“See a need and fill it.” That’s what many people use as their rationale when forming a new nonprofit. For instance, they may be frustrated about a lack of services, outraged about a specific public policy and its impact, or wanting to strengthen and expand the arts and the very definition of “who is an artist.” In almost all cases there is a driving passion to make a difference locally, regionally, or nationally. That’s all well and good, but is creating a new nonprofit the best way to fill the need?
We suggest that people take time to think through the many implications of starting a new nonprofit before acting. According to the Independent Sector, there are an estimated 1.8 million nonprofits in the United States. That’s a lot. And each requires bylaws, a board of directors, vision, volunteers, and structure and organization. Many also require staff, accounting and human resources services, technology, a building, communications, agreement on how to measure impact, and – very importantly – money. In sum, starting a nonprofit is akin to starting a new for-profit business. It is a lot of work: work that brings feelings of joy when you see your vision come to life. We like joy, but are there better ways to serve your community than starting a nonprofit?
Nonprofits – just like private businesses – start and close all the time. Take time to understand the environment you are working in and become aware of your competitors. In fact, we recommend rethinking the very phrase “competitors” when you consider starting a nonprofit. Think about it this way: could you support the work of an existing nonprofit instead of starting a new one? What about taking your business plan to an existing nonprofit and asking if they would be willing to incubate it or integrate it into their work? Oh, did we say business plan? Yes, we did. If you are planning on starting a nonprofit, you need to invest the time in thinking through how you will begin and sustain your operations. If you can’t dedicate the time to that, you need to ask yourself what you are willing to invest time and money in. Oh yes, we did say money. If you are starting a nonprofit, you need to be willing to invest your money in the venture: why should you ask others to invest if you won’t?
If you think our questions are harsh, read Jay Love’s article in Bloomberg, Should Hundreds Of New Nonprofits Be Created Each Year? It raises critical questions worthy of consideration if for no other reason than to anticipate objections to your new nonprofit. One of Love’s important issues is, “The majority of new nonprofits never even reach $100,000 in annual revenue and may (be) unable to truly perform the mission intended.” We want you to be successful, and we want you to keep your eyes open. Take a look at the five steps to creating a nonprofit published by the National Council of Nonprofits, it’s a great place to start.
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Copyright 2022 – Mel and Pearl Shaw of Saad&Shaw – Comprehensive Fund Development Services. Let us help you plan for 2022! Video and phone conferencing services are always available. Call us at (901) 522-8727. www.saadandshaw.com.
