Why There’s No Need For Your Nonprofit.
Pursue a world-changing, unprecedented idea. NOW. Just don’t start a nonprofit.
In the years I spent as a nonprofit consultant, I was repeatedly asked about advice on getting a nonprofit off the ground. In candor, I was ethically obligated to respond with a plain, but constructive: DON’T DO IT!
I’m sure if you have the mind to read articles on Medium you’re at least a bit of an optimist, or you at least believe that ambition and purpose can fuel any venture to success. I would concur that those qualities are enough to bear the legal, financial, and administrative hurdles you will encounter to establish a tax-exempt organization. But what they will not do, is allow you to sustain it long enough to make a meaningful dent in the problem you wish to solve.
Further, those qualities won’t protect you from the carnivorous nature of competing organizations in the same mission area, or the long-term damage you may actually cause by disillusioning another donor.
I am not a nihilist. In fact, I am as optimistic as ever that the social sector (nonprofits, non-governmental organizations, and community-based associations) will solve the world’s ugliest problems. However, there is rarely a strong justification for the creation of a net-new entity.
But before you subvert my advice or channel it as fuel to do just that, take a moment to ensure the following reasons for failure, won’t befall you.
YOU HAVEN’T DONE YOUR RESEARCH
Run a generic search for a type of nonprofit (in an official database such as guidestar.org) and you’ll find at least a dozen in your area, no matter where you live in the United States.
Last year the IRS approved more than double the usual number of new nonprofits, accepting over 94,000 new organizations in 2016, while rejecting only 67. (No, that’s not a typo. Put another way, for every 10,000 nonprofit applications that spill over the transom, the IRS rejected only seven.) Bottom line, there are many cooks in the kitchen.
Of course, unlike private enterprise or intellectual property, you cannot copyright a mission — nor can you prevent ‘like’ organizations from moving in right next door to yours! And the power of each and every one of those organizations is significantly diminished as the pond grows. It’s not just confusing for participants, but also for donors, who on Giving Tuesday have on occasion given to say, a local Boys and Girls Club when they’d meant to give to their local Brothers, Big Sisters.
It’s this exact duplicate-services scenario that spawned the future grounds for very hard conversations with nonprofits about merging with another organization or phasing out its services entirely.
YOU CAN’T DIFFERENTIATE EMOTION, FROM MISSION.
Some nonprofits fail because they were started for the wrong reasons, entirely.
Many people reflexively file for tax-exempt status, build a board, and launch their effort after a life-altering event. The most common among the emotionally motivated are people who want to commemorate the death of a family member or a publicly prominent person. A family creates a nonprofit to fight the disease that killed their loved one — even though there are undoubtedly organizations already doing just that. Or maybe, a police officer who is shot in the line of duty, or a journalist who is killed while on assignment in a war zone.
These lives are worth commemorating, but there are lots of ways to accomplish this commemoration short of creating a nonprofit organization. You could make memorial gifts to the deceased’s favorite cause, or create a special scholarship, or petition for a local resolution to mark a day of remembrance in their name. These approaches serve to preserve the memory of a loved one after they have passed, without cannibalizing support from effective agencies.
YOU’VE NEVER VOLUNTEERED
You’ve likely heard you must serve before you can lead. Volunteering is a valuable, character-building exercise, but it will also lead to invaluable insight. I cannot stress enough how much more prepared a dedicated volunteer will be to start their own programs once they’ve seen participate in the execution of them as volunteers. It’s the kind of insider information that you will never gain from research alone.
Volunteering doesn’t require any extraordinary feat of strength, only compassion, and respect for other people. People are more than just their problems. The people served in your programs should feel as though they are valued, respected, and bettered by participating in your program, not that they are recipients of half-hearted charity. Empowered participants become effective advocates for your nonprofit and incite greater interest from prospective funders.
If you have any professional expertise to offer, consider skilled volunteering as well. If there are any other operating nonprofits in your mission area — and we’ve established that there are — ask yourself: how can they be improved upon? Operational efficiencies exist at all layers in all types of organizations, maybe you can solve them. What methodologies are the programs utilizing? What limits them? If you have technical expertise, maybe you can help a food bank streamline its distribution to and from pantries or take mobile or online orders from community residents.
The possibilities are endless and contributing to an existing mission will undoubtedly aid you in your future enterprise, and benefit others in the process.
YOU’RE ‘NOT INTO POLITICS’.
Most founders are eager to serve vulnerable populations but rarely engage in the political process. The truth is, nonprofits may be tax-exempt, but they are not isolated from the political process. The decisions that are made about housing, education, animal welfare, agriculture, taxes, criminal procedure, and more all impact the same communities your services exist in.
In 2019, a proposal to reign in the Supplemental Nutrition Assistance Program (SNAP) would have eliminated benefits for millions and jeopardize free school meals. If successful, food banks would have faced the possibility of complete overwhelm and in some cases, collapse. Feeding America’s advocacy on Capitol Hill pushed back the administration’s proposal.
Finding homes for needy dogs and cats is gratifying, but homeless animals will always exist thanks in large part to spay/neuter policies, which are mostly in place at state and local levels. ASPCA regularly advocates for state assistance to make the cost of spay/neuter services more affordable. Until then, they believe no-kill shelters will remain at-capacity in almost of all their locations — leaving many animals with no safe options.
Simply put, in every mission area there is at least one, significant structural problem that will undermine or even eradicate your potential to do any good.
Often ridiculous missions include absolutely statements that are always red flags ‘ending’ ‘forever’ ‘never/always’ e.g.: ‘ending online sex predators’ well, to prevent any child from ever interacting with a maleficent adult online, you’d have to be able to monitor every adults’ online activity. There are constitutional privacies we’re entitled to as Americans, other countries have their own rules around privacy that mean there are technologies, services, and programs that you cannot offer, no matter how noble your intentions.
These legislative roadblocks are the reason why increasingly, nonprofits are exploring the advocacy space. I argue, not nearly enough have formally executed on this front. Consider what challenges your mission will face before you give it legs. Then, lobby your elected officials — and don’t stop lobbying.
YOU ARE EASILY DISTRACTED BY SHINY OBJECTS
The social-good space is littered with software and gadgets designed for every mission from animal shelters, to libraries, to voter literacy campaigns and back again. Well-intentioned, and even well-funded nonprofits regularly waste thousands of dollars to acquire technologies or tools that they believe will make their work easier.
Consider such tools to be ‘shiny objects’ of sorts. You’ll know if you are one to become easily distracted by such temptations if you have (1) purchased a domain name before you wrote a strategic plan (2), created a logo before you approached prospective board members, or something similar.
Trust me, you would be surprised that some of the most robust operations in the country are still working out of excel sheets for everyday tasks.
There will always be a new, shiny piece of technology promising a world of ease for tired, staff-strapped nonprofit professionals, but more often than not, those tools are either too sophisticated for the staff to operate, mismatched for the nonprofit’s programs, too expensive, or all of the above.
I am not the only social sector professional who has made this rallying cry to do-gooders near and far, but it bears repeating prove you can the work without the tech before you invest a dime in technology that promises it will help you to “work better.”
YOU DON’T KNOW HOW TO ASK FOR MONEY
Nonprofits may be a ‘heart’ business, but they are business all the same. Instead of paying customers, they serve the most vulnerable, neglected corners of our societies, and for that reason, money is the blood that keeps the organizations, alive.
Money is absolutely a necessity for an organization to survive. Funding is either revenue-based (program based) or maybe a retail or service provided. Though some organizations use a revenue-based model, many are still dependent on fundraising and do so by way of public funds (grants) or private funds (grants from corporations, foundations, or individual donations).
I am not exaggerating when I say that competition from these sources is steep, and very rarely feasible for new organizations. Funders want to see that you’re effective, they have their own shareholders to be accountable to, which means you’re program must demonstrate impact before it will be seriously considered for sizeable grants.
Unlike a government entity with guaranteed revenue streams, nonprofits must constantly prove their efficacy to donors, board members, and other stakeholders. This requires optimal performance against steep, societal problems against the threat of the next new, shiny-social enterprise, though, never reaping the financial rewards that private corporations do for the same.
Where results lack, dollars quickly dissipate. If you can’t stomach the fact that intentions alone don’t win the day, don’t even start.
WHAT DOES IT ALL MEAN?
The current landscape of the social sector is looking up.
Every day, especially in times of crisis, incredible organizations are stepping in to fill in the gaps. By doing so they are getting stronger, forming valuable cross-sector partnerships, and yes, ending long-standing societal challenges.
And I’m not saying you shouldn’t run with your great world-changing idea and your desire to do good. You should. Just don’t start a nonprofit.