely be supervising volunteers – and they’ll likely supervise you. What we mean is that (with very few exceptions) nonprofit boards of directors serve as unpaid volunteers. And if you’re the executive director, your supervisors are the trustees or board members of the organization. At the same time, you likely depend on volunteers to carry out some or all the activities of the organization. You may serve as a volunteer yourself.

      

The word “supervision” sounds harsh, and we don’t mean to suggest that nonprofits are or should be run with an iron hand. The board of directors does have ultimate responsibility, however, for the finances and actions of a nonprofit organization, and, therefore, people serving in that capacity have a real duty to make sure that the organization has sufficient resources to carry out its activities and that it’s doing what it’s supposed to be doing.

      We prefer to think of nonprofits as organized group activities. You need to depend on others to reach your goals, and they need to depend on you. We talk about boards of directors in Chapter 6 and working with volunteers in Chapter 9. If your nonprofit employs paid staff or hopes to someday, Chapter 10 provides some guidance in hiring and managing employees.

      Finding the Resources to Do the Job

      One distinctive feature of the nonprofit sector is its dependency on contributions. We devote many pages of this book – most of Part 3 – to advice about getting contributions through fundraising.

      Gifts from individuals of money, goods, services, time, and property make up the largest portion of that voluntary support. This portion is also the oldest of the voluntary traditions in the United States and goes back to colonial times. Since the late 19th century, private philanthropic foundations have emerged as another source of support, and more recently – particularly after World War II – the federal government and corporations have become important income sources. Earned income through fees for service, ticket sales, and tuition charges also is an important revenue source for many nonprofits; in fact, in 2013 nearly three-quarters of the revenues for public charities was earned.

       Seeing where the contributions come from

Among private, nongovernmental sources of support, gifts from living individuals – as opposed to bequests from people who have died – have always represented the largest portion of total giving, but philanthropic giving by foundations and corporations has been growing. Table 1-1 gives estimates of the sources of private contributions in 2014. The best fundraising strategy for most organizations is to take a balanced approach that includes individual giving as well as grants and corporate contributions.

TABLE 1-1 Sources of Private Contributions, 2014

      Source: Giving USA: The Annual Report on Philanthropy for the Year 2014 (2015). Chicago: Giving USA Foundation.

       Fundraising for fun and profit

      Nearly every nonprofit organization depends on generous donors for the cash it needs to pay its bills and provide its services. Even if you have income from ticket sales, admission charges, or contracted services, you’ll find that raising additional money is necessary to keep your organization alive and thriving.

      You can see from Table 1-1 that individual giving is the largest single source of contributed income to nonprofit organizations. But you can’t just sit waiting by the mailbox for the donations to begin arriving. Two basic rules of fundraising are that people need to be asked for donations and thanked after giving one. Chapter 14 focuses on raising money from individuals, Chapter 15 covers raising money with special events, and Chapter 18 discusses campaign fundraising, which is used when you need to raise extra money for your building or your endowment.

      Grants from foundations and corporations make up a smaller percentage of giving to nonprofits, but their support can be invaluable for startup project costs, equipment, technical support, and sometimes general operating costs. Keep in mind that the figures given in Table 1-1 don’t apply equally to every nonprofit. Some organizations get most of their income from foundation grants; others get very little. Chapter 16 introduces you to resources to help you find potential grant sources. Chapter 17 takes you through the process of crafting a grant proposal.

      Fundraising works better if people know you exist. That knowledge also helps get people to your theater or to sign up for your programs. Here’s where marketing and public relations enter the picture. Chapter 12 helps you figure out what your message should be and how to circulate it to the world.

      

Make no mistake about it, fundraising is hard work, but if you approach the task with a positive attitude and make your case well, you can find the resources you need.

Chapter 2

      Deciding to Start a Nonprofit

      IN THIS CHAPTER

      ❯❯ Considering the benefits and drawbacks of starting a nonprofit

      ❯❯ Starting off your nonprofit on the right foot

      ❯❯ Understanding who owns a nonprofit

      ❯❯ Surveying the different types of nonprofit organizations

      ❯❯ Comparing and contrasting nonprofits and for-profits

      ❯❯ Enlisting a fiscal sponsor to help you provide a service or complete a project

      Maybe you’ve been thinking about starting a nonprofit organization for years, or maybe an idea to solve a social problem or provide a needed service just popped into your head. It could be time to make your idea a reality. But before you file your incorporation papers, you need to understand the positive and not-so-positive factors that can make or break your new organization. Like opening any business, starting and managing a nonprofit organization isn’t a simple matter.

      Take a look at the economy around you. Are existing nonprofit organizations in your community thriving, or are they struggling to find financial and volunteer support? In addition, are you equipped to manage money and raise funds – which isn’t an easy task even when business is booming – and can you inspire others to work

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