The entrepreneurial spirit of business ownership goes hand-in-hand with the desire for making an impact on the world. What better way than launching a non-profit organisation?
Although getting started might seem overwhelming, it doesn’t have to be. If you want to start a non-profit, this post will guide you in what you should consider when creating your plan, with links to support your research.
Step 1: Know Your Legal Obligations
A good starting place is to understand the legalities for non-profit entities and how that differs from conventional businesses.
Who Can Qualify?
Whether or not your organisation will be granted non-profit status depends on a number of factors. Ask yourself:
- Purpose – what is its motive and purpose? For instance, do you want to relieve poverty, advance education or health, protect the environment, or something else? Learn more about determining your organisation’s purpose here.
- Revenue – where will it come from? Will income be sourced from donations, membership fees, fundraising, grants or investment income?
- Similar Organisation to Model After – are there other non-profits with a similar structure as an example to help your process?
Documents and Structures
When applying for registration, the government assesses your organisation’s rules document. The rules should satisfy the following criteria:
- they should be the legally binding rules for your organisation
- they should clearly set out the charitable purpose
- they should not assign powers that further non-charitable purposes, or profit any private or individual cause.
Continue learning more here.
Choosing an Appropriate Legal Structure
Incorporated or unincorporated? Accountable to many people or to a few? Whether social, charitable, sporting or otherwise, you’ll need to consider which legal structure will be most suitable.
There are a number of different legal structures to choose from, and first you’ll need to determine what your organisation’s role in the community will be and how you intend to operate. Also, you need to consider the requirements in several key areas such as its size, culture and values, activities and other operational factors. Learn more about choosing the right legal structure for your non-profit here.
Register with the Companies Office
With no national association that governs non-profit organisations in New Zealand, your registration requirements will depend on the legal structure you choose. For example, organisations that qualify for registration under the Charities Act need to register with Charities Services.
If you incorporate a company, society or charitable trust board, you need to register with the Companies Office.
Register with IRD and Apply for Tax Exemption
As part of your setup process, you need to get an IRD number. From the 2020-2021 year, any person or organisation that wants to get or keep an income tax exemption must be registered with Charities Services. This tax-exempt status applies to business income used for charitable purposes in New Zealand.
Step 2: Prepare to Launch
What’s next? Once you have your legal obligations sorted, you can start preparing for launch. Here’s where your vision, creative inspiration, and a bit of realism are needed for crafting solid plans.
Create a Business Plan
Without a well-thought-out business plan, you could have a harder time obtaining loans and grants, attracting corporate donors, or keeping your organisation on track. Even a simple one-page business plan helps you to polish your message. Also create a forecast, with a few different scenarios, to explore whether your plan is feasible. There are non-profit accounting programs available that can help you with this, and always seek help from your accountant at this stage to test your numbers and assumptions.
Create a Fundraising Plan
Get a clear plan of action for how you’ll raise money. This may include memberships, sponsorships, grants, or even selling products or services. A solid fundraising plan will get cash flowing in.
Explore Financing Options
As a non-profit, you may be able to apply for government and other types of grants. Explore the Charities Service’s Community Resource Kit for more information on raising and applying for funds.
Structure Your Expenditures
You’ll need a budget to determine what you can afford to spend, and to ensure your outgoings don’t exceed income. This is where accounting software or the guidance from an accountant can help you to create a solid and realistic budget.
Step 3: Put On Your Entrepreneur Hat
‘Not for profit’ doesn’t mean ‘for loss’, and just like a regular business, if you run an efficient operation, you’ll be able to provide a much better service to the people or cause you’re trying to serve. Here are a few tips:
- Hire the right staff. Your team can make the difference between failing and thriving in business, so make sure you hire well. Check out our blog Rockstars vs. Superstars: Get the Right Bums in the Right Seats for insight on building a great team.
- Spend less than you earn. Although a profit isn’t technically what you’re striving for, if you make a surplus, you can reinvest that into the organisation or allocate to a new project.
- Network. Making connections and setting up partnerships with the right people can help the organisation to raise more money, increase exposure, or improve your operations.
- Know your ‘customers’. Just like with a for-profit business, you need to understand the members of your club or the people you’re providing charitable services to, so that you can tailor your organisation to meet their needs.
- Get professional support. As with any other business, a non-profit is most successful when you have an accountant to keep you on track and compliant with tax obligations. Partner with one that has experience with and a passion for helping non-profit organisations, like BW Miller Dean.
We understand the unique challenges non-profit organisations face and can help you to put a business plan in place that supports your vision. We’re also good at being a sounding board for your ideas and give you unbiased advice. Contact us to see how we can help you make your vision a reality.