Creating a nonprofit is usually paved with good intentions, but successfully launching one can be time-consuming, expensive, and challenging.
While organizations may not avoid these issues, they can be better prepared to tackle each when they know what to expect. Here’s a brief guide to making a nonprofit in Australia:
1. Determine the Ideal Funding Model
The Stanford Social Innovation Review (SSIR) discusses one of many nonprofits’ long-standing dilemmas: the funding model.
The problem often lies in the organization’s lack of separation between donor and beneficiary value proposition. Sometimes they focus too much on the recipients of the charities, which are likely not the ones who help them generate the funds – the donors do.
For a nonprofit to attract donors—and encourage them to contribute often—it needs to answer the proverbial question, “What’s in it for me?” It has to identify the most suitable funding model, of which SSIR provides ten.
These include the Beneficiary Builder, which many universities use. A perfect example is encouraging successful alumni to donate to the causes of their alma mater.
The Heart Connector is the funding model of the likes of the Make-a-Wish Foundation. The organizations that use this focus on causes that the majority (regardless of demographics) resonate with.
2. Build a Website
More people are using the Internet not only to shop but also to donate. In a 2018 charitable-giving report, online donations made up nearly 9% of the total fund-raising revenues. This percentage was higher than in the previous year.
The pandemic didn’t even prevent individuals from being generous. The Women’s Philanthropy Institute’s recent report suggested that over half of the US households contributed to a charity while the health crisis was still ongoing.
Many nonprofits often rely on crowdfunding websites such as Kickstarter or GoFundMe to generate donors. Still, they can be better off with obtaining a website-hosting service and run their official site:
- Nonprofits can have more freedom in their strategies to attract and retain donors.
- They can provide more information about their organization, causes, beneficiaries, and even donors.
- With a website, nonprofits can create a more credible persona online.
- Nonprofit organizations can engage their existing and would-be donors and beneficiaries.
3. Know the Tax Implications
Australia recognizes at least two broad categories of nonprofits: charities that include health promotion charities (HPCs) and public benevolent institutions (PBIs) and other nonprofits, such as recreational or community clubs.
Although all legitimate nonprofits can enjoy some tax concessions, they do not receive the same benefits. Take, for example, income tax exemptions.
The tax agency identifies only nine groups that may be exempt from paying income tax. Further, to qualify, it must endorse the nonprofit as tax-exempt. The agency also has the discretion to demand payment of the said tax when necessary.
The nonprofit has to register for a goods and services tax (GST) if its total turnover is $150,000. Otherwise, it becomes optional.
Taxes are complicated, but nonprofits can also be maximized to help them raise income and use it to fund their services and programs. Anyone planning to run such an organization should consider working with a tax specialist at every phase of the group’s growth.
4. Market the Nonprofit Strategically
Contrary to popular belief, nonprofits, huge ones, produce high incomes. They can even amount to thousands or even millions of dollars. However, the demand can often outpace the supply, which makes budgeting extremely important.
Meanwhile, marketing takes a significant chunk of a nonprofit’s budget. But the organization may spend less or generate better value for its efforts if it can be more strategic with its approach:
- Attract the newer generations – These include millennials and Generation Z. Not only do they have high spending power and consumer influence, but they are also more purpose-driven. Many studies even show they’re willing to spend more on brands that are sustainable or champion a cause.
- Enhance the site to be mobile-friendly – As the number of people using smartphones increased, so do mobile giving. A Blackbaud Institute report showed that at least 25% of online donations occurred through a smartphone or tablet.
- Partner with for-profit brands and organizations – Brands can use nonprofits to enhance the value of the products and services they’re offering. On the other hand, nonprofits can take advantage of the robust marketing strategies of these for-profit companies, including improving public awareness. They may also generate income if for-profit groups donate a portion of their sales to the organization.
Creating a nonprofit can take so much from someone, but it can also be the most fulfilling venture. With this guide, the road will hopefully be easier to tread on.
