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It’s one thing to have hobbies and interests; parlaying them into a nonprofit organization is another leap entirely.

Expansion is an easy concept to imagine but a difficult one for most of us to execute.

In a hobby or interest group’s case, it’s tough to identify the right time to venture into nonprofit status. For molecular biologist Nina Dudnik, her epiphany started when she was studying rice in Ivory Coast. Conducting research in a developing country without enough equipment proved challenging, so after she began her Ph.D. program at Harvard University, she and a few fellow students collected extra supplies and equipment to send to labs in developing countries.

From that effort sprang a nonprofit venture that eventually became Seeding Labs, a firm that trains scientist and provides equipment to developing nations. Dudnik’s idea sprouted from a cause she had personal experience in, and she quickly found a way to translate it to a broader scale.

So how can an interest group widen its scope into a serious nonprofit? It starts with identifying the desired end goal and detailing the steps necessary to arrive there.

What Giving Gets You

When looking to invest more time and effort into a cause, going the nonprofit route makes sense. Nonprofits are highly credible entities that can exert social influences on broader audiences because a nonprofit donation elicits a stronger emotional response in the giver than spending money at a for-profit, even if the end result is the same.

Nonprofits are also eligible for certain federal tax exemptions. Provided they agree to be audited, corporate income tax is waived, and that money can be reinvested into the organization. Additionally, state and federal governing bodies and some private groups also offer nonprofit tax credits for nonprofits, so even if a nonprofit owes some taxes, these credits give organizations other options to stretch their operating budgets.

When homing in on a nonprofit cause, start with pinpointing a mission that’s the company’s sole focus. You’ll be fighting for a share of limited charitable giving, so don’t make your efforts more difficult by taking up a cause that another group has already embraced. Both the group and the cause itself would likely suffer.

Next, make sure interest is sufficient and funding is locked in. Ensure that the resources and support for your initiative are in place and that your plan of action is clearly outlined. This will help convince potential donors you’re a good candidate for their contributions, which most people don’t give out easily. In the long term, nonprofits need business plans that minimize operating costs to ensure sustainable organizations. Getting your group to that next step isn’t easy, but the benefits are tangible.

Make a Nonprofit Pivot

If transitioning your group to a nonprofit seems like a good fit, these to-do items will help make the process as smooth as possible.

1. Network as much as you can. Your nonprofit’s effect is only as strong as the people advocating for it. Make sure as many influential people know about it and talk it up as possible.

Take an active approach to networking. If you attend an event such as an NGO conference, think of questions ahead of time and share your plans with your organization. Whenever possible, get feedback from people who are already well-established in your group’s field of interest to figure out the best course of action.

2. Research regulations. Regulatory requirements may sound like a chore, but you’ll need to know how they work to understand the legal side of the transition to a nonprofit. Regulations are not only complex and different from state to state, but they’re also constantly changing.

Even though you’re passionate about your group’s subject matter, consider taking a class at a local college to get the most up-to-date guidance on your specific situation and how to get any compliance issues squared away. Setting up your nonprofit only to find it doesn’t comply with certain legalities isn’t the best way to get it off the ground.

3. Work with an accountant. Embrace the first lesson of nonprofits, and get ready to get lean. Utilize an accountant or financial advisor, and make sure that person has experience working with nonprofits.

These professionals identify specific steps a nonprofit will need to take in order to best protect itself financially. For instance, not-for-profits should create a statement of financial position instead of a traditional balance statement, or a statement of activities detailing revenue and expenses instead of an income statement.

Fundamentally, nonprofits are created to meet specific societal needs. If your group has the drive and resources to merit pursuing the advantages afforded to a nonprofit, take these steps to heart and take your cause to the next level.

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Kevin Xu is the CEO of MEBO International, a California- and Beijing-based intellectual property management company specializing in applied health systems. He also leads Skingenix, which specializes in skin organ regeneration and the research and development of botanical drug products. Kevin is co-founder of the Human Heritage Project.

          
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