It would appear that at least once every week there is at least one workshop somewhere in this country telling people how to start a nonprofit. Where are the workshops telling people why not to start a nonprofit? Where are the workshops on alternative ways to bring your wonderful idea to life?
There is a tremendous amount of ignorance and a whole lot of heart behind those who want to start a nonprofit and those who “help” them to do so. Help is in quotes because it really isn’t helping at all. The crown jewel of ignorance may be the person who wrote into a legal advice Q&A, telling a tale of woe. The writer wanted to buy an old church that was to be demolished, rehab it and sell it (as what, it wasn’t clear). The owners of the church, however, said it would be given to a nonprofit. Cut to the chase: this entrepreneur creates a nonprofit, gets ownership of the church, rehabs it and is all ready to sell it to recoup the investment, only to discover that’s not how it works in the nonprofit sector.
Two of the biggest mistakes people make in starting a nonprofit should be a hard facepalm. One, the founder doesn’t own the nonprofit. And, two, the easy part—starting the nonprofit—is in the past. The hard work is in sustaining it. Nonprofits aren’t family owned businesses. No one owns a nonprofit. The board, as the top of the organizational chart, stands in for the public, making sure that the organization fulfills the promises it makes in its mission statement. (Did our unhappy church buyer have a mission statement or a board?) The board, not the founder, determines if and when the founder needs to move on, for the good of the mission. Nonprofits exist to fulfill a stated mission that serves the public good, not to provide employment and/or purpose to a founder or anyone else.
Second, the hard work with a nonprofit comes with sustaining it at a viable level, as opposed to living hand to mouth. That involves securing diversified sources of income to sustain the programs that put the mission into action; working with a strong, functioning board that knows its job and allows the executive director (if there is one) to do her/his; supervising staff (and volunteers) to ensure programs are working to a high standard; maintaining the systems and procedures that allow the organization to operate smoothly and efficiently on a day-to-day basis. Hard work.
Last year I cited a study in my blog that looked at the “saturation point” for nonprofits, trying to determine whether there is a tipping point for a healthy number of nonprofits in a community. They found that the financial health of a nonprofit is put at risk when there are more than three nonprofits per 1000 people in a community. While this study was interesting, it makes starting a nonprofit a numbers game instead of a market research game, which is what it always should be. The question that needs to be asked before starting a nonprofit is: what are the needs; what is the supply of responses to those needs; what is the demand; is another response need; and, if there is, is there sufficient money available—be those philanthropic dollars or earned dollars—to support another response in this community?
Just because a person has a passion for something doesn’t mean s/he should start a nonprofit. Two cases in point, all from this week’s news headlines. The first is an amazing story of two young sisters, now 13 and 15, who eight years ago started creating origami ornaments to fund wells in underserved areas of the world to provide access to clean water. What’s not to love about this story?
Shortly thereafter, Paper for Water came into existence. The two older sisters are the co-founders. The youngest sister, now 9, is the director of marketing “in training,” and mom and dad are on the board of directors. But, is this a nonprofit or a very sweet family owned business. These enterprising girls have raised over $1.5 million, according to their website, and funded 190 “water projects” in 20 countries, including the US. They are gaining great business knowledge, developing their interpersonal skills, leaning amazing things, all while helping others. Winners all around.
But should this happen as an independent nonprofit? Or should it have been a fundraising stream for an existing nonprofit? The benefits to these three sisters and to the communities they have served would still be had, with a great reduction in risk. Most likely, they wouldn’t make the mistake of saying you can make a donation and get a free thank you gift akin to the Paper for Water ornaments that Neiman Marcus sells for $58.
The other newly formed nonprofit that had me shaking my head was a man turning his passion into writing about old, unsolved cases into a nonprofit that would work on solving such cases. Many large police departments have a cold case squad or unit. They generally are staffed by experienced, proven detectives, and are backed up with the ability to subpoena witnesses, get expensive DNA testing done, review past work done and evidence collected to date, etc. In other words, they have the right expertise and tools to do the job. I understand wanting to bring closure to the victims of unsolved crimes, to make a community feel safer because alleged criminals are taken off the street. But when there are trained experts already doing that work, why not simply raise funds for them? There isn’t a city police department today that couldn’t use additional dollars to support their cold case squad. Does this really need to be a nonprofit, or is this an opportunity for someone to fund what he wants to do when others are likely to be able to do it better.
There is an irony here in everyone wanting to start their own nonprofit. Bowling Alone, a book published in 2000, explored the decline of community in America. With the rise of technology and social media, many would argue that the decline is even worse than it was when Robert Putnam did his writing. For the last five plus years, one of the hot buttons has been collective impact: organizations working together to address community needs. Our communities, which we as nonprofits are supposed to be serving, would be better assisted if fewer people started their own nonprofits and more individuals with great ideas and passion worked together to address the problems of the world.