Why set up a not-for-profit?

Have you ever had an idea for doing good in the world? Have you thought about setting up a not-for-profit (NFP) organisation? Rae Knopik founder of The CBR Gals Network stopped by the Facebook Group recently to share her wisdom. Here are her key insights about issues you should consider before setting up a NFP

1. What drives the idea / organisation? Should I incorporate as a NFP? This is a personal question as it starts with YOU and what you want to accomplish. A NFP interacts with the community and handles money differently to a for-profit company. It is thus important to consider the big picture: the person, place, thing or idea. Simply put: what do you want to achieve and who or what do you want it to benefit?
2. What does the ‘end’ look like? When considering your idea, you need to be able to consider what success looks like. Is it measured in money? Or in helping others? If you are unclear on the idea and the end, it is probably best to hold off on establishing a NFP – at least for now.
3. Charity or NFP: what’s the difference? This is a common question. All charities are NFPs, but not all NFP’s are charities. The NFP serves as an umbrella for a charity; you can apply to become a charity after you have incorporated as a NFP. There are certain advantages, such as taxation treatment, when you are registered as a charity. You also have more social proofing as a charity.
4. What about profit for purpose or a social enterprise? NFP’s can make money; but all money must go towards the idea or purpose of the organisation. The terms profit for purpose or social enterprise are largely interchangeable. With either, the organisation can hold back a certain amount of the profits; unlike a NFP, not all profits must go towards the idea or organisation. You can still fundraise, but you don’t have the same tax concessions as a charity. A key distinction is that profit for purpose/social enterprises are not as socially proofed as a NFP. People know exactly what a NFP is, yet while profit for purpose/social enterprises often do a lot of good in the world, the fact they can and often do retain some profit means there isn’t as much social trust as with a NFP.

Rae Knopik is a digital consultant and founder of a number of companies, including Canberra-based not-for-profit, The Canberra Gals Network, which focuses on enabling every Canberran woman to be more in her personal and professional capacities by connecting to each other and the place that is Canberra through inclusive events.