Planning your charity

You know the problem and the people you want to serve. Now it's time to plan how the work will actually happen: what you'll do in year one, what it will cost, where the money will come from, and who will share the load.

A plan doesn't need to be long or fancy. A clear page that you can show a possible board member or funder is worth more than a 40-page document nobody reads. The aim is to think things through before money and legal duties are on the line.

What to do

Write a one-page plan

A business plan for a charity simply explains how you'll carry out your mission. One page is fine. Cover these points in a few lines each:

• Mission: your one or two sentences from the last stage.
• The need: the problem and who it affects.
• Programs: what you'll actually do in year one. Be specific about how many people, how often and where.
• Results: what you hope will change, and how you'll know.
• People: who's leading, who's on the board, and what volunteers you need.
• Money: how much the first year costs and where it will come from.
• Partners: other groups you'll work with.
• Risks: the two or three things most likely to go wrong, and what you'd do.

Our one-page plan template walks you through each part.

Build a first-year budget

A budget is your best guess at the money coming in and going out over the year. Start with costs, because they are easier to estimate:

• Program costs: supplies, food, materials, space rental, transport.
• Start-up costs: your state's incorporation fee, the IRS application fee, any state charity registration fees and basic insurance.
• Running costs: bank fees, a website, accounting software, printing, postage.
• People costs: most new charities have no paid staff. If you plan to pay anyone, include payroll taxes too.

Then list expected income, and be honest. Separate money that is promised from money you hope for. For example: "$2,000 pledged by board members" is promised; "$5,000 from a community foundation grant" is hoped for until you get the letter.

Use the Golden Hint budget builder to lay it out, or download our first-year budget template.

Gather your founding team

Founders often confuse the team that does the work with the board that oversees it. In a small charity the same people often do both, but the roles are different:

• The board of directors is legally responsible for the charity. It sets direction, approves the budget, watches the money and hires or oversees the leader.
• Officers are roles like president (or chair), secretary and treasurer. Your bylaws, the charity's internal rule book, will say which officers you need.
• Volunteers and staff carry out the programs day to day.

Recruit your first board members

The number of directors your charity needs is set by state law and your bylaws, and it varies by state. Many states require at least three. New York, for example, requires at least three directors for a not-for-profit corporation. Check your state's nonprofit corporation law, usually found on your secretary of state's website, before you finalize your plans.

Look for people who bring different strengths: someone good with money, someone with community ties, someone who can write, someone who knows the people you serve. Try to avoid a board made up only of your relatives. Family boards can create conflicts of interest, which is when a person's private interests could clash with what's best for the charity, and funders and regulators watch for them. The IRS also requires that a charity's money is never used to benefit insiders privately.

When you invite someone, be clear about what you're asking: how many meetings a year, how much time between meetings, whether you hope they'll give or raise money. People say yes more readily to a clear ask.

The Golden Hint board planner helps you map the skills you have and the gaps to fill.

Your checklist

• Write a one-page plan covering mission, need, programs, results, people, money, partners and risks.
• List every start-up cost, including state and IRS fees.
• Estimate your first year's program and running costs.
• List expected income, separating promised money from hoped-for money.
• Build your first-year budget with the budget builder.
• Look up how many directors your state requires.
• Map the skills your board needs with the board planner.
• Invite at least three board candidates, with a clear description of the role.
• Decide who will serve as chair, secretary and treasurer.
• Share the plan and budget with your future board and ask for honest feedback.