As a nonprofit advisor and CFO over the last eight years a number of folks have asked me for advice on starting a nonprofit. My advice to nearly all of them has been simple: Don’t Do It! The reason is simple; most prospective nonprofit founders do not understand the complexities of nonprofit entities or the current nonprofit environment.
Nonprofit Advice: Before Deciding to Start a Nonprofit, Know These…
12 Very Scary Facts About Nonprofits
- Nonprofits are complex organizations that require incredible amounts of specialized skill, planning and effort to be successful.
- The majority of nonprofits are not prepared for their next funding crisis, which in many cases may be days or weeks away.
- There are over 1.5 million nonprofits in the US (and that is just 501c3s).
- Many nonprofit funders are trending toward large impact projects which the vast majority of nonprofits cannot deliver.
- Foundations often want to fund stable financially viable organizations that do not rely on their funding and rarely provide funding for more than one or two years.
- Bankers may not be able to loan to nonprofits due to their small or non-existence cash and asset bases.
- Individual donations, the largest source of nonprofit funding, continue to migrate toward the nonprofits with the best social media footprint and donors are overwhelmed by the volume of donation solicitations.
- Nonprofits are not centrally regulated, so there is little consistency in regulations and practices from state to state.
- The separation between nonprofits and politics is under constant attack, risking the core concept of unbiased support at the center of most nonprofits.
- Nonprofit staff and leaders are commonly underpaid versus their counterparts in the for-profit sector. They are also often overworked which leads to higher burn out and turnover.
- Nonprofits Boards have fiduciary oversight responsibilities which means the founder doesn’t have a free hand to do whatever she/he wants.
- I won’t even begin to list the perils of surviving when your major funder is the government.
For more thoughts on the topic, check out this post from the good folks at Nonprofit Hub, What’s the Risk of Starting a Nonprofit?
These are only some of the issues facing all nonprofits. New nonprofits face all of these in addition to the challenges of any typical start up organization. So, what options are available for someone who want to start a nonprofit?
Nonprofit Advice: Consider Alternatives to Establishing a New Nonprofit
- Become active in an existing nonprofit with a similar mission and gain first hand knowledge. The good, the bad and the ugly.
- Volunteer at all levels of the nonprofit from front line up to the Board. Learn about the nonprofit’s challenges, strategies, finances and leadership methods.
- Work with the leadership team to explore your ideas on building a new program within the nonprofit.
- Join a nonprofit advisory council focused on the nonprofit segment that aligns to your ideas or passions.
- Look for a nonprofit in another regional area that has a mission that aligns to your nonprofit concept. They may be interested in a strategic expansion and willing to start a chapter or division in your area.
- Read articles and blogs about nonprofit issues and become a thought leader by developing new content.
- Attend or participate in conferences.
- Reach out to nonprofit associations in your state or neighboring states and network with participants. Any one of them could be aware of initiatives or organizations that might interest you.
- Learn about the fiscal sponsorship at fiscalsponsors.org
- Don’t limit yourself by the nonprofit corporate structure since there are social enterprises and alternatives like B-Corps which provide options that may offset some of the nonprofit challenges.
If you are thinking about starting a nonprofit my advice is to think again and while you do that consider these questions.
- Are you aware of the challenges facing nonprofits and startups?
- Have you spent time in the trenches of a nonprofit to get a good ideal of the time, effort and skills required?
- Have you established a network of resources and advisors who are ready to engage with their time and dollars?
- Are you certain that there isn’t another nonprofit nearby that is addressing the same or a similar mission or even one that has attempted to and failed?
If you are sure you are ready to start a nonprofit, then there are plenty of consultants willing to help, but personally, I recommend against it.
If you have experiences related to starting a new nonprofit recently, please share them in the comment section.
About the author:
Michael F. Cade is a nonprofit advisor and executive coach, taking the nonprofit sector Beyond the Numbers. He is a leadership pathfinder, helping nonprofits optimize operations and strategy to attain long-term viability and relevance. His Framework for Fiscal Sustainability is an innovative approach for evaluating organizational health and securing the ongoing ability to deliver on its mission.
Mr. Cade publishes the nonprofit leadership blog Not for Profit Beyond the Numbers
If you have questions or would like a consultation on a nonprofit leadership or operational issue, contact him at: firstname.lastname@example.org