Thinking of Starting A New Nonprofit? Think Again!

This week I was on a panel at Marymount California University on leadership in the nonprofit world.  We were a mixed group—3 Executive Directors of local nonprofits, the head of Toyota’s charitable giving program, and me.  While our work is all different, and we come from different backgrounds, there were a number of things on which we completely agreed.  The main one being that the sector as a whole needs a complete overhaul. There are, we feel, too many nonprofits, too much overlap, and, consequently, not enough impact.  Everyone with a passion wants to start a nonprofit and a goodly number of these folks actually do.

Now, in the past year, the number of nonprofit organizations in the US dropped.  But that was because the IRS finally took steps to purge inactive nonprofits from its records.  But that still left over 1.4 million nonprofit organizations, and applications are still in excess of 50,000 every year.  Typically, the IRS approves about 90% of those applying.

But it’s not the number of nonprofit organizations that is of concern.  It is the duplication of effort; the lack of coordination; the services that could be better but aren’t because the focus is on the nonprofit not the clients or cause the nonprofit wants to serve.

Beyond that, there is the practical issues.  These include:

• The infrastructure that must be developed.  You know, those pesky policies and procedures
• The administrative work including tracking and thanking of donors
• The tax returns that must be filed
• The board that must be built, nurtured, refreshed
• Programs to be created and delivered
• Clients to be served.  And to serve them, you must first identify and, often, recruit them
• Staff to be recruited, trained, and maintained
• Revenue that must be raised

I get calls weekly from people who want to start a nonprofit as well as those who have started one without thinking beyond the mission.  I hear variations on the same theme:  “I have a great program, but I don’t have enough money to (fill in the blank).  Can you help me…” fill in that blank also, which typically consists of:

• Raise funds
• Find wealthy board members
• Preferably both of the above.

So here is my best advice if you are considering starting a nonprofit:

1. Be honest about your impetus.  Are you starting this because you have to be the boss?
2. Check out who is doing similar things in your geographic area.  If there is no one, you may want to consider why not?  If there is, before you jump, go talk with them and see if there are ways for you to work together rather than competing for scarce resources
3. If, after these conversations, you are convinced that your own nonprofit is the only way….do your homework.  Understand what it takes to be a successful nonprofit.
4. Create a plan, a business plan.  Yes, business; it really isn’t a dirty word.
5. Make sure you start with enough capital to carry you for at least three years.  It takes that long to build a program.

Your passion is a wonderful thing, but understand that by itself, passion is not enough.

Janet Levine works with nonprofits, helping them to increase their fundraising capacity.  Learn how she can help you and your organization at http://janetlevineconsulting or contact her at janet@janetlevineconsulting.com