How to start a charity

What’s your passion? Save the world? Save the whales? In post-recessionary times, many people leave the corporate world and create new business start-ups. Later most of these business owners thank their “misfortune” and happily go on to build a legacy for themselves and future generations. But these times are not only good for starting “for-profit” enterprises; they’re also good for starting non-profits. Here are some easy steps to start a charity.

Start by developing your vision and mission. A vision is an inspiration and aspirational destination on the horizon. It should not include quantitative measures but descriptions of what you want to create. The mission is a more concrete description of purpose and intent. It is a clear and concise expression of the basic purpose of the organization: what it does, for whom, and what is the basic service. Missions should be complemented with specific, measureable, achievable, and challenging goals. Also you should develop a set of values, the beacon by which your organization will be led.

Next you need a name. Charities are organizations by design but require philanthropy for support—and people like to donate to people. So names can describe the function of the organization (e.g., The American Cancer Society), but many successful organizations are named for people (e.g., Susan G. Komen for the Cure, The Jimmy Fund, etc.). Names of organizations in memory of specific people but with a mission to help others may encourage donations.

Differentiate your charity. According to The National Center for Charitable Statistics (NCCS) there are over 1.5 million nonprofit organizations in the U.S. Many organizations compete with one another for funding to support the same cause. So you have to clearly differentiate your organization and hopefully stimulate the same kind of passion in potential donors to your charity that you have for it yourself.

Write a plan. Part of your plan, of course, is your vision, mission, name, and point of differentiation. But you should then layout a five-year plan of strategies and tactics including fundraising strategy, operational strategies, budget, etc.

Register as a 501(c)(3). This refers to the IRS code that allows you to operate as a nonprofit, tax-exempt organization. Be sure to have a lawyer and accountant with nonprofit experience advise you on the proper steps to register and operate so you don’t run afoul with government rules. A lot of information can be found online.

Start your website. You can announce your inspiration, intentions, plan outlines, etc. all on your website and begin fundraising using the site as the primary tool. You can seek contacts for donations via the site. It is not recommended that you put complete business plans or financials on the site. People can contact you to get more information from you.

Fundraising . Of course you can put your own funds into the charity. But usually you will need to raise support from others. This can include friends or relatives, but normally will need broader support from grassroots organizations, individuals, and foundations. Once your plans are complete you should make contact with grant-making organizations that are focused on areas that include your mission. Expect to make a significant number of calls, meetings, and presentations. Don’t be discouraged. This will take significant time and energy. It must be conducted in a professional and disciplined fashion. Many websites exist that teach you techniques of fundraising. Develop significant activity through Facebook, Twitter, LinkedIn and other social media sites.

Establish an Advisory Board. Initially this should be a handful of people with significant nonprofit experience (including financial and fundraising experience) who can help you launch. Ideally they should available real time as resources to you and should meet more formally weekly or monthly until operations are established. Once the charity is up and running, the board should be expanded to include significant donors, potential donors, and people with significant fundraising contacts. Be careful not to let the board get too big and watch out for big egos that can destroy an organization. A good board size for mature charities is around twenty individuals. Board positions should be unpaid, of course.

Begin operations. It is recommended that you have cash raised to fund initial capital requirements and at least a year of operating funds before committing any cash outflow. Using debt to start an organization is not recommended. Remember to treat every dollar you spend as if it is your last dollar. In other words, be frugal. You need to stretch your dollars as far as possible. Also, many organizations forget that spending is supposed to go to the mission of the organization, not into the pockets of the people who work there.

Keep your spending efficient. While in time you may need to hire professional help, be very cautious about spending. A rule of thumb is that nonprofits should spend 80%+ on program expenditures and 20% or less on administration and fundraising. In fact, often more efficient organizations (higher ratio of program to administrative spending) have the easiest time fundraising. Donors want their money to go to the ultimate beneficiaries not the employees.

Be patient. Hopefully you want to help the maximum number of people possible. But you won’t be able to help for long unless you engineer your organization for longevity. This means expanding only at a rate that is supported by your fundraising. Take your time. Every organization started somewhere but they are what they are through discipline. Survival is key and this requires patience.

Of course, rule number one for starting anything is that you have to have a passion for what you’re doing. After all, startups are a lot of work. There will be times when you question your sanity for having tried this and it will be the passion that carries you through. It is unwise to start anything with the goal of fortune and fame, especially nonprofits. Expect to invest significant amounts of time, passion, and money with great satisfaction as the only reward. So pour yourself into your passion and create a legacy while helping others.

What’s your passion? Save the world? Save the whales? In post-recessionary times, many people leave the corporate world and create new business start-ups. Later most of these business owners thank their “misfortune” and happily go on to build a legacy for themselves and future generations. But these times are not only good for starting “for-profit” enterprises; they’re also good for starting non-profits. Here are some easy steps to start a charity.

Start by developing your vision and mission. A vision is an inspiration and aspirational destination on the horizon. It should not include quantitative measures but descriptions of what you want to create. The mission is a more concrete description of purpose and intent. It is a clear and concise expression of the basic purpose of the organization: what it does, for whom, and what is the basic service. Missions should be complemented with specific, measureable, achievable, and challenging goals. Also you should develop a set of values, the beacon by which your organization will be led.

Next you need a name. Charities are organizations by design but require philanthropy for support—and people like to donate to people. So names can describe the function of the organization (e.g., The American Cancer Society), but many successful organizations are named for people (e.g., Susan G. Komen for the Cure, The Jimmy Fund, etc.). Names of organizations in memory of specific people but with a mission to help others may encourage donations.

Differentiate your charity. According to The National Center for Charitable Statistics (NCCS) there are over 1.5 million nonprofit organizations in the U.S. Many organizations compete with one another for funding to support the same cause. So you have to clearly differentiate your organization and hopefully stimulate the same kind of passion in potential donors to your charity that you have for it yourself.

Write a plan. Part of your plan, of course, is your vision, mission, name, and point of differentiation. But you should then layout a five-year plan of strategies and tactics including fundraising strategy, operational strategies, budget, etc.

Register as a 501(c)(3). This refers to the IRS code that allows you to operate as a nonprofit, tax-exempt organization. Be sure to have a lawyer and accountant with nonprofit experience advise you on the proper steps to register and operate so you don’t run afoul with government rules. A lot of information can be found online.

Start your website. You can announce your inspiration, intentions, plan outlines, etc. all on your website and begin fundraising using the site as the primary tool. You can seek contacts for donations via the site. It is not recommended that you put complete business plans or financials on the site. People can contact you to get more information from you.

Fundraising . Of course you can put your own funds into the charity. But usually you will need to raise support from others. This can include friends or relatives, but normally will need broader support from grassroots organizations, individuals, and foundations. Once your plans are complete you should make contact with grant-making organizations that are focused on areas that include your mission. Expect to make a significant number of calls, meetings, and presentations. Don’t be discouraged. This will take significant time and energy. It must be conducted in a professional and disciplined fashion. Many websites exist that teach you techniques of fundraising. Develop significant activity through Facebook, Twitter, LinkedIn and other social media sites.

Establish an Advisory Board. Initially this should be a handful of people with significant nonprofit experience (including financial and fundraising experience) who can help you launch. Ideally they should available real time as resources to you and should meet more formally weekly or monthly until operations are established. Once the charity is up and running, the board should be expanded to include significant donors, potential donors, and people with significant fundraising contacts. Be careful not to let the board get too big and watch out for big egos that can destroy an organization. A good board size for mature charities is around twenty individuals. Board positions should be unpaid, of course.

Begin operations. It is recommended that you have cash raised to fund initial capital requirements and at least a year of operating funds before committing any cash outflow. Using debt to start an organization is not recommended. Remember to treat every dollar you spend as if it is your last dollar. In other words, be frugal. You need to stretch your dollars as far as possible. Also, many organizations forget that spending is supposed to go to the mission of the organization, not into the pockets of the people who work there.

Keep your spending efficient. While in time you may need to hire professional help, be very cautious about spending. A rule of thumb is that nonprofits should spend 80%+ on program expenditures and 20% or less on administration and fundraising. In fact, often more efficient organizations (higher ratio of program to administrative spending) have the easiest time fundraising. Donors want their money to go to the ultimate beneficiaries not the employees.

Be patient. Hopefully you want to help the maximum number of people possible. But you won’t be able to help for long unless you engineer your organization for longevity. This means expanding only at a rate that is supported by your fundraising. Take your time. Every organization started somewhere but they are what they are through discipline. Survival is key and this requires patience.

Of course, rule number one for starting anything is that you have to have a passion for what you’re doing. After all, startups are a lot of work. There will be times when you question your sanity for having tried this and it will be the passion that carries you through. It is unwise to start anything with the goal of fortune and fame, especially nonprofits. Expect to invest significant amounts of time, passion, and money with great satisfaction as the only reward. So pour yourself into your passion and create a legacy while helping others.

Sections on this page:

You provide the vision, we take care of everything else.

Overview

How to start a charity

If you’re like most people, you already give to charity. But perhaps you’d like something more. How would you like to:

– Go beyond checkbook giving and get more out of your philanthropy?

– Unify your family by establishing a permanent philanthropic legacy?

– Build an enduring structure for your giving that can be handed over to your children to continue?

– Have philanthropic experts to help you get started whom you can tap whenever you need advice?

Benefits of a Foundation

Here are a few of the unique benefits of this powerful, flexible giving vehicle:

  • Get a current-year tax deduction, but give when you feel like it
  • Retain full legal control over foundation governance, assets, and spending
  • Create a lasting legacy that links the family name with good works
  • Hire family members and reimburse foundation-related expenses
  • Pass on values and skills to younger generations
  • Make tax-deductible grants directly to individuals in need
  • Run charitable programs without setting up a separate nonprofit

Funding and Investment Options

Private Foundations are typically funded by a single individual, family, or business. They can be funded with, and continue to hold, a wide variety of assets. Other giving vehicles typically liquidate any assets that aren’t publicly traded securities shortly after funding.

Assets that can be held in a private foundation include:

  • Cash and publicly traded securities
  • Alternative assets, including private equity
  • Real estate
  • Tangible assets (art, jewelry, collectibles)
  • Intangible personal property (copyrights, patents, royalties)
  • Life insurance and annuities

If you have a Charitable Remainder Trust, you can typically name your foundation as the beneficiary.

Foundation Source does not manage assets. We work closely with the trusted financial advisor you designate, and share our expertise on special considerations that affect assets within a private foundation.

Giving Options

Private foundations have broad latitude to pursue any activities as long as they advance a charitable purpose.

In addition to supporting public charities and other types of nonprofit organizations, a foundation can:

  • Make grants to individuals for disaster relief and economic hardship
  • Provide loans that are repaid to the foundation
  • Set up scholarship and award programs, and choose the recipients
  • Grant directly to international organizations
  • Provide funds to for-profit companies, as long as they’re used for a charitable purpose
  • Run its own charitable programs, such as a coat drive or soup kitchen

Our staff of foundation experts will guide you every step of the way, so you can easily take advantage of every IRS-sanctioned option to accomplish your charitable goals.

Starting a charity is no easy process. Many people come from the business world and decide they want to open a nonprofit so they can create positive change in the world. They believe that opening a nonprofit will be a piece of cake. However, this is typically not the case. Starting a charity requires a lot more time, effort, and money than most people realize. This process can be even more difficult if you are unsure about how to start a charity.

However, this is not meant to discourage you, but rather give you a more realistic view of things. With these ten steps, you can learn how to start a charity and make the world a better place.

How to start a charity

10 Steps to Tick and Learn How to Start a Charity

1. Develop Your Mission Statement and Vision

When learning how to start a charity, developing both a mission statement and a vision is one of the most important steps. This way, you can define what you want to create and actually do with your charity.

However, your mission statement should be a statement of intent for your company. For example, what it does, who it’s for, and how it serves. Nonetheless, your charity’s mission should be challenging, yet achievable. You should also create a number of values that your organization leads by.

2. Choose Your Name

It’s vital that your charity name describes what the organization does, so people will want to support it. For example, the American Cancer Society. However, at the same time, many successful charities are named after people, such as The Jimmy Fund.

Naming a charity in memory of a person, with a strong mission statement, can help encourage people to make donations. You can even gather sponsors for a possible event.

3. Figure Out How to Stand Out

In the United States alone, there are over 1.5 million nonprofits, according to The National Center for Charitable Statistics. However, most of these organizations compete with each other for funding the same cause.

This is why it’s so important to create a charity that will set it apart from the competition and make potential donors passionate about supporting your cause.

4. Create a Plan

A large part of your charity’s plan should already be planning out your vision, mission, and name.

However, you should also be planning out a five-year strategy of fundraising efforts, budgeting, and other important factors.

5. Register as a 501(c)(3)

The next step in how to start a charity is to register your charity as a 501(c)(3), which refers to the IRS code that will allow you to operate as a tax-exempt, nonprofit organization.

However, make sure that you have both a lawyer and accountant on your staff to advise you on how to properly register and operate in cooperation with government rules.

6. Create Your Website

You can use your charity’s website as a fundraising tool, as well as an announcement board for intentions, upcoming plans, important dates, etc.

But, most importantly, you should use it to seek leads for donations to your charity.

7. Start Fundraising

You can put your own funds into your charity, but we suggest that you plan on raising support from other donors. Although this can generally include close relatives and friends, you should work on expanding your support to foundations, grassroots organizations, and other individuals.

However, once you develop your plan to reach out to other donors, you should work on contacting grant-making organizations that focus on your mission statement. You should expect to make plenty of calls and attend numerous meetings to do so. But, don’t get too discouraged if you get a few no’s. Creating a charity takes time and effort, just make sure you stay as professional as possible.

How to start a charity

8. Create an Advisory Board

Your advisory board should be made up of people who have experience in the nonprofit world with things like finances and general operation. Their expertise will help you to have a successful launch. You should formally meet with your board either weekly or monthly though, to start, they should be available to offer advice and assistance whenever needed.

After your charity is up and running, you can grow your advisory board to include:

  • Significant donors;
  • Potentially significant donors;
  • People with lots of fundraising connections.

However, make sure your board does not become too big. Try to keep it at around 20 members. Also, remember that board members are unpaid.

9. Open for Business

Before you commit to any sort of cash outflow, you should have raised enough money to fund both the initial capital requirements and a year’s worth of operating costs.

Try not to go into debt to start your nonprofit. Remember to spend as little as necessary and stretch your cash as much as you can. Most of your money should be going to your charity’s mission, not into your wallet.

10. Focus on Spending Efficiently

Down the line, you will likely need to hire some professionals to help run the nonprofit. However, make sure you are always cautious about your spending. When it comes to charitable organizations, you will want to spend 80 percent on program expenditures and 20 percent or less on administration and fundraising.

Nonprofits who have a higher ratio of program to administrative spending even have an easier time fundraising. People donating money want to know that their cash is going to the charitable cause, not your employees.

Wrapping Up

Though starting a charity is a very noble pursuit, it can also be a difficult one. It can be even more challenging when you do not know how to start a charity. With these ten basic steps, you will be well on your way to starting your charity and creating positive change in the world.

Do you have any experience in the nonprofit industry? Share your experiences in the comments below!

When you have a cause you care about and have gone as far as you can on your own to champion it, it might be time to start your own charity to spread your work to a wider audience. Starting a charity can be a big undertaking, but there are basic steps to follow to make sure yours gets started on the right foot.

1. Define Your Mission

Before anything else, you need to figure out your reason for existing. State your cause as specifically as you can, and see if you can come up with a unique angle that makes your mission a little different than everyone else’s. For example, if you want to fight cancer, be clear about the type of cancer, age group of patients or focus of your efforts. Will you raise money for research or to help families afford treatments? Narrow your scope and define your unique value proposition.

2. Pick a Name

Choosing a name is crucial. You want to select something that’s easy to remember so your donors have no trouble finding you. You also need to make sure your name is completely unique. Check your state’s list of existing nonprofits to make sure your name isn’t taken. You can also double-check with the Department of Commerce to ensure a business hasn’t already trademarked the name you’re thinking of.

3. Register With the IRS

In order to receive a nonprofit tax-exempt status, you’ll need to file paperwork with the IRS. This can be found at the IRS website under section 503(c)(3). In most cases, you’ll also need to register as a nonprofit with the Secretary of State in your state. Each state has different rules about what’s required, and it can help to hire a lawyer who works with nonprofits to make sure you have everything you need for a smooth application process.

4. Make a Website

Your website is your most important window to the world to explain your mission and get people excited about your work. In addition to a detailed “About Us” page, be sure to include a place where visitors can donate directly and a page with information about volunteering opportunities. If you can’t afford a professional to help you, try a DIY web builder instead. If you can invest in a custom website built exclusively for you, consider it! Your site will serve as an online advocate for your mission.

5. Start Raising Money

Your first fundraiser will help you get your name out into the community and give you some much-needed cash to start your operations. Whether you try a single fundraising event with lots of visibility or start small by bundling your social media presence and leveraging affiliate links, you’ll want to focus on raising money as soon as you can. Depending on your goals, you may need to raise several months’ worth of operating costs before you can dig into your charitable work.

6. Stay Lean

Overnight success is pretty rare in the world of nonprofits, so you’ll need to keep your operations as streamlined as you can while you build your initial fundraising and support. If you get creative about accepting donations online and make the most of your office supplies, staffing resources, and space, you can make sure that most of your donations go towards helping the cause you care about.

If you’ve never worked for a nonprofit before, consider seeking help from experts. As you define on your mission and build your core group of workers, ask someone with experience serving on the board of a nonprofit for help with your charity. Of course, if your goal is simply to raise some money to donate to a school or hospital, your work will be much easier. Whatever your purpose, if you can dream up a unique charity, you can also make sure it gets off the ground and serves your community.

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Instead of working for a charity, why not start your own? Here’s our 10-step guide to get you started

  • Want to work for a charity? Browse a range of open vacancies on Guardian Jobs

What steps should you take to set up your own charity? Photograph: Martin Godwin

What steps should you take to set up your own charity? Photograph: Martin Godwin

You may have a great idea for a charity, but knowing what first steps to take can be tricky.

Here is a 10-step guide to starting your own charity:

Be the change-maker

Identify the exact need or problem you want to address and why. Thoroughly research the need – what’s causing the problem, how serious is it and exactly what will solve it? Consider the key questions: what, who, where, when and how? And think about scale: local, national or global?

Identify the solution

Find a unique solution that will solve the problem you want to address and that, if delivered through a new charity, will be more effective than other attempts – and attract investment.

Find out if charities, institutes, statutory bodies, local groups or global NGOs are already trying to solve this issue. If someone is already in your space, talk to them. Explore the options: could you add value through partnership or support? If your solution seems as simple as providing some personal or company funding, then make sure your funds will make a genuine difference and that setting up a charity is the best financial model. If you can’t see anyone addressing the need, then move ahead with your research.

Map your 3-10 year journey

Include details of your first year of activity. What are you actually going to do and when? What’s the big vision, and what small steps will achieve it? Do you want to launch publicly straight away? Before setting up Media Trust, we had strongly identified a need so we jumped straight into delivery. But we didn’t hold a formal launch for a year, until we were certain that we had a high profile, a plan for financing our activities and a strong board in place.

Plan your fundraising

If you need to raise money, where will it come from, how will you raise it, and how much might you need to get off the ground? We started Media Trust with a donation of £40,000 from the ITV Telethon Trust – just enough to buy a small film production company.

Do your research by asking people in similar charities what works for them, or by talking to the Institute of Fundraising. Then decide whether you will ask for donations from individuals, charitable foundations or corporate funders. Find out how much they are likely to give and when. What will you need to invest to raise funds, and who will underpin that investment?

Find a friendly and pro bono business finance mentor

Look at the big finance picture as well as the detail – the complications of VAT, cash flow and investment. If your expected income is less than £5,000 a year you can set up as an unregistered charity, which gives you more flexibility and less administration and regulation.

As a registered charity you have to provide detailed publicly-available information about your activities, finances, trustees, impact and more. You may also want to set up a company, which then can be registered as a charity – for more help on this, see below about talking to a lawyer.

Think carefully about what your role will be

Are you going to be a trustee? In this unpaid role you’ll be accountable to the Charity Commission for ensuring the charity’s purpose is upheld, and, as a non-executive director to Companies House. Or will you be a paid employee – the chief executive, executive director or manager – responsible to your chair and board? Think carefully about this. Talk to others who have set up charities, both recently and in the past. The Small Charities Coalition would be a good place to start.

Seek communications expertise

You need to communicate your message effectively to your target audience. This will help significantly in your future fundraising, planning, communications, and engagement of supporters, volunteers and staff. It will also help you think through what you really want to do.

Consider your name and brand

You need to be visible to future donors, volunteers, partners and beneficiaries, so you’ll need a clear and compelling brand. Consider your charity’s strapline and descriptors, the “about us” section on your website, your logo, colours, use of media and your Twitter handle – all will be key.

Check out what works best for online search – make sure you know about search analytics, how to position your charity’s name as high up the search engine findings as possible. You may want your strapline to tell the story, and the name to be catchy or quirky, or you may want a name that says the obvious. Either way, you’ll need approval by the Charity Commission for your name – this section of their website is useful. They give the example of Comic Relief, one of the UK’s most successful charitable brands, whose formal registered charity name is Charity Projects.

Do you actually need to set up a charity?

You’ll need to fit in with one or more of the 13 charitable purposes, and much more. Check the Charity Commission website thoroughly.

Consider setting up a community interest company or social enterprise instead. Both will enable you to do good with far fewer restrictions. But be aware that quite a few charitable trusts prefer not to donate funds to these types of organisation because they are not perceived to have the purpose and the regulatory safeguards offered by charitable status. You’ll need an experienced and supportive lawyer to advise you on these final decisions and processes. A good place to start is LawWorks, the solicitors’ pro bono group.

Be bold and keep striving

I’ve worked in the charity sector for three decades now and have been chief executive of Media Trust for nearly 20 years. It hasn’t always been easy, and you’ll certainly face obstacles along the way. But if you’re doing something you really believe in – and that makes a genuine difference – the rewards are worth it.

Caroline Diehl is the chief executive and founder of Media Trust.

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Sections on this page:

You provide the vision, we take care of everything else.

Overview

How to start a charity

If you’re like most people, you already give to charity. But perhaps you’d like something more. How would you like to:

– Go beyond checkbook giving and get more out of your philanthropy?

– Unify your family by establishing a permanent philanthropic legacy?

– Build an enduring structure for your giving that can be handed over to your children to continue?

– Have philanthropic experts to help you get started whom you can tap whenever you need advice?

Benefits of a Foundation

Here are a few of the unique benefits of this powerful, flexible giving vehicle:

  • Get a current-year tax deduction, but give when you feel like it
  • Retain full legal control over foundation governance, assets, and spending
  • Create a lasting legacy that links the family name with good works
  • Hire family members and reimburse foundation-related expenses
  • Pass on values and skills to younger generations
  • Make tax-deductible grants directly to individuals in need
  • Run charitable programs without setting up a separate nonprofit

Funding and Investment Options

Private Foundations are typically funded by a single individual, family, or business. They can be funded with, and continue to hold, a wide variety of assets. Other giving vehicles typically liquidate any assets that aren’t publicly traded securities shortly after funding.

Assets that can be held in a private foundation include:

  • Cash and publicly traded securities
  • Alternative assets, including private equity
  • Real estate
  • Tangible assets (art, jewelry, collectibles)
  • Intangible personal property (copyrights, patents, royalties)
  • Life insurance and annuities

If you have a Charitable Remainder Trust, you can typically name your foundation as the beneficiary.

Foundation Source does not manage assets. We work closely with the trusted financial advisor you designate, and share our expertise on special considerations that affect assets within a private foundation.

Giving Options

Private foundations have broad latitude to pursue any activities as long as they advance a charitable purpose.

In addition to supporting public charities and other types of nonprofit organizations, a foundation can:

  • Make grants to individuals for disaster relief and economic hardship
  • Provide loans that are repaid to the foundation
  • Set up scholarship and award programs, and choose the recipients
  • Grant directly to international organizations
  • Provide funds to for-profit companies, as long as they’re used for a charitable purpose
  • Run its own charitable programs, such as a coat drive or soup kitchen

Our staff of foundation experts will guide you every step of the way, so you can easily take advantage of every IRS-sanctioned option to accomplish your charitable goals.

As a serial founder, I know running a charity is harder than business. Here’s my advice, from avoiding fraud to managing finance and hiring on a budget

Avoid chasing the money: how to set up a charity. Photograph: Alamy

Avoid chasing the money: how to set up a charity. Photograph: Alamy

Last modified on Wed 17 May 2017 09.02 BST

Whisper it quietly: running a charity is harder than running a for-profit business. Hiring top talent on modest salaries is harder; lack of money makes it harder to move people out with a golden parachute; mergers stumble over egos when the money motive is absent. As a co-founder of eight charities, I have made more mistakes than I care to remember.

Here are the seven key lessons I have learned about building a charity. They may seem obvious, but as George Orwell noted: “to see what is in front of one’s nose needs a constant struggle”.

1. Put in strong financial controls

Any good charity entrepreneur will want to focus all their time and effort on the mission. Controls and audits are seen as dull bureaucracy. But ignore them at your peril. Charities need very strong controls – such as to ensure that no single individual can make or authorise payments – and you need to make sure these controls are being implemented. Charities are magnets for fraudsters because they are seen to be soft targets, but most fraud happens with the help of an insider. I have had three close escapes on fraud. Fraud is not something that happens to other people: it can happen to anyone.

2. Focus on financial management

A charity cannot change the world if it is bankrupt. Know your cash position and cash forecast, and build reserves against a rainy day. From the very beginning, charities must set out a clear financial model which demonstrates – to funders and beneficiaries – how the organisation can be sustainable long term through contracting or fundraising. This kind of good financial information can help head off a potential crisis early.

3. Avoid chasing the money

Money is tight and getting tighter all the time. Charities are competing harder than ever for a shrinking pot of money. So when a large donation is dangled in front of a charity, the natural instinct is to grab the money and ask questions later. This is dangerous because it means the charity may be making contractual or donor commitments it cannot realistically deliver.

4. Good governance matters

Some charity boards are truly excellent; too many are weak. Many boards simply want a quiet life, together with the social status that comes from being able to talk about being on the board of a charity. Wanting status and a quiet life is the first step on the road to a debacle like Kids Company. Good boards are active: they will have a range of skills to support the executive; they will have good networks to build support for the charity; and they will be ready to ask awkward questions of senior management to ensure good governance. New charities should be specifying all this when inviting applications. Remember also that board membership is not for life: boards need fresh talent and thinking, so term limits are vital.

5. Find a great chief executive

The single most important decision a board will make is the choice of chief executive

The single most important decision a board will make is the choice of chief executive. The transition from an existing to a new chief executive is fraught with risk. As a result, many boards are unwilling to challenge, let alone fire, the boss. This is especially problematic where the chief executive is also the founder and dominates the charity. The board must be strong enough to challenge and change senior management where needed.

6. Hire the “A team”

Charities usually cannot afford large salaries, but this should not mean settling for second best. If a charity is to achieve its mission, it needs top talent, so be relentless in looking for the best. Settling for “good enough” is normally a very expensive mistake, which no charity can afford. There are many talented executives who seek more than financial rewards: a great mission can attract great people.

7. Be ambitious

It is often easier to raise money for a big target than a small target. A big target implies a big mission which is more likely to engage funders – and if charities want to change the world, they need serious money to do so. A larger charity also finds it easier to attract talent and put in good management systems. Small charities can get caught in a trap where the chief executive has to spend too much time on day-to-day activities like fundraising and fire-fighting, and not enough time thinking strategically about how to deliver the mission.

There is, however, one mistake which outweighs all the others when it comes to starting a charity: not trying. If you have a great idea, then go for it. Success is never guaranteed in life – or in charities. If you have the courage to start up you are guaranteed to be richer in experience, if not necessarily richer financially. And if you follow these seven hard won lessons you can tilt the odds of success in your favour.

Jo Owen is co-founder of Teach First and seven other charities, and author of The Mindset of Success.

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