Starting a Nonprofit

How to write your Mission Statement, Bylaws, Annual Budget

Mission Statement

The mission statement of a nonprofit organization is the foundation that an organization is built upon.  Your mission statement should state who are you serving, how are you serving and why you are serving them.  Simply, the mission statement describes the overall purpose of the organization.  Your mission statement should be a sufficient description that clearly separates the mission of the organization from other organizations.

The basic framework of your mission statement:

The mission of new nonprofit organization is to serve (who) with (services) in (location).

Do your best to develop a mission statement for what the organization is today.  In the future you most likely will revise, alter or rewrite your nonprofit as the organization develops and becomes more clear about who it serves and with what services.  Over the lifetime of the San Diego Women Film Foundation, we had three mission statements – each one evolving as the organization grew.

Additionally, you may want to draft values and vision statements.

To create a values statement: Values are the guiding principles of the organization and represent “what the organization stands for.”  Present a list of values to the people who will be leaders in your organization and have each person circle the values that are representative of your organization. Some possible values to choose from: Challenge, Change, Community, Compassion, Creativity, Balance, Awareness, Adventure, Achievement, Excellence, Excitement, Flexibility, Growth, Influence, Integrity, Leadership, Learning, Loyalty, Making a Difference, Prosperity, Quality, Security, Service, Success, Trust, Truth, Knowledge, Openness, and Empowerment.

To develop a vision statement using this formula:

“Five years from now, the (nonprofit organization name) will ___________________ by ________________________.”


Bylaws are simply rules that govern the organization.  They define the overarching guidelines of the organization focusing mainly on the Board and the governance of the organization.  Bylaws are also overwhelming, long wordy documents that should be written by lawyers.  If you are writing the bylaws on your own, utilize Nolo’s book that provides a bylaw template and allows you to just fill in the information that is specific to your organization – saving you the trouble of drafting all the legal language.

I am not a lawyer nor am I allowed to give legal advice (thank goodness!).  I would like to make a couple of suggestions about bylaws because I see my clients challenged (later on) when bylaws are not set up correctly:

  • Board member term limits: There needs to be a limit on the Board of Directors terms as it is important to constantly be renewing the Board.  I would recommend two-year terms with a limit of three consecutive terms (total of 6 years) and Board member may rejoin the Board after one year off of the Board.  Board Officers also need term limits.  I would recommend two years.  It is very easy to bring on a new Board member and nearly impossible to get a difficult Board member off.
  • Compensation: Directors will receive no compensation, but may be reimbursed for out of pocket expenses.  A Board member position is a volunteer position, therefore, members will not be compensated for their services.  Also, if a Board member is paid, they may have a difficult time voting in the best interest of the organization if their compensation is affected.
  • Board of Directors member numbers: Choose an odd number so that there will not being any “ties” when voting.  An ideal number of Board members is between 11 and 25 members.  It may not be possible to have a minimum of 11 members at first because that requires a lot of recruitment.  Boards who have more than 30 members become hard to manage and allow for the staff to interact with each member to make their experience meaningful and valuable.
  • Board Committees: I would suggest having five standing Board committees: Executive, Finance, Fundraising, Program and Marketing.  Ad hoc Board committees can include: Nominating, Bylaws, Personnel (or Compensation), Audit (you are required by CA law to do an audit each year if you have a budget over $2 million).
  • Meetings: I would recommend regular monthly meetings scheduled on a specific day each month and keep the meetings to 90 minutes.  Many nonprofits have an annul meeting that is more of an open forum.   I would also recommend that actions may be taken without meetings so long as the consent of Directors is unanimous and in writing (which can include actions by email).
  • Board and Staff: Board is only responsible for hiring, firing and evaluating the Executive Director (ED).  The ED is responsible to hire, fire and manage the staff.

Board of Directors

For the paperwork, you will need two other people to form your Board of Directors.  When I filed the paperwork, my roommate and my nonprofit mentor willingly signed up to be the first Board members.  The initial requirements for Board members are a willingness to put their name on the paperwork, passion for the cause and willingness to support you and the organization as it develops.

Annual Budget

When applying for nonprofit status, you are required to draft a budget for your first year of operations.  This is an estimation of the funds you think you will raise and how you will spend it.

I would start by estimating potential revenue.  Utilize these two categories:

  • Earned income (ticket sales, program fees)
  • Fundraising (grants, individual donations and corporate support)

To estimate expenses, consider these categories:

  • Compensation (executive director, director of development, program director, administrative assistant, bookkeeper/accountant)
  • Office (rent, phone, internet, utilizes)
  • Insurance (liability and directors and officers)
  • Administrative (Postage, post office box, office supplies, equipment, web hosting and email service, licenses, permit, bank fees)
  • Printing and Copy (fliers, brochures, worksheets)
  • Program Services (cost for rental of facility use, food, curriculums, pens/paper)

Using this simple steps, you will be able to assemble the key pieces of your nonprofit application.

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