Copyright 2013 Rainie Howard Enterprises, LLC. All Rights Reserved.

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2 The information contained in this guide is for informational purposes only. I am not a lawyer or an Copyright accountant Any legal Rainie or Howard financial Enterprises, advice that I LLC. give All is my Rights opinion Reserved. based on my own experience and education. You should always seek the advice of a professional before acting on something that I have published or recommended. Any results disclosed in this guide should not be considered average. Please understand that there are some links contained in this guide that I may benefit from financially. The material in this guide may include information, products or services by third parties. Third Party Materials comprise of the products and opinions expressed by their owners. As such, I do not assume responsibility or liability for any Third Party material or opinions. The publication of such Third Party Materials does not constitute my guarantee of any information, instruction, opinion, products or services contained within the Third Party Material. The use of recommended Third Party Material does not guarantee any success and or earnings related to you or your business. Publication of such Third Party Material is simply a recommendation and an expression of my own opinion of that material. No part of this publication shall be reproduced, transmitted, or sold in whole or in part in any form, without the prior written consent of the author. All trademarks and registered trademarks appearing in this guide are the property of their respective owners. Users of this guide are advised to do their own due diligence when it comes to making business decisions and all information, products, services that have been provided should be independently verified by your own qualified professionals. By reading this guide, you agree that myself and my company is not responsible for the success or failure of your business decisions relating to any information presented in this guide. Start Your Dream Organization Mentoring Girls Copyright 2013 by Rainie Howard Enterprises, LLC All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means without written permission from the author. 2

3 Start Your Dream Organization Mentoring Girls I m excited to coach you through the beginning stages of starting your organization! I remember when I founded started Sisters of Hope, Inc. It started with a strong urgency to help girls that struggled with low self-esteem, bullying and a lack of confidence. I experienced those same things when I was twelve and I wanted to do something to empower girls who struggled like I did. I know you and I both share a passion to mentor girls and change their lives. I must say that is the best foundation to starting a successful mentoring organization. In this guide, I will give you step-by-step strategies on how to start a successful and unique business mentoring girls. As you read the tips and strategies, be sure to take notes and plan specific goals for your organization. If I can help just one person succeed in starting his or her own business, then the weeks I spent preparing and writing this E-Book would be worth it. Here s to you and your success! Rainie Howard 3

4 Table of Contents Where to Start?... 5 Exposing the BIG Myth About Nonprofits.. 5 What s the Difference Between For-profit & Nonprofit?...5 How Can I Make Money as a Founder of a Nonprofit?...6 The Pros and Cons of a Nonprofit Organization.6 How to Write a Mission, Vision & Values 7 How to Avoid the #1 Mistake That Most People Make..11 Incorporating & Applying for 501(c)3 Status. 12 Create Your Programs & Services Steps to a Successful Nonprofit Business.17 Strategic Planning for Your Business...19 Launch Your Business! 21 4

5 Where to Start? This E-book is a great start! Think about how advanced you ll be in your knowledge and understanding of starting and launching your business after reading this book. I must say it took me years to learn the tips and strategies that you will read about in this guide. So, let s get started. Exposing the BIG Myth About Nonprofits There s a BIG myth that states, nonprofit organizations cannot profit, and the services and products of a nonprofit organization are supposed to be free or underpriced. Let me clarify the facts. There are several multi-million dollar nonprofit organizations that profit greatly, and that s a good thing. Cash flow keeps an organization alive, whether it s a for-profit or nonprofit. What s the Difference Between For-Profit & Nonprofit? The difference between a nonprofit and a for-profit is the profit distribution. A for-profit organization, such as Macy s, McDonald s, or Sony, can distribute its profits to the owners and shareholders of the company. However, nonprofit organizations can t do the same with their profits. After expenses and bills are paid, a nonprofit must invest its profits back into the organization s programs and services, or place the profits in a savings account until they are needed. Nonprofit organizations do not have any owners, but there are shareholders. Nonprofit shareholders are those who benefit from the organization s services. Therefore, as a mentoring organization, your shareholders are 5

6 the young girls you mentor, their parents, and the community that benefits from the organization s program focused on enhancing and empowering youth. How Can I Make Money as a Founder of a Nonprofit? As the founder of a nonprofit organization, you will earn money being a paid staff member of the organization. You can still, make a living working for a nonprofit. So don t panic there s hope! In the beginning, I didn t see Sisters of Hope as a nonprofit organization; my only focus was helping girls. I didn t plan on it being a business. I started off as any volunteer would, by providing my time; talents and resources to helping girls. I didn t receive any monetary gain in return. The organization began as a community group/girls club that later elevated into a 501(c)3 nonprofit organization. I must say that I have no regrets about those beginning years. Everything happened the way it was supposed to. My motives were in the right place making a difference. However, after becoming an established organization I discovered how to make a living while simultaneously making a difference. Pros and Cons of a Nonprofit Let s start with the Pros: You will get the overwhelming satisfaction of making a difference in society You will receive tax exemption on most income as a 501(c)3 You will qualify to receive grants from foundations and corporations You will qualify to receive tax-deductible contributions from your donors Now with the Cons: Nonprofit employees are taxed on their income, just like for-profit employees 6

7 The IRS requires the filing of an annual report with the IRS. The density of this report increases, as your nonprofit s income increases. Competing for grant money is very difficult, and receiving individual donations can be challenging. You will be competing with larger organizations that are more established and have a stronger track record. If you decide to close your nonprofit organization you aren t allowed to take any of the organization s assets with you. Let me review my personal experience, after learning about all of the pros and cons of starting my nonprofit. I attended a nonprofit workshop, where I received all the basic information about nonprofit organizations. After reviewing the pros and cons, I was even more confident that I needed to register Sisters of Hope (at that time a community group/girls club) as a public charity, 501(c)3 nonprofit organization. I was overwhelmed with the satisfaction of changing lives, receiving support from the IRS tax exemption, and the potential support of donors, and corporate grant contributions. Although, the cons aren t necessarily favorable, they aren t that bad either. For starters, employment income taxing is the same as a for-profit company, so in other words there s no way of not paying income taxes as an employee. The annual report required by the IRS is very simple to complete for start-ups organizations. For nonprofits whose gross receipts are $25,000 or less, there is a very simple online e-postcard that can be filed electronically. Regarding grants and donation competition, I have discovered that there are other ways of getting funds for your organization. There are many nonprofit organizations that do not rely on grant money or individual donations. Sisters of Hope s income primarily comes from alternate funding strategies, including membership, program and event fees and service contracts. As you can see, there are ways to ensure that your organization is not being negatively impacted by the cons. 7

8 How to Write Your Mission, Vision and Values Your mission statement is very important, because it tells people what you do. The best mission statements include the purpose, benefits and strategies of the organizations. Your mission statement identifies your ideas, goals and inspirations for your organization. Before writing your mission statement, its important that you spend some time thinking about what your organization hopes to accomplish. The mission statement gives you direction. It s a constant reminder of both your purpose, and where you are headed as an organization. It also helps your clients, volunteers and staff members connect, collaborate and share common goals. Here s what every mission statement need: An overarching purpose Specific Goals Focused activities Benefits of the organization Sisters of Hope Mission Statement: Sisters of Hope provides prevention and empowerment programs to women and girls. We strive to enhance their lives through enrichment programs, products, workshops and events that serve and inspire individual advancement. Our programs result in the increase of confidence, courage, educational and personal development. When I started writing the mission statement for Sisters of Hope, I first thought about what I would like the organization to accomplish. Then I thought about the desired end result, or the outcome, of my organization s services. You can brainstorm ideas by 8

9 asking yourself questions like. Why do I want to start a nonprofit organization? Who will it benefit, and how? A mission statement involves identifying what the organization does, who benefits from the organization s service and activities, and the desired end results of the organization. The mission statement does not need to be a novel or 10- page essay. In fact, it shouldn t be. The mission statement should be 1-5 sentences long. Be sure not to add any jargon or unfamiliar phrases, and limit the use of adjectives. It should be written in plain understandable language. The Vision The vision statement is your dream! Its what you believe your organization is capable of becoming. It can also describe the desired future of the organization for what it is by adding phrases like the greatest or recognized as a leader. Sisters of Hope vision: We will help women and girls of every nation, country, state and city, inspiring and encouraging them to live the life they were meant to live. To see themselves victorious, and do everything in their power to believe that they can become who they were created to be. Writing your values is a very simple process. Brainstorm what you believe is, or should be, valuable to your organization. Does it entail working with integrity and honesty? Is it a focus on humility? Think about what s important to your organization, and write it down. 9

10 Sisters of Hope Values: Creating and offering quality, effective programs Serving others with love and patience Working in honor and integrity Striving to be the best that we are capable of being Take this time to write out your organization s mission, vision and values. 10

11 How to Avoid the #1 Mistake Most People Make? I ve learned so much leading Sisters of Hope and I often reflect on what I would do differently. This leads me to the number one mistake most people make when starting a nonprofit organization. Here it is failing to plan, or failing to write a business plan. When you fail to plan you plan to fail. Without a good plan, your nonprofit can not survive. Here are a few reasons why nonprofit organizations need solid planning: It creates structure, allowing a nonprofit organization to better evaluate its performance It helps the organization be prepared for external environmental changes It builds structure and helps the organization fulfill its mission Never go with the flow; plan instead. As an entrepreneur it s very important that you be proactive rather than reactive. Studies show that almost 80% of businesses that fail did not have a business plan. You should constantly be planning from the beginning and throughout your years of development as a business leader. I am continually restructuring and re-evaluating my business plan in order to successfully grow Sisters of Hope. The planning doesn t end after you start your business. Rather, it s a continual process. When you begin to plan your organization, be sure to review your mission, assess the internal and external situations, survey your potential clients/mentees and start writing. Every business plan should include the following: 11

12 Executive Summary Company Description Market Research Product & Service Marketing & Sales Financial Projection Now lets get planning! I love the scripture, Habakkuk 2:2-3 Write the vision; make it plain on tablets, so he may run who reads it. For still the vision awaits its appointed time; it hastens to the end it will not lie. If it seems slow, wait for it; it will surely come; it will not delay. Incorporating and Applying for a 501(c) 3 Status Incorporating As a nonprofit organization you will need to set up the organization s legal structure by applying for tax exemption. However, there s a process to applying for tax exemption. You will first need to form a corporation. A corporation is an entity or an organization established by a group of individuals (the incorporators) under the laws of the state in which the organization will operate. This process can be very easy; I completed this step online, on the Secretary of State website. You can search online for Secretary of State for your specific state, and visit the provided website to obtain an application to become a corporation. After completing the application you may submit it and pay the fee online. Governing Documents As a corporation there are certain documents you will need to create. These governing documents include the Articles of Incorporation and the organization s bylaws. The 12

13 Articles of Incorporation include general information regarding the organization such as the reason it exist, specifies that the corporation will not allocate a profit the Directors, and is signed by the Directors of the organization. The bylaws describe how board members are elected and the length of their terms, the various positions on the board, responsibilities of the board, required attendance of board members, and the various rules for board meetings. Employee Identification Number The next step in the process is obtaining your Employer Identification Number or EIN. Even if you do not plan to hire employees, you will still need this number to apply for tax exemption. You can get your EIN easily and for free. Simply download and print the SS-4 form at or you can complete it online. Tax Exemption 501(c)3 Applying for the tax exemption is the final step in becoming a public charity tax exempt 501(c)3 nonprofit organization. In order to apply for tax exemption, complete the IRS Application for Recognition of Exemption of the IRS, Form You may download this form at where you can also download the instructions for filling out and submitting the application. This application is long, and it can be daunting for some. However, the instructions are very helpful. Although the application is about 27 pages long, each page/schedule does not apply for every organization. If a schedule does not apply to your organization, do not submit it with your application to the IRS, it s best that you toss it. The application fee is $850 for organizations anticipating revenue of more than $10,000 per year, however if your organization intends on having less revenue less than $10,000 per year the fee is $400. Although you may save $450 on the initial application fee, I recommend paying for the $850 application, which covers everything. If there s a chance that your organization will gross over $10,000 in any one year, you will want to save yourself from being penalized by the IRS. If the fee isn t in your budget, I recommend doing some fund-raising to pay for your application fee. Be sure to send the fee with the completed application, Articles of Incorporated, bylaws, and any 13

14 attachments. Make a copy of everything, and keep it filed away for your records. I created a binder with all of the important documents for Sisters of Hope. Whenever I need the important information its very convenient to refer to my binder. Creating Your Programs & Services Now is a great time to start creating your programs and services. A nonprofit s organizational structure is build around programs and services. A program is a system with inputs, processes, outputs and outcomes. The program inputs are the resources needed to run the program, including money, facilities, clients, volunteers, program staff, and supplies. The processes include ways in which the programs are delivered such as how clients are mentored and/or counseled, children are care for, youth are tutored etc. Program outputs are units of services, such as the number of clients served, the number of members within your organization etc. Finally, outcomes 14

15 are the results of the programs and services, such as increased high school graduation rates, a decrease in mental illness etc. The outcomes are very important, and this information is often requested by funders during the evaluation of programs. When creating programs and services, remember that they must align with the mission of the organization. All program planning should align with the overall planning of the organization, including the vision, mission and overall goals of the organization. As you begin to plan your organization s programs, it is a good idea to get your board involved. This can help you become creative by utilizing several minds, as well as getting helping hands and ideas throughout the process. You never want to do it all by yourself. This will overwhelm you and cause a lot of unnecessary stress. It s also a great idea to involve your potential clients when creating programs especially when working with youth. They will give you ideas that you and your board would have never thought of. I would often ask our girl mentees what ideas they had and what topics they would like to discuss. I would also allow them to help design t-shirts and other organizational material. Youth can be very creative, and can provide fresh new ideas that will attract their peers; this may transition into increased membership or clients, which will further the mission of your organization. As you begin planning your programs, start with your program outcomes. What do you want to see happen? Be very specific. Maybe you want 10 girls to enhance in their selfesteem and perception of their body image and you will evaluate the results through a pre and post program survey. You may even want 15 girls to increase their GPA s through your tutoring program. No matter what it is that you hope to accomplish, you must first identify it, then begin to plan it out. Next you want to identify your program goals. Maybe you want to support the efforts of 30 girls to graduate from high school with a 3.0 GPA. Be very specific and realistic in your processing. It s also important to determine your program strategy, how will you accomplish your goals. An example of a program strategy for supporting 30 girls 15

16 graduating from high school with GPAs of 3.0 could be providing free tutoring services and mentors to high school students with GPA s of 2.0 and under. This structure is a great way to organize the programs for your nonprofit organization. Be aware that collaboration in the nonprofit industry can be very beneficial. You may want to collaborate with a school in order to deliver more services and reach more girls. You may also want to consider collaborating with a YMCA or church in order for your organization to successfully reach its goals. I have several partnerships and collaborations with other organizations that have helped me grow Sisters of Hope, Inc and accomplish our goals very quickly. Collaboration doesn t have to be complicated at all. All it takes is gathering your goals and program plans, and finding an organization with similar goals and values. As a small grass-root organization, I recommend you seek to partner with larger organizations that can positively benefit your organization and enable it to grow and prosper. Our partnership with the local history museum has helped us grow tremendously. It is a very beneficial partnership. We bring successful special events to the museum, which helps us in our fundraising goals, and the museum benefits through an increase in their exhibition attendees from the people we invite. All partnerships should benefit both parties involved. Now is a great time to plan out your programs. What are the outcomes/results you would like to see from your programs? What are the goals you plan to accomplish? What are the processes of your programs? 16

17 5 Steps to a Successful Nonprofit Business 1. Be very clear about your intentions. Why are you starting a nonprofit organization? Is this really important to you? Why is it important to you? What is your measure of success and is it realistic for what you are pursuing? The deeper you go into answering these questions, the clearer your intentions will be. It s important that your motives and intentions are in the right place otherwise you may realize later that this type of business is not for you. Your answers to the above questions will help you identify the true foundation for starting your business. 2. It s very important to know and understand your business competitors. In the nonprofit industry, funders often question why you exist if there are others doing similar work. They often ask: Why can t you just volunteer and help the organizations that are doing the services you do, instead of starting a whole new organization? You have to know what makes your organization different and unique. You need to justify why it s important that you create your organization. I had to discover my brand very quickly after starting my company. I had to identify our niche, and communicate it very well so that others would know why we were needed despite the existence of competitors. 3. Stay focused on your top fund-raising strategies. Many nonprofits fail because they are too focused on the services and programs, and they fail to recognize the inputs (money and resources) needed to successfully operate the organization. If money and resources run out, the programs will stop. Please understand that you need funds in order to deliver great results. Many nonprofit founders and CEO s begin by volunteering with a strong passion to make a difference. However, without the proper resources, your organization 17

18 can go under very quickly. Fundraising is very important. Please do not neglect the inputs necessary to support the outcomes. 4. Set your goals for your business, and break them down into small shortterm tasks. If you want to have a successful business, you must set goals. I experienced great success in my business because I was very goal-oriented. I set goals, and I functioned daily by completing those tasks that brought me closer to accomplishing my goals. As a business director of both a nonprofit and for-profit company, I have had to stay goal-oriented. As you do the same, you will accomplish great things that will bring you enormous satisfaction. 5. Understand your weaknesses. It s vital that you know what it is you are good at, and that you partner with others who are strong in the areas where you are weaker. I understand that I m not a very detail-oriented person. I m a natural visionary/overseer who is often looking at the big picture. Therefore, I partner with people who are really good with details and who can help me accomplish my goals step by step. I encourage you to identify your weaknesses and work with others who can strengthen you in those areas. Thrive in your strengths. Stay encouraged throughout the process, and understand that your big vision is not meant for you to accomplish alone. 18

19 Strategic Planning For Your Business When it comes to strategic planning for your organization you must understand your organization completely. You should study your organization s pros and cons. It is vital that you be very realistic about your organization. For instances, your board may need leadership training, or your executive director may have issues communicating with volunteers or staff members. Understand the issues of your organization, and try very hard not to be biased. It may be beneficial to bring an outsider in to provide advice. However, honesty may create conflict so be prepared. All staff and board members should show respect for each other in order to be productive in the strategic planning process. A very common way of collecting information is through a SWOT analysis. SWOT is an acronym for Strengths-Weaknesses-Opportunities-Threats. A sample SWOT analysis for a mentoring program for girls may look like the following: Strengths The mentors are highly qualified and committed Girls and parents are very satisfied and give services a high rating Program costs are funded by grants Weaknesses The cost per client is higher than competitor s programs Most funding is through government grants; individual contributions are low Organization is not well-known in the community 19

20 Opportunities Organization has cash reserved to invest in growth Population trends predict a growth in membership and client increase Media are showing an interest in covering issues related to the organization Threats Local government has a budget deficit and plans to cut funding during the next fiscal year Program cost are increasing by 3% each year After completing a SWOT analysis you can easily identify what your organization needs to do to improve, and what it needs to focus on. After reviewing the example above its clear that the organization has sufficient funding and satisfied clients. However, the service costs are high, the organization s reputation is low, and there are not enough individual contributions. Also, the government is planning to cut funds. This shows that the organization should focus on building community awareness and creating new streams of funding instead of depending completely on government funds. This type of strategic planning has helped my organization grow tremendously. I suggest you try it and watch it work for your organization. 20

21 Launch Your Business Launching your business can be very exciting! This is the manifestation of all the behind-the-scenes work coming to life. Some people celebrate with business launch parties, ribbon-cutting ceremonies, or open houses. If your business is limited on resources, you might want to consider hosting a meet and greet. This is just a small celebration introducing your business to the community. As you consider planning a business-launching event be prepared. Order business cards, brochures, flyers and other materials needed to promote your event well in advance. Make sure that your marketing material has information about future services and programs that you plan to offer. This event should be free and open to the community. Be sure to offer food and refreshments as an incentive to your guest. This event is meant to cater to your potential clients and spark their interest in your services. Have fun! Play games that complement your programs. Most importantly, have a system set up that will help you collect names, s and telephone numbers of potential clients. This will help you to establish a database of your potential clients, volunteers and donors. When I started my business, I often kept a sign in sheet at the registration table. This ensured that, everyone who attended the event would fill out the sign-in sheet prior to participating in the event. You can begin to build your database, which will help you grow your business. I ll discuss this in the next ebook, Grow Your Dream Organization Mentoring Girls. 21

22 THANK YOU! I hope you ve enjoyed this E-book as much as I loved writing it for you. I can t thank you enough for your continued support. I appreciate you for taking time out of your day or evening to read this, and if you have an extra second, I would love to hear what you think about it. Please leave a comment at or if you d rather reach me in private, don t hesitate to shoot me an . I read each and every single comment and ; so don t be afraid to say hi! Lastly, if you haven t already, you can follow me on Twitter (@rainiehoward), and join in on the conversations going on right now on my Facebook Fan Page. Thanks again, and I wish great success! Rainie Howard rhoward@sistersofhope.org 22