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So You Want to Start a Nonprofit

Not every new problem needs a new nonprofit. There. I said it.

At least two or three times a month, I have someone approach me about starting a new nonprofit organization. While there is always a need for a problem to be addressed, there is seldom a need to create a new organization to address it. Whatever problem they want to solve, there is usually a reputable organization already addressing it. And they are probably doing it with more effectiveness and efficiency than a start-up organization could.

Truthfully - I don't want to crush anyone's dreams. I would rather see those dreams succeed beyond their wildest imaginations! That kind of success, however, might be better achieved by NOT starting a new 501(c)(3) organization.

According to the National Center for Charitable Statistics:

  • In 1999, there were 631,902 nonprofit organizations in the U.S.

  • In 2009, there were 1,006,670 of them - a 59% increase.

  • In 2012, there were 1.4 million.

  • Today, there are 1.5 million - about a 130% increase in 20 years!

Even more amazing is this: in 1999, only 32% of nonprofits had receipts less than $25,000 a year. By 2009, 79.4% of them were that small.

Thus: only 18% of the new nonprofits started in 13 years have enough revenue to hire even ONE full-time employee. The rest of them - all 691,008 of them - are tiny.

In my mind's eye, I see all those 691,008 nonprofits scrambling like ants - working hard for every little crumb they can get. And more ants are arriving on the scene daily to compete for those crumbs.

Is your dream crushed yet?

I hope not.

If you are truly committed to making the world a better place through charitable work - please do it! In fact, we should all be doing that anyway. But if you think a NEW nonprofit is the BEST way to do that, please answer these questions first:

  • Are there other, already-established organizations doing related work, even if it isn't exactly the same as what you are envisioning? In your community? In your state? Anywhere? You can do a Google search to find them or go to Guidestar and do some research there (it's free).

  • If yes, can you offer your time and passion to help them achieve their mission? If there isn't a local group, is there a regional or national group you could encourage to come to your community? Could you ask them to adjust their programming to meet the need you've identified? There is TRULY no reason to re-invent the wheel. If another group is working to meet the need - don't duplicate them; help them!

  • If no, check again. Of all those 1.4 million nonprofits, I seriously doubt that there isn't one addressing that issue in some way.

  • No one else is doing what you dream of? Okay, then keep going.

  • Do you realize that, if you start a nonprofit, it will not truly be "yours?" You will have to establish a board of directors, who will become your boss. They can even fire you (it happens all the time). Are you okay with that?

  • Do you have sources of funding up-front? Lottery money or rich uncle? A circle of friends with deep pockets? Nonprofits take money and grant-makers are almost never interested in start-ups.

  • Do you have the skill set needed to run a nonprofit? Business acumen? Bookkeeping knowledge? Organizational skills? Vision? Communication skills? Programming expertise? If you have deep pockets, you can hire people with these skills but, in all likelihood, you will be doing them all yourself.

Finally, answer this question as honestly as possible: WHY do you want to do this? I often get some version of one of these answers:

  • To honor someone I love;

  • Because I need a job;

  • I don't have anything else to do;

  • I used to volunteer for another organization but they made me really mad, and I know I can do things better;

  • I’ve been doing this on my own and it needs to be a nonprofit so it can grow;

  • I don't really know why - but I just know that I want to

None of these answers - by itself - is a good enough reason to start a new nonprofit.



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