It’s a new year and new start for nonprofit entrepreneurs and leaders!  If you already have an established organization you probably have made the resolution to implement new strategies, to finally launch your nonprofit website or to engage in additional marketing initiatives to bring record-setting awareness of your mission! If you haven’t yet started your nonprofit organization, there is no better time than now to jump into the nonprofit startup process by getting yourself organized and a clear mission established.  Which ever category you fall into, there are a few important things to remember: The best fundraisers, events and donor campaigns will only be achieved through effectively PLANNING and PREPARING for all of your anticipated initiatives.

Nonprofit organizations and leaders across the U.S. share the same goal: to effectively spread their mission and build awareness for their worthy cause!  Those who achieve thier goal have most likely taken the critical steps in properly planning and preparing for their new initiatives or resolutions.  Those nonprofit organizations who have failed, ask themselves: “where did I go wrong?” or “it was a great event, why didn’t I get donations?” The problem here is that they skipped those critical planning and preparation steps that take care of every aspect of their initiative. 

While there are many things you should be thinking about, we have compiled a list of the Top 5 Things You Should Be Doing to start PLANNING  and PREPARING your nonprofit organization for success in 2010!

The Top 5 Things Your Nonprofit Should Be Doing!

1. Creating or Re-evaluating you Strategic Plan - A nonprofit strategic plan is the “game plan” for how the organization will reach its goals.  It is the framework that determines where an organization is going over the next year or more; how it’s going to get there; and how it will know if it got there or not!  Strategic planning steers an organization on the path to success.
2. Start Preparing for Nonprofit Tax Season -A 501(c)(3) organization’s annually mandated filing with the IRS is the form 990. All organizations are now required to file, regardless of revenue; however the version of the form will differ based upon the year’s receipts.  Now is the time to get a professional CPA or Bookkeeper to avoid errors in your filings, heavy fines, and a set-back to your goals.
3. Create a Quarterly/Monthly Marketing Plan – Many nonprofit organizations make the resolution to implement new “cost-effective” marketing strategies that will boost donations and build a wider awareness of their organization .  While this goal is more than possible, it can go extremely wrong and waste a lot of time and energy if a PLANNED nonprofit marketing strategy is not put in place.
4. Put 2009 in the Past - Make sure all the loose ends tied up from 2009, including: donor comittments, holiday event wrap-ups, reporting, financials and anything else that may insufficiently occupy time in the new year.
5. Always Make a Compelling Story- Nonprofit organizations must have a strong case for support, a compelling story about what the organization does.  They need to be able to tell that story in different ways to different audiences at all times and at all events. Donors must know where their dollars go and that they have positive impact.

I’m not saying that planning and preparation will eliviate every possible problem that may come in the way of your events, inititiatives and fundraisers.  It will tho, significantly add to the effectiveness of each new initiative or goal your nonprofit organization takes on this year.

Are you a nonprofit entrepreneur or leader who has experienced failure due to a lack of planning and prepartion?  If so, tell us your story and share a few tips for other nonprofit organizations!

“When the going gets tough, the tough get going” Will your organization rise to the top or will it buckle under the pressure of an unstable economy?  Most likely, you would prefer the latter, but in order to “get going” it’s imperative that an organization utilize strategies that are both low cost and effective. 

Social networking, press releases, blogging and article writing are all ways to spread your brands image across a variety of mediums without breaking the bank.  If you take the time to learn and then execute each of these marketing strategies, they can provide any organization a maximum return on little investment.

Does your organization “RT” the latest tweets in your industry? If you have an upcoming event, do you update your “wall” with the details? Is your nonprofit “In” the network with other fundraisers, charities and donors? If the previous three questions went completely over your head, it is what you call social media and it has completely re-shaped the realm of marketing. Currently, there are well over 50 different of social networking sites including: Facebook, MySpace, Twitter, Plaxo, Mixx, LinkedIn, Tribe, Ryze, Digg, Reddit, Squidoo, Flickr, Freindster, Bebo, YouTube, Tagged, Xing, and the list goes on and on and on.  The key is to gain a presence on as many sites as you can maintain; meaning regularly capable of adding fresh content, interesting updates and organizational news.  Ideally and realistically, this will be around five to ten sites. If your organization does not already have a presence on at least three of the top social networking sites then now is the time to “get going” on the social media wave.

Press releases are more effective than ever and, if done right, can deliver better pick-up with traditional media outlets, new media outlets and even get directly to consumers. How would you like your annual Gala event to be plastered in front of 200,000 eyes in color, in sound and in action?  Accomplishing this means providing your local media with a newsworthy press release.  Local reporters are constantly on the prowl for the latest happenings in the area that will generate interest from the community.  While you may not be guaranteed a feature package every week, a few sound-bites and video on the evening news would get you free publicity that reaches thousands.  Additionally, to stay competitive in the market today you need to be searchable, believable and credible.  Press releases help you to promote these goals.

An organization’s blog can provide commentary or news on your specific organizations interests, beliefs, positioning on current news.  As a nonprofit it is important to start your blog early because this can be one of the most cost effective ways to reach followers of your organization.  As your organization grows so will your number of followers and those who become faithful will appreciate your information and possibly become a future donor. One of the best characteristics of a blog is that it’s not necessary to be a professional author or a multi-million-dollar company to have a blog.  All you need is opinions, information and insight in your cause.  If you prove to be genuine and knowledgeable your readers will notice and your blog will become one of the most cost effective marketing tools your organization could invest in.  If you have a sincere message, as most nonprofit organizations do, now is the time to “get going” on an organizational blog.

Spreading your organization’s passion to others is what builds the foundation for most nonprofits.   Writing articles for your organization is a great way to disseminate your mission to current and future donors, plus it will build your organizations credibility as an expert source for your cause.  Furthermore, blasting these articles out to websites, directories and news outlets will increase link-backs to your website, making your organization easier to find on the web.  Writing an effective article requires an understanding of professional writing and AP standards along with the capability to merge SEO tactics throughout the body of your article.  To “get going” with writing articles may be a bit trickier than writing for a blog, but with a little practice or help from a professional writer, your organization can be on its way to expert article status.

“When the going gets tough, will your organization get going?” Using the above strategies will give you the tools to get started; it is how you execute them that will determine the results you will receive.  Finally, keep in mind that every method will not deliver results right away, but not giving up and pushing forward through the storm is what will set you apart from other organizations.

More and more organizations are using charity auctions to supplement their fundraising. Charity auctions can be profitable and fun, however to ensure success organizational administrators must undertake careful planning and maintain an eye for details. The amount of time necessary to plan such an event will vary depending on how large scale an auction your organization wants to undertake. For a major event with widespread awareness, a minimum of 6 to 9 months is required.

Before beginning, it must be determined that the organization possesses adequate funding to cover up-front costs associated with the auction. These will include items such as invitations, advertising, food, drinks, decorations, location, entertainment, lighting, gift bags, the auctioneer, and more. Once the budget is set, a fundraising goal should be calculated. The fundraising goal should include the costs associated with the event, as well as the additional amount that is needed to be raised to cover necessary program expenses.

Volunteers will need to be recruited to be responsible for decorations, publicity, coordinating volunteers, the auction itself, cleaning up after the event, and of course procuring items for the auction. Without exciting items on auction, the chances of you reaching your fundraising goal are slim. Event coordinators should try to put together packages and items that are unique-something you can’t find just anywhere. Make sure the items will appeal to the audience you are inviting. Use whatever connections you and your constituents have to bring in quality items for your auction.

One major contributor to a successful charity auction is publicity. Publicize! The more people hear about your charity auction and get excited about it, the better your chances of selling more tickets and reaching your goals. Depending on the budget, you can utilize direct mailing, TV ads, radio ads, newspaper ads, or anything else that will reach your target audience. Reach out to local media to utilize free PSA time.

Keep in mind that to be successful you’ll also need to concentrate on drawing an appropriate crowd. If you expect quality people to attend your auction every year and donate to your organization, you need to make it an event worth attending. It should be referred to as “the party of the season”, or “the event not to be missed!” Stay focused on the guest list. You don’t have to convince your core supporters to attend since they will always be there for you. Rather, you are after the “swing” attendees in the community – the movers and shakers who make the rounds to the best events. These people are going to attend someone’s party; they just haven’t decided whose. All things being equal, they tend to focus on the fundraiser that offers something better than the rest. Create an atmosphere that is impossible to resist, and they’ll arrive ready to spend.

Finally, be prepared to give quality information to your donors about their contribution. Donors who purchase items at a charity auction may claim a charitable contribution deduction for the excess of the purchase price paid for an item over its fair market value. The donor must be able to show, however, that he or she knew that the value of the item was less than the amount paid. For example, a charity may publish a catalog, given to each person who attends an auction, providing a good faith estimate of items that will be available for bidding. Assuming the donor has no reason to doubt the accuracy of the published estimate, if he or she pays more than the published value, the difference between the amount paid and the published value may constitute a charitable contribution deduction.

Many nonprofit organizations with which you may be familiar have names that contain the word “Foundation”. However, in many cases these organizations are not foundations in the legal sense, but rather are public charities. While both private foundations and public charities are 501(c)(3) organizations, there is quite a substantial difference between the two types of entities.

 Traditionally, the Internal Revenue Service classifies an organization described in Section 501(c)(3) of the Code as a private foundation unless the organization can demonstrate that it qualifies as a public charity. Because there are different rules that apply to public charities and private foundations, it is important to be able to identify whether an organization is a public charity or a private foundation.

 Unlike private foundations, which normally receive substantially all of their contributions from relatively few sources, such as a wealthy individual or corporation, and often rely on investment earnings as their source of ongoing support. A public charity, on the other hand, is either “publicly supported” (deriving a substantial portion of its financial support from the public) or functions to support one or more organizations that are classified as public charities. Specifically, an organization may qualify as a “publicly supported” organization because it does one or more of the following:

•Carries on specific exempt activities, which are religious, educational, scientific, or charitable in nature

•Is supported substantially by financial support from government agencies and/or the general public.

•Is supported substantially by contributions and gross receipts from its exempt activities, and does not receive more than one-third of its support from investment income.

•Is organized and at all times thereafter operated exclusively for the benefit of, to perform the functions of, or to carry out the purposes of one or more specified publicly supported organizations. Organizations described in this paragraph are called “supporting organizations”.

 Because the private funding and private control of a private foundation increase the likelihood that the foundation will improperly benefit those who control the foundation, the Code subjects a private foundation to certain requirements and restrictions that are not applicable to public charities. For example, private foundations are subject to a tax on net investment income. In addition, private foundations are subject to excise taxes for failing to take certain required actions or for taking certain prohibited actions.

 Most notably, private foundations are required to make annual distributions equal to 5 percent of the aggregate fair market value of all assets of the organization, and are prohibited from the following:

•Engaging in acts of “self-dealing” with certain persons
•Having excess business holdings
•Making jeopardizing investments
•Making certain prohibited international expenditures

 Finally, the deductibility for federal income tax purposes of contributions to a private foundation is subject to certain limitations that do not apply to contributions to public charities. For example, the amount of contributions to private foundations that may be deducted for any year generally may not exceed 30 percent of an individual′s adjusted gross income for the year, while contributions to public charities may be deducted up to 50 percent of the AGI.

 Since the elimination of the advance ruling period, the IRS will review annual information returns annually and make bi-annual status rulings. Thus, nonprofits will have to be extra diligent in monitoring their funding sources and activities if they wish to retain their specific classification as either a private foundation or public charity.

Your dream has become a reality. The cause that is your passion has been transformed into a functional organization. You′ve established a board, clarified your mission, adopted bylaws, incorporated, and achieved 501(c)(3) status from the Internal Revenue Service. After such exhaustive effort has been expended, it would be senseless to allow the organization to lose its exempt status or even become administratively dissolved for failure to uphold administrative compliance. Thus, knowledge is power-organizational administrators must be diligent in educating themselves on all state and federal regulations.

First and foremost, it is important to recognize that almost all forms of regulatory compliance will be difficult without the maintenance of adequate financial records. It is imperative that administrators document all sources of receipts and expenditures. A sufficient donor database is ideal. It is also critical to retain all supporting documents, such as grant applications and awards, sales slips, paid bills, deposit slips, and cancelled checks. This will allow for easy preparation of financial statements, include statements of activities (income statement) and statements of financial position (balance sheet).

A 501(c)(3) organization′s annually mandated filing with the IRS is the form 990. All organizations are now required to file, regardless of revenue; however the version of the form will differ based upon the year′s receipts. The filing is due on the 15th day of the 5th month after the fiscal year end  (For example, if the fiscal year ends December 31, the 990 is due on May 15th), but it may be submitted anytime after the fiscal year end. To remain in full compliance, administrators must be aware of all forms that must be filed, i.e. the 990-T for unrelated business income, and special filing requirements for supporting organizations.

In addition to annual reporting, organizations with paid employees will be faced with additional quarterly filings. Like all employers, charities who pay wages must withhold, deposit, and pay employment taxes, including federal income tax, Social Security, and Medicare. This must be done for each individual paid more than $100 per year and reported on form 941.

In addition to IRS compliance some states, though not all, will require annual state level tax filings. Upon commencement of the activities, you′ll need to be sure to obtain state level sales and income tax exemptions, if they are available in your state. If the organization is not granted state exemption, they must file and pay taxes! In some states, even organizations exempt from state taxes must still file some sort of annual return.

In addition to state tax considerations, each year the organization must file an annual report with their state to remain an active corporation. While these forms typically require a minimal amount of information, failure to file may lead to an administrative dissolution of the organization.

A final state level compliance issue to remain abreast of is concerned with charitable solicitation registration requirements. Such laws have been implemented in most states in an effort to protect consumers, and the statutes require charitable organization to register and become licensed prior to the initiation of any solicitation activities. These registrations typically require annual renewal, and come with stiff penalties for violations. If an organization will solicit in more than one state, a valid registration must be in place in each state where representatives will seek donations.

Possibly most importantly, you must remain aware of what activities may jeopardize your exempt status. The most common offenses that lead to the revocation of a 501(c)(3) are private inurement and political campaign intervention. Private inurement occurs when an insider receives excess benefit from the existence of the organization, either in the form of direct financial gain or in more indirect means such as the provision of business to a for-profit in which an insider has an ownership interest. Excess benefit may also occur in transactions with outsiders, however the benefit in the situation must be substantial. Lobbying activities, or attempts to influence legislation, may be conducted; however these activities must be kept to a minimum.

501(c)(3) nonprofits are also strictly prohibited from undertaking any political campaign intervention. While organizations may provide voter education or a review of the issues supported by all candidates, a public charity may not, directly or indirectly, support or oppose any candidate for political office.

Finally, organizations must be diligent in filing annual returns on a timely basis each year. Not only can the IRS revoke the exempt status of any organization that fails to file returns for more than two years, it also reserves the right to impose penalties upon late filers. While an organization may not owe any taxes, the standard penalty for late filing of the annual information return is $20 per day, up to a maximum of $10,000.

Remaining in compliance after attainment of 501(c)(3) status may seem a daunting task; however with careful attention and cooperation of organizational administrators, public charities can function successfully and fulfill their missions abundantly.