7 Tips for Launching a Nonprofit in Retirement

Retirees form nonprofit organizations to give back and leave a legacy.

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Starting a nonprofit organization in retirement is a noteworthy way to give back to your community. But beginning and running your own foundation can be incredibly challenging. U.S. News asked several of the winners of this year's Purpose Prize, an award for entrepreneurs over age 60 who tackle societal challenges, and other experts for advice about launching a nonprofit.

[In Pictures: The 10 Purpose Prize Winners.]

Research the competition. When Tim Delaney, CEO of the National Council of Nonprofits, is teaching a course about beginning a nonprofit, he generally spends the first third of the class explaining why most people should not start a new nonprofit. "Sometimes people are drawn to the nonprofit sector with a false sense of reality," he says. "It is not always fun and it is very hard work." He encourages students to research existing nonprofits that align with their goals. "If you have a passion for a particular cause, hold on to that and find someone with a nonprofit that is providing those or similar services and pour your energy into that nonprofit to help it grow and prosper in your local community," Delaney says. "If you love paperwork and worrying about making payroll, then go out and form a new nonprofit." But keep in mind that you don't want to duplicate services that are already being offered in your community.

Get some experience. The best way to get a feel for how nonprofits work is to spend some time at one. "Volunteer or intern for a nonprofit and spend at least two months learning best practices at the best run nonprofit you can find," says Barbara Allen, a former Philadelphia Museum of Art administrator who founded Fresh Artists, a nonprofit that provides funding for art supplies in urban public schools in Philadelphia, Pa. "Offer to work for free and just be a sponge." Ask questions about attracting funding, meeting payroll, and benefit obligations, and reaching out to the community.

Prepare for the paperwork. To begin a nonprofit organization, you will likely need to hire a certified public accountant and an attorney with nonprofit experience. You may also need to go back to school or take a few extra courses. Many colleges offer coursework in nonprofit management and fundraising. "We wrote a business plan and researched the market," says Allen. "We went and talked to potential customers and art teachers who were going to be our clients to find out what they need."

[See How to Retire Gradually.]

Test it out. It can be useful to test out your idea on a small scale. "It's easier to convince funders to buy into what you are doing after you start a pilot project," says Inez Killingsworth, board president of Empowering and Strengthening Ohio's People, a nonprofit that helps homeowners negotiate better mortgage terms with banks to avoid foreclosure in Cleveland, Ohio.

Be able to demonstrate results. Donors will want to know what results you are accomplishing with their money. "We collect a great deal of data about the home visits and what outcomes we are achieving," says Judith Van Ginkel, 71, a professor of pediatrics at the Cincinnati Children's Hospital Medical Center and president of Every Child Succeeds, a nonprofit that provides in-home counseling for first-time, low-income mothers. "It helps us to be able to validate that what we are doing works. It also helps us to understand where we could improve operations." Be prepared to document what you are doing and make presentations using that data to new potential donors. "People don't just donate to someone with good intentions. They like to see results," says Ilona Bray, an attorney and author of Effective Fundraising for Nonprofits. "They want to see demonstrated outcomes and statistics about how many people you have reached."

Prepare for setbacks. The economic slump has caused many government agencies to cut funding for nonprofits. Many private donors have also recently reduced their charitable giving at a time when cash-strapped families are increasingly seeking the services that nonprofits provide. "You will have stories about times when you have made a huge difference, but you will also have stories where despite your best efforts things go wrong," says Bray.