November 7, 2013
Incubators and accelerators are finally making their way to the nonprofit sector, helping young organizations get off the ground. The programs provide free office space and access to professional resources for technology and legal issues.
Two recent nonprofit accelerators are Beespace and Blue Ridge Foundation. BRF also provides services for mission-driven for-profits, but Beespace will focus entirely on the nonprofit industry. Beespace's creator, photographer and consultant Marissa Slacker, will also cap residency in the program at two years. This will make room for new startups and encourage more successful ones to grow and move on.
Nonprofits need more than just a free space
Any startup comes with risks, but for nonprofits, jumping in too quickly can mean disaster. According to Grant Space, nonprofits need to determine if the services they intend to offer are already provided by another organization or if they're needed in their community. Nonprofit entrepreneurs also need to confirm very early on if their idea truly qualifies as a 501(c)(3).
Free office space and access to professional help is a great benefit to nonprofits as long they realize they will need to move on. If the idea proves to be a success, organizations must prepare for increased needs related to staffing, HR, fundraising and space to operate. Young organizations must control their growth so that their mission doesn't suffer. Once under control, nonprofit leaders need to ensure their model is sustainable.
Nonprofits should seek outside consulting after the startup phase
As an organization leaves the startup stage and takes on more employees it must consider the growing expense of unemployment insurance, fraud protection and financial management.
Even if a nonprofit maintains its staffing levels as it continues to grow, their costs associated with state UI tax pools will continue to increase for each new employee. Even if no benefit claims are paid out, organizations will still incur a cost. Nonprofits should consider opting out of state UI tax pools and joining an unemployment insurance savings program. Programs that offer organizations membership in a limited liability corporation provide an opportunity to lower UI costs as a self-reimbursing employer with less risk than group trusts.
As an organization grows it will also be faced with the realization that many of the rules and regulations regarding nonprofits are complex. From UI laws to HR management and financial consultants, leaders should consider enlisting the help of professionals to keep their growing organization on the right track.
Content presented by First Nonprofit Group, a leading provider of financial consulting services for 501(c)(3) nonprofit employers.
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