Menu
Home
Log in / Register
 
Home arrow Business & Finance arrow Financial Sustainability for Nonprofit Organizations
< Prev   CONTENTS   Next >

STARTING A NONPROFIT ORGANIZATION

Starting a nonprofit organization requires three key factors: (1) a vision and mission, (2) satisfaction of legal requirements, and (3) organization and management practices.

Vision and Mission

The Industrial Revolution in England (1750-1850) facilitated the birth of big cities where people (pickpockets, beggars, drunks, thugs, and abandoned children) lived in very poor economic and social conditions. Also, there were many young men who left the countryside to work in urban jobs that became available as a result of the Industrial Revolution. These young men worked about 12 hours per day, 6 days a week. In June 1844, George Williams, a young British sales assistant in a London shop, and a group of his coworkers started a group to bring hope and comfort using a Christian perspective to young men living in unhealthy conditions in London. The group was called the Young Men's Christian Association or the YMCA. Today, the YMCA operates in many countries in the world, serving people from all social, political, and economic backgrounds.

In June 1859, a Swiss businessman named Jean-Henri Dunant traveled to Italy, then occupied by France, in order to lobby before the French emperor about his difficulties in doing business in Algeria, which was also occupied by France. While in Italy, Dunant witnessed an important battle of the Austro-Sardinian war in a small Italian town called Solferino. In A Memory of Solferino, Dunant reported that about 40,000 soldiers from both sides died or were left wounded in just 1 day. The tragedy was that there was little to no basic medical care for the wounded. Dunant abandoned the business mission of his trip,

TABLE 1.2 Sections of 1986 Tax Code Relative to Tax-Exempt Organizations in the United States

Section of 1986 Tax Code

Description of Organization

General Nature of Activities

501(c)(1)

Corporations organized under Acts of Congress (including federal credit unions)

Instrumentalities of the United States

501(c)(2)

Title-holding corporation for exempt organization

Holding title to property of an exempt organization

501 (c)(3)

Religious, educational, charitable, scientific, literary, testing for public safety, to foster national or international amateur sports competition, or prevention of cruelty to children or animals organizations

Activities of a nature implied by description of class of organization

Further classified as:

private foundations

or

public charity organizations

p5ÔÏÏc)(4)

Civic leagues, social welfare organizations, and local associations of employees

Promotion of community welfare; charitable, educational, or recreational

501 (c)(5)

Labor, agricultural, and horticultural organizations

Educational or instructive, the purpose being to improve working conditions and to improve products and efficiency

501 (c)(6)

Business leagues, chambers of commerce, real estate boards, etc.

Improvement of business conditions of one or more lines of business

Social and recreation clubs

Pleasure, recreation, social activities

501 (c)(8)

Fraternal beneficiary societies and associations

Lodges that provide payment of life, sickness, accident, or other benefits to members

501(c)(9)

Voluntary employees' beneficiary associations

Provide payment of life, sickness, accident, or other benefits to members

501 (c)(10)

Domestic fraternal societies and associations

Lodge devoting its net earnings to charitable, fraternal, and other specified purposes; no life, sickness, or accident benefits to members

501(c)(11)

Teachers' retirement fund associations

Teachers' association for payment of retirement benefits

501 (c)(12)

Benevolent life insurance associations, mutual ditch or irrigation companies, mutual or cooperative telephone companies, etc.

Activities of a mutually beneficial nature similar to those implied by the description of class of organization

501 (c)(13)

Cemetery companies

Burials and incidental activities

501(c)(14)

State-chartered credit unions, mutual reserve funds

Loans to members

501(c)(15)

Mutual insurance companies or associations

Provide insurance to members substantially at cost

p501(c)(16)

Cooperative organizations to finance crop operations

Financing crop operations in conjunction with activities of a marketing or purchasing association

501(c)(17)

Supplemental unemployment benefit trusts

Provide payment of supplemental unemployment compensation benefits

501(c)(18)

Employee-funded pension trust (created before June 25, 1959)

Payment of benefits under a pension plan funded by employees

501(c)(19)

Post or organization of past or present members of the armed forces

Activities implied by nature of organization

501 (c)(20)

Group legal services plan organizations

n/a

501(c)(21)

Black lung benefit trusts

Funded by coal mine operators to satisfy their liability for disability or death due to black lung diseases

501 (c)(22)

Withdrawal liability payment fund

To provide funds to meet the liability of employers withdrawing from a multiemployer pension fund

[501(c)(23)

Veterans organization (created before 1880)

To provide insurance and other benefits to veterans

501(c)(25)

Title-holding corporations or trusts with multiple Parents

Holding title and paying income from property to 35 or fewer parents or beneficiaries

501 (c)(26)

State-sponsored organization providing health coverage for high-risk individuals

Provide health care coverage to high-risk individuals

501(c)(27)

State-sponsored workers' compensation reinsurance organization

Reimburse members for losses under workers' compensation acts

501(d)

Religious and apostolic associations

Regular business activities; communal, religious community

501(e)

Cooperative hospital service organizations

Perform cooperative services for hospitals

501 (f)

501 (k) 501 (n)

Cooperative service organizations of operating educational organizations

Child care organization

Charitable risk pools

Perform collective investment services for educational organizations

Provide care for children

Pool certain insurance risks of 501(c)(3)

and devoted himself to helping with treatment and care for the wounded. Also, he organized and motivated the local community to help care for the wounded of both sides, with no discrimination. Then he advocated before powerful political and military figures in Europe for the creation of a voluntary relief organization that could assist nurses in caring for the wounded. He also argued for an international treaty to guarantee the protection of neutral medical professionals and volunteers caring for the wounded on a battlefield. The commitment and determination of Dunant and other people whom he won to his cause led to the creation of the International Committee of the Red Cross. Today, every country in the world has its version of the Red Cross, which provides assistance not only during wars, but also in times of natural disaster.

In 1860, three women in Hartford, Connecticut—Mary Goodwin, Alice Goodwin, and Elizabeth Hammersley—saw young boys in the streets who seemed to be a lost cause. These women felt the need to take action and provide an alternative way of life for these children. They created a club to provide hope to these young boys. The Boys Club was born. Later, other people bought into the vision and created Boys Clubs throughout the United States. They created Boys Clubs of America, which received a U.S. congressional charter in 1956. Later, in 1990, Boys Clubs of America integrated young girls, and the organization renewed its charter to become what is known today as "Boys and Girls Clubs of America."

Mary, Alice, and Elizabeth saw a situation that probably broke their hearts. They formed a vision from that situation. They acted on that vision, and created an organization that rescued the lives of many people. George saw a need, responded to a call for action, and made a difference through a nonprofit organization called the YMCA. Like George Williams and the women of Hartford, Jean Henry Dunant saw a need. He claimed a vision and a mission from that need. He persuaded others to espouse his vision, and created a nonprofit organization that positively changed the world forever. In all three examples, there was a need identified by one person or a group of people. Then, there was a vision. The vision was translated into a mission to act, to create a nonprofit organization that transcends times and makes a difference in the lives of people. The point is that serious nonprofit organizations start with a vision, and from the vision emerges a mission to drive the call for action. Organizations, including nonprofit organizations, express their drive through their vision and mission statements.

Vision Statement: Haines (2000) refers to vision statements as "shared hopes, dreams, and shared image of the future" (p. 25). Allison and Kaye (2005) define a vision statement as "a guiding image of success" and "the pursuit of this shared image of success that inspires and motivates people to work together" (p. 68). Although the above definitions inform us about what a vision statement is, they fail to provide specific indicators that would enable us to tell a well-written organizational vision statement from one that is not.

Jean Francois (2011) asserts that in the vision statement of most organizations, there are:

A strategic intent (where the organization will be at some future time)

- A statement of value (the values that the organization will be recognized for)

- A statement of quality (the quality of its operations and products or services)

One or more indicators of change in a broader community, nation-state, or world perspective

According to Jean Francois (2011), a vision is "an ideal picture of what an individual, organization, or a business strives to be at some future time. This is an overall direction, something to be pursued" (p. 7). The focus can be on the organization or the client or a community, a society, or the world.

Example 1: Save The Children's Vision Statement

Our vision is a world in which every child attains the right to survival, protection, development and participation.

This vision statement includes:

- A strategic intent: ...a world in which every child attains ...

A statement of value: every child = inclusion, children's rights and protection

- A statement of quality: child survival, protection, development, and participation

Example 2: Mississippi Library Commission's Vision Statement

All Mississippians have access to quality library services in order to achieve their greatest potential, participate in a global society, and enrich their daily lives.

This vision statement includes:

A strategic intent: All Mississippians have access to quality library services ...

- A statement of value:... achievement, participation in globalization, life enrichment

- A statement of quality:... access to quality library services

Mission Statement: Most textbooks on for-profit or nonprofit organizations introduce the concept of the mission statement as a mandatory ingredient of the organization's strategic-planning process (Allison & Kaye, 2005; Haines, 2000; Holland & Ritvo, 2008; Jean Francois, 2011; Smith, 2005). Almost all scholars agree that a mission statement answers the following questions: (a) Why does organization "X" exist? (b) What does it want to accomplish? (c) For whom? (d) What are the guiding principles in the process? Jean Francois (2011, p. 9) indicates that a mission statement should include:

- A statement of purpose (Why does organization "X" exist?)

- The specification of the clients (Whom does the organization serve?)

- The business (What are the services, products ... offered by the organization?)

- The philosophy (What are the values, beliefs, or guiding principles of servicing, producing... ?)

- And possibly a self-concept (Is there some concept of pride that the organization values in a unique way?)

Example 3: Big Brothers Big Sisters of America's Mission Statement

The mission of Big Brothers Big Sisters of America is to make a positive difference in the lives of children and youth, primarily through a professionally supported one-to-one relationship with a caring adult, and to assist them in achieving their highest potential as they grow to become confident, competent and caring individuals.

This mission statement includes:

- A statement of purpose:... make a positive difference

- The specification of the clients: ... children and youth

- The business:... professionally supported one-to-one relationship with a caring adult

- The philosophy:... assist them in achieving their highest potential

- And possibly a self-concept:... confident, competent and caring

Example 4: The Gazelle Trust's Mission Statement

Provide essential financial and material assistance, in terms of education, shelter and healthcare to orphans and vulnerable children in developing countries.

This mission statement includes:

- A statement of purpose:... provide essential financial and material assistance

- The specification of the clients: ... orphans and vulnerable children in developing countries

- The business:... education, shelter and healthcare

- The philosophy:... humanitarian assistance

- Self-concept: None!

 
Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >
 
Subjects
Accounting
Business & Finance
Communication
Computer Science
Economics
Education
Engineering
Environment
Geography
Health
History
Language & Literature
Law
Management
Marketing
Philosophy
Political science
Psychology
Religion
Sociology
Travel