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HOW

TO

START YOUR OWN NGO


GUIDE
TO

MINOR ENTREPRENEURSHIP AND INNOVATION IN A GLOBAL PERSPECTIVE

THE HAGUE UNIVERSITY

September 2009

HOW

TO

START YOUR OWN NGO

The text of this guide is adapted from the Guide to Young European Start-Up Project, The Hague School of European Studies, Academic Year 2007-2008.

Table of Contents
Introduction.................................................................................................3 Defining Your Starters Opportunities (Assessment 1).................................4 Introduction and brainstorm............................................................................4 Before you start............................................................................................4 Your NGO, its products and service................................................................4 Carrying out a customer or target group analysis............................................4 Defining the added value................................................................................4 Choose and describe the legal structure............................................................4 Writing a marketing plan (Assessment 2).....................................................4 Write an external analysis...............................................................................4 Stakeholder analysis......................................................................................5 Write an internal analysis...............................................................................5 Make a SWOT and confrontation matrix............................................................6 Defining the strategic framework ....................................................................6 Write a marketing action plan (Assessment 3).............................................7 Write an organisational plan (Assessment 4)...............................................8 Staffing your NGO..........................................................................................8 Building an organisational structure.................................................................8 Financial forecasts (Assessment 5) (Optional).............................................9 Executive summary (Assessment 6).............................................................9 Annex I. How to start a successful NGO in 10 steps....................................10 Annex II. Financial plan..............................................................................13 II.1. Estimating your costs............................................................................13 II.2. Estimating your income.........................................................................13 II.3. Creating a cash flow forecast..................................................................14

Minor Entrepreneurship and Innovation in a Global Perspective

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Introduction
This Guide offers an overview of the different aspects involved in starting a new nongovernmental organisation (NGO) or a non-profit organisation. It should enable you step by step - to create a Business Plan. A business plan is a written description of the goals and objectives of the business and how they are going to be achieved. It includes the mission of the business along with the production, organising, marketing, and financing intentions. A business plan is a very important tool if you are starting a new business or expanding an existing one: the business plan communicates to others how successful you are going to be; lending institutions require them to support loan applications; experience shows that successful businesses have a plan; the majority that fail do not. A good business plan is your road map to success! The business plan should include a description of: Your business opportunity Marketing Plan, which includes a Fundraising Plan and a Promotion Plan Organisational Plan: your management team, personnel and organisational structure Financial Plan Executive Summary Definition of an NGO and a non-profit organisation In the minor we will use the following definition of NGOs and non-profit organisations. A non-profit organisation is: Organised - people and their activities have a structured organisational form. Private not part of apparatus of the state (but could be funded by them). Not profit distributing - not returning any profits generated to their owners or directors but ploughing them back into the basic mission of the organisation. Self-governing - in a position to control their own activities to a significant extent and equipped with their own internal apparatus for governance. Independent - because they are primarily sponsored by membership fees and private donations. They may receive financial funding from official institutions, but only to a limited extent. Voluntary - involving some meaningful degree of voluntary participation, either in the operation or management of the organisations affairs. NGOs are a subset of non-profit organisations. They are concerned with development and social change, relief and emergency work, human rights, and environment. Development is an umbrella term for all deliberate efforts to secure positive changes in peoples quality of life in economic, political, educational and social terms. They do not exist solely for the benefit of their own members. They are geared to improving the quality of life for disadvantaged people.

Minor Entrepreneurship and Innovation in a Global Perspective

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They are value driven: based on ethical, cultural, political, scientific, religious or philanthropic considerations. They are non-violent in nature.

For more inspiration and some dos and donts see Annex I.

Defining Your Starters Opportunities (Assessment 1)


In the minor you will have to write a feasibility analysis. Before you can do that you need to answer a few important questions. Introduction and brainstorm Start with an overview of your NGO. Choose the right name for your NGO. Develop a logo and a slogan. Before you start Decide whether you have what it takes to set up a NGO. Decide upon the market opportunities and a product or service. Your NGO, its products and service This part of the plan sets out your mission and vision and includes who you are, what you do, what you have to offer and the market you want to address. You need to describe the sector your NGO is going to operate in. Which other organisations and NGOs are active in this sector? What do they do? What are their contributions? What are their results? Carrying out a customer or target group analysis This step deals with your primary beneficiaries, your customers or clients. You will define a customer profile. The questions you need to be able to answer are: Which community / people do you hope to assist? What are their characteristics? What are their needs? If possible and appropriate you can also use a questionnaire to make an inventory of the needs and demands of your potential beneficiaries (clients). Defining the added value What makes your service unique, different from the services of other NGOs working in the same field, on the same issue? Choose and describe the legal structure NGOs may have several legal forms. However, most NGOs are set up in the form of an Association or a Foundation.

Writing a marketing plan (Assessment 2)


Write an external analysis In this section you have to write a DESTEP analysis. You describe the main opportunities and threats as a result from Demographic, Economic, Social/cultural,

Minor Entrepreneurship and Innovation in a Global Perspective

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Technological, Ecological and Political/legal developments. The purpose of this analysis is to scan the external environment for forces and trends that may be opportunities or threats for your NGO. Stakeholder analysis You describe the main stakeholders. A stakeholder is anyone or any group or any institution or structure that has any kind of interest (stake) in your NGO. Make an inventory of your NGO, key stakeholders and their concerns and expectations, and indicate how they influence your NGO. Try to answer the following questions about each stakeholder group: What is their (possible) interest in your NGO? What is their relation with your NGO? What are their (possible) expectations from (their relationship with) you? How much support do they have for your issue / good cause? What (possible) contribution could they make to your NGO (cooperating, volunteering, donating, providing other resources, creating publicity)? Overview of possible NGO-stakeholders

GENERAL PUBLIC GOVERNMENTS COMMUNITIES

OTHER NONPROFIT ORGANIZATIONS

YOUR NGO

SPECIAL INTEREST GROUPS

PRIVATE COMPANIE S MEDIA

OTHER NGOS

Write an internal analysis In an internal analysis you identify the internal strengths and weaknesses of your NGO. In any case, answer the following questions: What am I best qualified to offer in order to address the problems identified? Is anyone else already doing what I can do? If so, do we have anything to add? In the areas where I am qualified, where can I make the most significant difference?

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Make a SWOT and confrontation matrix Include your external opportunities and threats and internal strengths weaknesses in a SWOT analysis diagram: Strengths S1 ________ S2 ________ etc. Opportunities O1 ________ O2 ________ etc. Weaknesses W1 ________ W2 ________ etc. Threats T1 ________ T2 ________ etc. and

Combine the internal and external factors in a Confrontation Matrix. The matrix is used to answer the following questions: How can a strength be used to benefit from an opportunity? How can a strength be used to defend yourself from a threat? How can a weakness be improved to benefit from an opportunity? How can a weakness be improved to defend yourself from a threat? Strengths Opportunities Strategy 1 (S2O1) Strategy 2 (S3O3) Strategy 4 (W1O1) Strategy 5 (W2O2) Threats Strategy 3 (S1T2)

Weaknesses

Strategy 6 (W1T2) Strategy 7 (W2T1)

In any case, try to answer the following questions: What can I do to maximise my strengths? What do I need to do or develop to overcome weaknesses? What do I need to do to make use of the opportunities? What can I do to minimise or neutralise threats? In this part you can decide upon the strategy you want to apply. With this strategy you can position your product. Describe possible alternative strategies and make a choice for one. Defining the strategic framework A strategic framework includes: The overall goal of the NGO The immediate objective of the NGO The strategies of the NGO The key result areas or outputs on which the NGO intends to focus The process of defining the strategic planning framework looks like this:

Minor Entrepreneurship and Innovation in a Global Perspective

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What must you do to fulfil your mission and to achieve your objectives? What can / must you do to solve the problems you have analysed? You have to select a number of strategies.

Write a marketing action plan (Assessment 3)


Use your strategic framework to describe the specific activities you intend to use to promote and sell your idea. Use your research skills to find out how your future customers can best be satisfied. In your marketing action plan you define: the way you raise funds; the way you communicate with your stakeholders. Fundraising plan Fundraising is the process of soliciting and gathering money or other gifts in-kind, by requesting donations. Note that fundraising is not just about raising money: time and expertise of volunteers and other resources (e.g. materials) are just as valuable as money. In your plan make it clear which potential donors you will approach: individuals, members, local/national/international businesses, national/international foundations (trusts), national/international governmental agencies and institutions, other nonprofit organisations, other NGOs. Take the following fundraising strategies for your NGO into consideration: Personal contributions (by direct mail, solicitation, telemarketing, etc.) Grants (from foundations, companies, government agencies, etc.) Earned income (membership fees, special events, etc.) Corporate collaboration (licensing, joint promotion, sponsorship, etc.)

Minor Entrepreneurship and Innovation in a Global Perspective

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Promotion plan In a promotion plan you state your policies and strategies as to how you will promote your organisation towards your external stakeholders and how you will communicate with them. To develop your promotion plan ask yourself the following questions: Who do you want to communicate with? Use your stakeholder analysis and prioritise amongst the possible different target groups: beneficiaries, members, (potential) donors, volunteers, other NGOs. Why do you want to communicate with them? Set your objectives for each target group. What are your key messages for your different target groups? Now you need to come up with simple, clear and compelling key messages for each different group. What is the best way to communicate with each target group? Now you are ready to come up with strategies, channels/media and instruments for communicating with each group that you have identified.

Write an organisational plan (Assessment 4)


Staffing your NGO Main questions you have to answer are: How many paid staff members does your NGO need? What are their positions or functions? Many NGOs have filled the following positions: executive director/board, programme staff, financial staff, communications staff, fundraising staff, and administrative staff. Do you need volunteers? If so, how many (ratio paid staff volunteers), what do you want them to do? How will you acquire and select them? Which soft and hard skills do they need? (see figure below) Building an organisational structure While the answers will partly depend on how you want your NGO to be registered (as an Association or Foundation), the main questions you have to answer are: How will you recruit and develop an effective board for your NGO? Boards of directors or trustees are almost always required by law to act as the governing structure accountable for the actions and activities of an organisation. Which departments will you create in your NGO? Which decision making procedures will you use in your NGO?

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Financial forecasts (Assessment 5) (Optional)


A financial plan (or budget) is a document that translates your plans into money; money that will need to be spent to get your planned activities done (costs) and money that will need to be generated to cover the costs of getting the work done (income). It is an estimate about what you will need in monetary terms to do your work. A budget should normally be prepared for a period of 12 months, which may be a financial year or a calendar year. As part of the plan you will need to provide a set of financial projections. You will need to look carefully at: How much capital you need if you are seeking external funding The security you can offer lenders How you plan to repay any borrowings Sources of revenue and income More information can be found in Annex II.

Executive summary (Assessment 6)


Write an executive summary. The executive summary is a synopsis of the key points of your plan. It should cover the highlights of your research plan.

Minor Entrepreneurship and Innovation in a Global Perspective

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Annex I.

How to start a successful NGO in 10 steps

Ryan Libre worked with NGOs for most of his life, and even helped start a few. Now, he is venturing out to start his own NGO: Documentary Arts, Asia. He explains how to start a successful NGO.

Step 1: Test the waters. Many new activists are ready to commit their lives to the cause. Some are even willing to die for it. Most of these enthusiastic newbies are nowhere to be found a few months later. Theres no need to turn down the volume of your enthusiasm, but before starting your own NGO, consider joining one that does similar work for a while. If starting your own NGO really is right for you, the experience of working for an established NGO will only strengthen your resolve and direct your passion. Maybe youll find that NGOs are not your life calling after all. Better to learn that early on, before making a big commitment. Step 2: Start on the right foot. The leaders main job is to make themselves obsolete. Lao Tsu Becoming obsolete should be the fundamental goal of all NGOs. You must constantly strive to work yourself out of a job. Becoming obsolete works on two levels. In terms of your personal involvement, you should build the NGO to the point where it can function independently of your leadership. The long term goal of your NGO should be to solve a problem and thereby become unnecessary. Put Lao Tsus advice into practice and youll be able to help more people in more profound ways, and enjoy every minute of the experience. If you try to maintain control, dependencies will develop, and once dependencies start they are hard to stop. Dependency can leave NGO volunteers feeling trapped and sometimes even leave negative impacts on the people you are trying so hard to help. Step 3: Clarify your goals. Set clear and achievable goals for yourself and the NGO. Ending world hunger is a great goal and looks good on your NGOs t-shirt, but its not a problem you can seriously hope to solve. Finding a niche is good place to start. Positive change usually comes from picking something small, doing it well and following through. Step 4: Make an action plan. A plan of action is your chance to make an NGO effective, address any potential negative impacts and make sure your NGO will attract donors and volunteers. Make sure you are able to follow through with what you start. Think hard about your action

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plan. Hard work is important, but hard work without a good plan is a waste of time and money. Step 5: Make a website. Its never too early to make a website for your NGO. A good website helps you to spread the word, attract volunteers, secure funding and establish a professional appearance. An interactive website can also minimize your need for meetings and micro managing. Attention spans on the web are very short. Be clear and concise. Some hosting companies give free hosting to NGO sites. Ask around. Step 6: Get in the know. Local knowledge is indispensable to every NGO. Even if you grew up in the city where you want to start an NGO, you still need to research and make contacts. Making solid local contacts and understanding the locals worldview is especially important if you want to work in a foreign culture. Good use of local knowledge can really make an NGO effective. Without local knowledge, you may do more harm than good. Step 7: Assess your NGOs financial needs. Money, when it does come, usually requires great amounts of paperwork and sometimes has strings attached. The quality of the work an NGO does and the amount of its funding are often inversely related. That is to say, the NGOs with less money do better work per hour and dollar spent. The crucial point is to minimize your NGOs need for money. That said, money can be really helpful sometimes. Heres how to get it. Get an established NGO to accept you under its umbrella. Tax deductible donations and grants will go to them, care of your NGO. Setting up this arrangement could be as easy as a 30 minute talk with your local peace centre. Now you are ready to ask for money from businesses, grant foundations, and governments. A Paypal donate button is a quick and easy way to accept donations from visitors to your website. Step 8: Network, network, network. Make friends with people and organizations doing similar work so that you can learn from their successes and mistakes. Networking also helps you to know when to team up and when to divide your efforts for maximum effectiveness. These are good places to start networking: UNDPs guide to NGO networking, Idealist.org, and Matadors Grassroots NGO network. Step 9: Find balance. Be realistic about how much time you want to give to your NGO. Taking on projects beyond your comfortable limits wont yield much benefit in the long run. You are worth more to your NGO as a part time activist for 5-20 years than letting your passionate burn out in two years. Finding balance between work and personal life is a key to success. Step 10: Re-evaluate everything. Take a step back and look at what you have done and where it is all headed. Take joy in what you have accomplished, but also make sure your NGO is not becoming self aggrandizing. How much time, effort and money are being spent on the NGO itself? This is the biggest problem facing all organizations, non-governmental or otherwise. Your own awareness is the best tool to avoid over-emphasizing the NGO to the detriment of the cause, but dont hesitate to ask someone from outside of

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your NGO for an evaluation. With constant awareness, you can keep your focus and resources flowing to your original goals. Conclusions Any volunteer experience can be rewarding. Starting your own NGO can make you feel totally fulfilled. You will learn and grow as an individual and receive a profound sense of satisfaction not easily found in modern life. I hope my insights, experiences and mistakes were of benefit.

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Annex II. Financial plan


II.1. Estimating your costs When you carry out your plans you will probably need to make use of a wide range of inputs. Inputs include people, information, equipment, skills. Most of these inputs will have a cost attached to them. These are the costs you need to estimate in order to develop a budget. The costs you need to estimate fall into the following categories: Operational costs the direct costs of doing the work, e.g. the cost of hiring a venue, or of printing a publication, or of travelling to the sites where fieldwork needs to take place. Here you include materials, equipment, transport and services. Organisational costs (also called core costs) the costs of your organisational base, including management, administration, governance. Once you have decided on the best organisational set-up to support your operational plans, you will incur the organisational expenses on a regular basis. Staffing costs these are the costs for your core staff, the people involved in management, the people doing work that cuts across projects. (These costs can be included as a category under organisational costs.) These costs include their salaries and any benefits such as medical aid or pension fund payments for which the organisation is responsible. Capital costs these are costs for large investments which, while they may be necessary because of a project or projects, will remain organisational assets even after the projects are over. Vehicles and equipment such as computers and photocopiers fit here. They may be used by all projects, or they might only be required for a specific project. Depending on how you intend to use the equipment, you might budget for it under operational costs or under organisational costs. II.2. Estimating your income

In your fundraising plan you selected the different ways to generate income. In your budget you have to make reasonable estimates of the income you can expect to generate from each category specified.

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II.3.

Creating a cash flow forecast

CASHFLOW FORECAST TEMPLATE - NAME NGO


Period 1 2 3 4 INCOME - CASH IN Donations Grants Fundraising income Sales Fees TOTAL CASH RECEIPTS EXPENDITURE - CASH PAID OUT Salaries Staff Training Bank charges Electricity Insurance Local travel Meeting expenses Miscellaneous expenses Overseas travel Postage and stationery Professional fees Publicity Rent, insurance and utilities Repairs and renewals Telephones, email and fax Vehicle running expenses Specific Project costs Land and buildings Office equipment Furniture Office equipment Computer equipment Loan and financing repayments TOTAL CASH PAID OUT NET CASH FLOW FOR PERIOD CASH BALANCE 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

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