The life of a nonprofit organization begins with an idea and continues until a mature organization delivering on its mission statement is established. Here’s a breakdown of these stages:
1. Pre-Formation/Planning Stage
Vision and Mission Development: The initial stage where the founders identify the purpose of the organization, its mission, and its core values.
Feasibility and Planning: Determining the need for the nonprofit’s services, and developing a strategic plan for the organization.
2. Formation Stage
Incorporation: Filing the necessary paperwork.
Establishing Governance: Defining the governance structure.
State and Federal Filings: Submitting IRS Form 1023 to apply for tax-exempt status.
3. Start-Up Stage
Initial Operations: Launching programs, services, or initiatives in line with the organization’s mission.
Fundraising: Identifying initial sources of funding.
4. Growth Stage
Program Expansion: Increasing the scale or number of programs/services the organization provides. These programs/services must align with their Mission Statement and have community support.
Sustainability Efforts: Developing long-term strategies for funding.
5. Maturity Stage
Consolidation: The organization becomes stable and sustainable. Its programs are well-established, and it has an established reputation in its field or community.
Strategic Refinement: Regular reviews of strategic goals and potential adjustments to stay relevant and responsive to changes in the community.
6. Renewal or Transition Stage
Innovation and Adaptation: As the organization matures, it may need to evolve. This may include rebranding, shifting programs, or revising strategies.
Significant Events: A mature organization will occasionally encounter items that are out of their normal processes. An example of this is an Audit. Audits may be requested by governments or donors. These events may impact your exempt status or your funding sources. Additional information about audits will be provided in a future blog.
Additional information from the IRS is available at this link.