Stop - 7 Reasons not to start a nonprofitOccasionally I will get an email asking how to start a nonprofit organization.  There are several great resources online that can help, but before I get to that I always kindly caution them on a few points.

It is very time and labor intensive to start a nonprofit.  You should be certain that this is the right path for your endeavor before moving forward.

Here are 6 reasons not to start a nonprofit

1. There is already an organization filling that need.

If you are seeking to fill a specific need in your community, first contact other organizations with a similar mission. For example, say you find out that the grocery store throws away all its bakery goods at the end of the day.  You’d like to get that food into the hands of people that really need it.  Contact your local food bank or other assistance nonprofit. Volunteer to coordinate the pick up of the leftover foods. The same rings true for many causes seeking a national or international audience, do research to find out what organizations are already working in that space.

If the mission you’d like to tackle requires funding (as many do) if you can start as a “project” under an existing NPO it may help you with getting grants and other funds.  Foundations are more likely to fund projects under established nonprofits.  You can also use this time to learn the ropes from experienced nonprofit professionals. Then later once you have a solid foundation you may decide to go out on your own.

2. You do not have other people “on board” yet.

Setting up and running a nonprofit organization takes a lot of people, focused on a single vision and mission.  If so far you are on your own in your quest, first seek to get the interest of other people.  You may begin by talking with people in your community with similar interests.  Volunteer to help out with community events or attend local social clubs.  Join online forums, browse blogs or search Twitter and Facebook to see what other people are saying about this issue.

When you do have people interested in participating you’ll find that some are more committed than others.  When forming a nonprofit you must have a formal board of directors who are willing to lead the effort.  Then there will be others needed who can volunteer their time on committees and fulfill other responsibilities.

3.Your idea is better suited as a for-profit enterprise

If you would like to produce a product for sale to the public, most of the time this falls into the for-profit category.  Starting a nonprofit is not a work-around for not being able to get a loan.

I have also met those who want to run a one-person services business as a nonprofit.  That is also not the basis for a nonprofit organization.  If you are lucky enough to get your nonprofit status approved and attract board members, your goal is not to then have them there only to rubber stamp every thing you want done.  The executive director works for the board, not the other way around.

4. Starting up takes time.

There are some causes where immediate action is vital. Responding to natural disasters such as the earthquake in Haiti need organizations that are already on the ground, trained, funded and ready to go.  Even for events only impacting a small local area, it is best to work as an ad-hoc committee under the umbrella of an established nonprofit.  You don’t need a board, by-laws or every administrative detail that goes with starting a new organization.  You just need a committee chair and guidance from the staff and board that you are working under.

5. You’d like to plan a one time fundraiser.

Perhaps you’d like to put on a fundraiser to help a particular cause.  Some crazy people (like me) enjoy planning events, raising money and seeing it put to good use. If this is your thing, there are many nonprofits out there that would love to have your help!  Join their fundraising committee if possible.  Otherwise, simply contact them to get approval for your fundraising efforts.

A great example is the category of athletic fundraisers like 5Ks and endurance training programs.  I know some very dedicated volunteers who raise money for Relay for Life for the American Cancer Society.  In fact, participating in a marathon training program was how I got started in fundraising.  Someday I’d like to do a marathon or half marathon in Hawaii as a way to raise funds for a cause.  (OK, maybe I just want an excuse to go to Hawaii!)

6. Your type of cause makes it difficult to secure long term funding.

Many people start a charity because they are passionate about the cause and rightly so.  But keeping that cause funded can be half, or even the majority of your job as an executive director or board president.

It’s important to take a look at the funding landscape for your type of cause and decide what strategies will or won’t work.  Are corporations and foundations already supporting this type of work?  Is your cause too narrow, so that getting funded will be very difficult? Decide if this is a hurdle that you are able and willing to work hard to overcome. If so, create a plan that will keep your organization funded for the start-up phase and for years to come.

Resources for starting a nonprofit organization

You have weighed all your options and are certain that starting a new charity is the right step.  You have a strong team of people who are willing to work toward a singular focus.  You are ready with a long term plan of action and funding. Congratulations!

Here are several resources that will get you started:

Starting a Nonprofit: What You Need to Know – Manual from the University of Richmond (free download)

United States Internal Revenue – Forms for filing for 501(3)(c) tax exempt status in the USA

Board Source – Resources for building effective non profit boards

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Posted on 27 March 2010

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13 Comments For This Post

  1. David Bressler says:

    Sandra,

    You’ve skipped #5!

    david

  2. David Bressler says:

    Sandra,

    Your post has inspired me to share some of my experience from the last year starting my own non-profit. I disagree with most of your points above, but hope that by sharing my experience I offer a counter-point to some of your comments.

    I really enjoy reading your material, and do so regularly. Thank you.

    http://davidbressler.com/2010/03/28/go-ahead-start-that-nonprofit-organization/

    David
    Where’s Your Heart? Foundation (http://wheresyourheart.org)

  3. Sandra Sims says:

    Thanks for the pointing that out! OK, so now I’m down to 6 reasons. These are not hard and fast rules but ideas for people to consider before proceeding. I enjoyed reading your counter post and will post further comment there.

  4. David Bressler says:

    Six reasons are still good!

    Thanks for not taking my sarcasm personally. I do really enjoy your posts.

    David

  5. ENS says:

    Hmm I personally find this post useless and baseless, but what do I know. If everyone subscribed to these theories then there would be no nonprofits (or businesses for that matter). Discouraging people because it takes hard work? Are you serious. Post like this make me desire to never return to your site.

  6. Sandra Sims says:

    The point is not to be discouraging. But to encourage those who truly care about a cause to find the best way to make a difference. Sometimes the solution is to start a new nonprofit, sometimes it is not. Every situation is different.

  7. Shuey Fogel says:

    Hi Sandra,

    I agree that starting a new nonprofit isn’t always the best way to “get the job done.” Unfortunately, as a banker I have seen tens of thousands of dollars squandered by some (not all) donors that felt that the only way to actualize their goals was to start out on their own as a newly registered charity.

    A post that reinforces this idea appeared on the Social Citizens blog: http://www.socialcitizens.org/blog/start-nonprofit

    Additionally, for those that are debating whether to start a new nonprofit or to join an existing organization (Fiscal Sponsorship), I stumbled across a table that compares the two very nicely:
    http://www.fiscalsponsorship.com/Compare%20501c3%20w%20Fisc%20Spon%20Model%20A%20_00075865-2_.pdf

    Thanks for the post,

    Shuey
    @nonprofitbanker

  8. David Bressler says:

    @Shuey,

    You’re very correct in the way you’ve said that. “Squandered”. People are well meaning, but they have trouble thinking long term. To be successful, a company (including a non-profit) must first survive. If there isn’t a solid business in place, then just like a capitalist company, it’s resources are simply wasted in the end.

    David

  9. Sandra Sims says:

    Thanks for the links, these are helpful resources.

    Agree… long term goals and generally thinking long term are so important in the beginning and all along the journey. Not focusing on goals is the root cause of many mistakes that nonprofits make, IMO.

  10. Debra McCalla says:

    Hi Sandra,
    My name is Debra McCalla I truly believe that you can give me some positive insight on how to start a non-profit organization. Your 6 reasons are very clear and very much substantial information that I can build a foundation on. We are a new organization that has only been in existance for 3 years. We want is to now venure out so that the public is aware of who we are and what services we provide. I really need for you to give me some insight on where I should start first for this is all new to me. Check out my website is is a religious based organization.

  11. Sandra Sims says:

    Debra, first start with the established relationships that you have and strengthen them. Meet with people one on one, ask them to volunteer for an hour, share stories of those whose lives are changed because of your work. Then ask those people to introduce their friends to your cause. Houseparties are a good avenue for this. See: http://stepbystepfundraising.com/fundraising-houseparty/

  12. ThinkingofJumping says:

    I am thankful for your post. It brings to light the importance of not biting off more than I can chew. And my dream or vision of the program I want is really in the hands of my future Board. So I have some hard long thinking to do. There is a program in our area that does DV/SA but the sexual assault side of things seems to be put on the back burner more often then not. According to our SA Nurse the needs of her program are not being met and there is not another program in our area who can compete for the grant. I want to meet those needs and more. But with who and how? Do I jump and make my own vision come to fruition or do I climb into bed with another organization? The current one is not interested in my proposals. Do I keep searching for another partner? All very important questions to add to yours. So thank you!

  13. aida says:

    I started a non profit and I haven’t finished because it requires a lot of money and paper work that I do not understand.I contacted sone rip off agencies wanting to help me but not tell me all the money required and the assistance they provide once they grab your money.so n ow what I am wanting is to join a already made up non profit that I can join and give the funds to them.but I want kind of piggyback with them. And use my non profit name .any..one can tell me how to do this? Thank you.


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