Nonprofit organizations are governed by an elected board of directors. The IRS recommends a minimum of 5 unrelated individuals. We recommend 5 to 7. Unrelated, means that they have no familial or business relationship with one another or employees/staff of the organization. This is the group of individuals that have ultimate legal responsibility and decision making authority for the organization. It is expected that board members will serve without compensation.

It is vitally important that you fully assess the needs that you intend to meet within your community. Ask yourself, what empirical evidence exists to support your assumptions about the needs of the community and how would you go about convincing others of the existence of that need. A hunch, feeling, or single personal experience is valuable, but may not be enough to sustain an entire organization. Make sure that what you think is a need is actually a need people want to have met.

Having a clearly articulated and developed program is the basis for becoming a tax-exempt organization. Be prepared to communicate you theory of change, your philosophy of approach, and the specifics of how your program will work and whom it will serve. You will need all of these specifics for the next phase, building a budget. Additionally, many regulators, donors, and volunteers will want to know EXACTLY what you plan to do. An idea is a great start, but it cannot be the foundation of the organization.

No one would start a for-profit business without a clear understanding of what the venture would cost and where revenue is likely to come from. The same is true for a nonprofit. Once you have your program(s) developed, you need to determine what resources are needed to deliver it. Many of these resources may be non-financial (volunteers, gifts in kind), however you are likely to need some money to buy some goods and services. You will be expected to project 3 years of future budgets when applying for 501(c)3 designation from the IRS, so be prepared.

Just because your organization is a nonprofit does not mean that people will be lining up to give you money. In fact, many nonprofits generate the bulk of their revenue through fees for services. Charitable contributions are an important part of the mix and more important for some than others. However, almost every nonprofit struggles at some level when it comes to identifying and securing charitable donations. It is important to do you homework to determine whether foundations and individuals will be willing to contribute to your cause. Go out and ask and find out who gives.

• Funding Sources for Various Types of Organizations in Maryland