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Business Stages: Non-Profit


    The basics of creating a non-profit

    2 min read

    Your non-profit organization will need a well developed business plan to get it off the ground. In order to simply apply for registration you'll need to clearly state the objects of your organization. You must also be aware of and prepared to comply with all federal, provincial and municipal requirements. Furthermore, in order to be successful, you'll need to have a carefully developed structure, operating procedures and bylaws.

    It may sound like a lot of work, but a business plan for a non-profit organization isn't that different from any other business plan. You simply need to describe why your organization is valuable, both to those who benefit from it, and to those who fund it.  


    It's important when envisioning the scope of your non-profit organization to have specific aims and goals in mind. If your mandate is "to help the poor", you're probably thinking too big. You need to carefully define the group who will benefit from your activities and how they'll benefit specifically. A better mandate may be "to feed the homeless and hungry within the municipality by establishing a soup kitchen and providing information and access to local missions and shelters".

    Vision and strategic planning

    Although you should always keep long-term goals in mind, you may find them taking a back seat to the struggles of day-to-day operation. If you persevere through the difficult early years, your organization will grow and things will calm down considerably.

    Just because things stabilize doesn't mean you can relax. The danger now is not in failing outright, but in stagnating and losing touch with your community. Take the time to look carefully at what worked in the past and what failed. Use this information to develop a new, stronger plan that will help you help others even more in the future.

    Developing a constitution and bylaws

    Aside from having to obey the legal and financial regulations of your province and region, a non-profit organization needs its own internal constitution and bylaws. These rules, which must be decided on and approved by the board of directors, will govern all the operations of your organization.

    The scope of a constitution

    Aside from stating the purpose of your non-profit organization, a constitution also defines its structure. It establishes, among other things, the number of directors, the length of directorial terms and the powers and duties of the board. A constitution details all of the procedures for the organization, from how minutes are entered and distributed, to how votes are conducted. Further, a constitution needs to outline the procedure for making changes and amendments to the constitution itself.

    A constitution can be fairly simple, or incredibly complex. In general, the larger your organization is, and the larger the geographical area it services, the more complicated your constitution will need to be. For a non-profit organization that you operate largely from home to the benefit of people in your immediate neighbourhood, your constitution may be only a single page in length. For a national organization, with directors serving regionally and flying across the country for annual meetings, you'll need a fairly lengthy constitution.

    If your organization is incorporated, you'll not only have a board of directors for the organization, but officers for the corporation as well. The Articles of Incorporation will detail the roles of the directors, but the constitution must be drafted in full awareness of the relationship that exists between board members and officers.

    Writing a constitution and bylaws

    Even a simple constitution is an important legal document. With that in mind, it's probably a good idea to draft your constitution with the assistance of an attorney experienced in non-profit law. Furthermore, since it is not always easy to amend a constitution once it's approved, make sure that it not only serves the organization in the early stages, but that it will also be adequate when your organization expands.

    Non-profit structure

    Non-profit organizations come in all shapes and sizes. A poetry group that gives free readings at a café once a month is just as much a non-profit organization as an international agency mandated to protect a certain species of wildlife.

    There are, however, two main types of non-profit organization: those that are incorporated and registered as non-profit charitable organizations, and those that are not. If you are incorporated, your organization will probably function very much like any other corporation, and that means you need a formal structure.

    Starting structure

    The structure that your organization has at the beginning will be determined by your Articles of Incorporation and your constitution. There will be corporate officers, a board of directors and a staff that reports to the board, or to an executive director appointed by the board.

    Aside from the officers, the board and the staff, non-profits have one thing that most for-profit corporations do not: volunteers. In many ways, volunteers function as an extended staff. They are often assigned to the programs offered by your organization where they can most directly serve the people you're trying to help.

    Organizational theory

    There are thousands of books and papers written on the topic of organizational theory and there is no one way to set up your organization. There are good ways and there are bad ways, with a huge grey area in between.

    One of the key roles of the board of directors is to constantly analyze what is working and what is not. If you adopt an organizational structure that is not helping you meet your goals, you'll need to change it.

    A good director will never be afraid to reassess the organizational structure and initiate changes. Some directors may even feel that changes need to be made periodically to structures that are working, just to keep things from growing stagnant. The point is, the ability to adapt and to continually strive for excellence can only be a benefit, both to the organization and to those it serves.

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