Want to start a nonprofit? Think again.
I’ve heard lots of people fret over the list of issues with my generation - we're unprofessional, we're entitled, we're always online, we're slacktivists...I'm not so worried about those things. I think we'll work that out. But there is something about my generation that actually kind of gets my goat. When a bright, passionate, innovative Millennial sees a problem, I don't think starting a nonprofit should be the default solution. This might not be popular among my nonprofit-starting group of friends and peers, so I should say, not just for them, that sometimes starting your own nonprofit is the right choice...but often it's not.
I know the thought process because I've been through it too. You want to help people. You're good at your current job and sometimes feel underutilized and underappreciated at your organization. You look elsewhere, but you can't get a job doing exactly what you want to do at exactly the level you deserve because turns out lots of other young people with great experience, master's degrees, and fathers with Senate seats and Fortune 500 companies want those same things too. But you don’t need to beg to for permission to make an impact as part of some old person’s nonprofit, you can just start your own – and it will be better. It will focus on the issue you care about most, you'll be the boss, you can set your own office culture and, odds are, you'll even make a name for yourself.
Ok, it's not just that you want to skip ahead to the CEO title. You have some really innovative ideas, you’re frustrated with the way some of the old, bureaucratic nonprofits function and you want to make a difference. Today. And it’s not all our fault. We are being encouraged by Boomers who set up awards and fellowship programs to recognize young people who are starting new organizations. I googled "how to start a nonprofit" and got 44 million returns. You people have to stop.
Before you start designing your new nonprofit’s logo, ask yourself a few questions to determine if that’s the best thing:
- Is another organization already doing something like this?
There are roughly 1.5 million nonprofits today, with about 50,000 new ones created each year. Jack Siegel of Charity Governance Consulting estimates that creating a nonprofit costs roughly $5,000. That means that each year $250 million is spent just creating nonprofits – and that’s before they spend a dime actually helping people. Do a quick landscape assessment and really know your facts on who else is doing something similar.Late last year, public service expert Paul Light predicted that 100,000 nonprofits will have to close their doors before 2011. Paul Lamb's recent article suggests that with one nonprofit for every 300 people in this country, we don't need more NGOs, just more efficient ones. This is not a new problem. Nonprofits of the same type often replicate services and compete for resources when they should be cooperating, whether it’s five after-school clubs in the same small town or 500 documentaries and studies about how Millennial civic engagement during the Obama campaign was something special. But with an oversaturated market and an economic crisis, your nonprofit will be competing with lots of existing organizations for scarce funds. And without an established track record it's going to be tough to convince new donors you're worth the risk.
What about competition? Shouldn’t the market decide? Sure, and it will. But not before time and money is wasted where it could have been better spent working together.
- If there are others doing something similar, and there almost always are, how would you do it differently?
Take some time examining what they’ve done, and do a quick SWOT analysis of your idea. Start a conversation with them. Learn from their barriers, successes and challenges. Whether you would do it differently or not, this leads me to question #3.
- What can you do to support existing organizations?
If there's not actually much you would do differently, you can get deeply involved by volunteering with them or fundraising for them. You can raise thousands of dollars for a cause you care about through Causes on Facebook by designating a beneficiary you trust.I went to a small fundraiser this year where a group of Millennials was raising money for a new nonprofit they were starting to help former child soldiers. They were in the early stages of making a documentary about child soldiers, intended to raise awareness and funds to help the children with education and rehabilitation. The thing is, I've already seen this documentary. It's called Invisible Children. I left the fundraiser without giving any money because even though it felt awkward and I am touched by the issue, I could not justify funding a movie just so they could say they've made a documentary. I’m not trying to be Ebenezer Scrooge here, and I love seeing my peers passionate about a cause, but it seems their time and energy could be better spent if they held a fundraiser for Invisible Children or tried to work with UNICEF or another existing organization that addresses the reintroduction of child soldiers and refugees. Reinventing the wheel in this case doesn’t seem to be the best or quickest way to get support for those that really need it.
If a similar organization exists and fits your mission but you have innovative strategies that would benefit them, try talking to them about how you can help. I know this isn't easy, and I would like to take this opportunity to plead with existing organizations to be open to our generation, our ideas and innovations. Kiva didn’t invent microfinance, but they are largely responsible creating a new buzz around it and introducing a lot of average people to the practice. I’m sure there are microfinance organizations who wish the Kiva people had come to them to collaborate. Bringing your project under an existing organization will give you an instant audience and allow you to skip over a lot of hurdles to the core of what you want to do.
If you still insist that your project is too different to fit within an existing organization, try to find an incubator or fiscal sponsor like the Tides Center or the Echoing Green Fellowship, which can provide guidance and backoffice support.
- Do you have a real sense of how hard this is going to be?
Starting a nonprofit is not like starting a band in high school. You're going to need a board, bylaws, a budget, articles of incorporation, all kinds of tax exemptions, and major fundraising. Not everyone has the appetite and skill set required to get a nonprofit up, running and sustainable. If you think filing your taxes every April is confusing, navigating the paperwork for getting a 501(c)3 is going to be a nightmare. Even after you jump through the hoops of setting it up, you’ll have to comply with strict reporting and management procedures to keep it.Since I’ve only had limited experience with this grueling process, I asked my friend David Smith, who founded Mobilize.org in 2002, for his take. He said, “The entrepreneurial spirit of the Millennial Generation is strong, and this often leads to us starting nonprofit organizations rather than working through existing ones. Although this may be helpful at times and yield greater social innovation for the sector, the sheer paperwork and reporting requirements necessary to start new legal entities often turn social entrepreneurs into desk jockeys. It is important for young, passionate leaders to focus on what excites and fuels them. Spend your time building houses, solving climate change, and making our generation fiscally literate, and leave the IRS Form 1023s and 990s to established organizations with the capacity to manage the legal and financial headaches.” Consider the fact that the actual process of starting a nonprofit could hinder your ability to do the work you're really excited to do.
- Why do you want to do this?
This one is touchy. I understand not wanting to put your blood, sweat and tears into a mission you don't believe in. And I understand wanting to get credit for hard work and innovative ideas you've put in, but the reality is that it doesn't have to be yours to be good. If you're tempted to start a nonprofit, I'm guessing that you see a need in your community or in the world, and you want to use your unique ideas, talents and perspective to do your part and meet the need. I love that about our generation, but starting a nonprofit should not be the default solution. Push your creativity and your humility, and you may just find an even better way to change the world.
Comments
Having just started a non-profit myself, I think you pose some great questions that are definitely worth pondering before taking the plunge. That said, if you are thinking of starting a non-profit and find, as I did, that the answer to number 1 is "No", then I say go for it.
But maybe that's just because I did.
I have no idea if my idea will work the way I dream it will. However, I could manage the start up costs (your number is right on target) and after that, the ongoing operating costs are very, very low - Director's Insurance is the biggest number at around $900 a year. So, while I of course have no way of knowing if my idea will actually take hold and grow, I felt it was worth the risk.
I agree that is the NGO landscape is crowded and there is much mission overlap. As you say, it is also littered with inefficient practices, outdated infrastructure and perhaps most importantly, lots of intra-sector competition. Everyone in is competing for the public's attention and dollars.
So one question I would add to your list is - how does your non-profit contribute to an atmosphere of collaboration between like-minded projects?
Anna McDonnell
5 for Fairness
http://www.5forFairness.org
Kristin:
One question you left out is whether you need to create a formal legally recognized nonprofit (501c3) or whether you are better off as a fiscally sponsored project of another nonprofit. I go into more detail here: Should I formalize my project as an NGO? - but the summary is if you don't expect to have revenues over $1.5M I would go the fiscally sponsored route.
Best, Angus Parker, WiserEarth
Anna, thanks for your comments. I agree that if you cannot find another project that looks similar to yours or an existing organization you could fit under, starting a nonprofit can be a valid option. And I like your additional question for potential nonprofit founders. I hope that people who do feel the need to start new nonprofits because they cannot find points of collaboration with existing organizations would be that much more open to collaboration with others once they get on their feet.
Angus, thanks for your link and additional thinking on the fiscal sponsorship option.
Kristin, first and foremost, thanks for broaching this sometimes difficult topic.
After years of working in the sector and looking at how well (or not well) nonprofits are actually fulfilling their ultimate aims, I'm of the camp that the 1.5 million nonprofits in the US are too many by at least a factor of 10. (Maybe by even 100.) That is to say, 150,000 very strong, well organized nonprofits *should* be far more than enough to meet our needs, and would ultimately serve far better than the current dispersion in which a majority of effort goes into perpetuation and survival - not service to those who need it most.
Anna, I hate to pick on you, 'cause it looks like you've got a great aim and a big heart, but put bluntly, 5forFairness looks to me like a prime example of the problem.
For you to say that you looked around and didn't see any other organizations that were doing the same thing as you - or under whose umbrella your project could fit - is simply inaccurate... and a little baffling. There are dozens upon dozens - if not hundreds - of organizations in the US and around the world with the nearly identical mission of "fostering fairness for girls" or "educating and empowering young women" etc. Not the least of which would be Girl Scouts of America.
It's simply incredible that we have the kind of philanthropic energy and capacity we do in this country, but that said, I think we all need to collectively start asking some of the tough questions about where are resources are going and how we hospice out some of the old models and organizations so we actually start solving problems. I'm glad Case Foundation is facilitating that conversation.
Some thoughts:
- Grants for mergers and acquisitions?
- More fellowships and seed funding for new ideas/projects under existing orgs (like 5forFairness)?
- On the extreme end: commitments from nonprofs when they start - if we don't do X by Z date, then we will close our doors. (After all, EVERY nonprofits business should be to do their job so well they go out of business)
Thank you so much for posting this!
As someone who works in fundraising for nonprofits, I am so frustrated by the amount of people who question me about starting a nonprofit. I usually tell them my true thoughts about it... don't.
I live in Charlotte, so I'm sure there are different places where this problem is not as widespread, and there are places where the problem is in fact more widespread, but in Charlotte, there are large nonprofits that get the most funding, attention, and respect because they have the funding to spend on marketing. Yet, if more groups of young professionals (such as Guys with Ties) dedicated themselves to utilizing their own resources to helping these small nonprofits, there would be more opportunities to grow these nonprofits, and perhaps even grow them to opening up some more jobs.
Secondly, before starting a nonprofit, have you ever thought about doing it for a nonprofit's clients, and piggy-backing onto their 501(c)3? So much easier. Say, for example, you want to offer backpacks to homeless people. Why not contact the homeless shelter and say, "Hey, look, we want to start this. We won't use any of your time, but would like to be able to use your 501(c)3 number when asking for donations, so we will call it your project." I'm pretty sure I would jump up and down and hug anyone who asked me if they wanted to do that for us, instead of taking away from my resources to start their own nonprofit.
Thirdly, I often roll my eyes at people who think that their way of fundraising is new and inventive... and then tell me things like, "I have a great idea. We'll ask Bank of America." Um. Yeah. Been there done that. The fact of the matter is, unless you can look around and find plenty of money in your own sphere of influences, you'll probably pull more money away from another nonprofit, which will cause inefficiencies across the board. We all (in Charlotte) want to get in with Bank of America, Levine, and Belk. But not all of us do. And there's no guarantee that you will, either.
Yes, I also am a young professional frustrated with the sometimes condescending nature of the older generations. And I also want to go out on my own and look at developing innovative solutions to real problems. But you'd better believe that the first place I'll be looking is to the existing organizations.
Thank you, I agree compLETELY, and it needs to be said more.
Check out Robert Egger's fantastic book "Begging for Change" for more on this topic (redundancies in non-profits, the need to work together).
Thank you, I agree compLETELY, and it needs to be said more.
Check out Robert Egger's book "Begging for Change" for more on this topic (redundancies in non-profits, the need to work together).
Thanks Kristin, really important post. It reminds me of my time in the Former Soviet Union running a youth center. There were four organizations performing similar work; overlap and lack-of-communication between the different organizations were rampant. To make matters worse, one of the organizations threw you out if you were involved at all with any of the other three (oy vay!).
As a banker, I have seen many cases where a donor "tired" of the traditional, established charities, started his own initiative. About half the time, this donor didn't even realize that he lacks the experience and knowhow to see his project through (forgetting, of course, that these older orgs have decades of experience and contacts in the field). It has crushed me when these private donors had to close up shop, essentially, having wasted tens of thousands of dollars.
Furthermore, I think that many times the responsibility lies with the donors to rein in the idea-makers and world-changers, forcing them to rethink their strategy of creating a new nonprofit (in lieu of a new initiative within an existing charity).
Thanks again,
Shuey Fogel
http://nonprofitbanker.com
http://twitter.com/NonProfitBanker
Jake,
Perhaps you didn't take the time to look at 5 for Fairness before you wrote your comment. As far as I can see, there may be many organizations whose mission is similar to ours, but our strategy is unique. I don't think there are any organizations that are working to foster fairness for girls through web-based collective grantmaking with a minimum donation of $5 - and I am quite sure that the Girl Scouts of America is not one of them! You have to look beyond the mission to the ways in which we are all trying to accomplish that mission. At 5 for Fairness, we are looking to engage those that may not feel they have the wherewithal to make a difference, don't know the value of their own social networks in helping to create change, and don't understand that their engagement and attention is just as important as any money they might contribute to a cause. A problem as huge as unfairness to girls needs an abundance of strategies. We are proud and happy to be a new strategy on the block. Best, Anna
You should try fiscal sponsorship through http://www.oceangrand.org . They made setting up and running our nonprofit inexpensive and easy. Through their structure all our paperwork, filings, accounting, etc is taken care of. We just fundraise and do our programs. So there are a lot of nonprofits, there are also a lot of cars on the roads but I am sure the majority of the people reading and commenting on this post drive solo everyday to work. Do you know how many for profit companies there are and how many do the same thing? At least with nonprofits people are focusing on helping people.
Starting and running a nonprofit does not have to be hard or difficult as we have experienced it being very easy with Ocean Grand's help.
Amen. Just amen.
Undoubtedly, new strategies are needed by old organizations. So if you have a new idea, see if you can't chip in and help an existing organization.
I don't believe that new strategies need entirely new organizations built around them. Stop replicating the massive infrastructure that already exists to support new ideas and new strategies under 'old' missions. It's just plain inefficient for our dollar and time 'pies'.
This is a great post! I represent non-profits and people who are just starting out and I have been accused more than once of trying to talk them out of it. So many new groups won't make it and so many folks new to the field just have no concept of how competitive the sector is.
Also, Jack Siegal's estimate of $5,000 to start is a best best case scenario. If the organization has any complicated issues (school, international grantmaking or operations, economic development, etc.) it can go much higher. Naturally we tend to be hired for the complicated ones. The simple ones usually do it themselves with a brief attorney review to save money.
I will print this post and keep it in my file. Its nice to have someone else singing the same tune from a different perspective.
Also, I have posted on the topic from legal perspective at http://charitylawyer.blogspot.com .
Thank you for another good article on this subject. We have many dreamers with very good ideas but who are not doing their homework, not knowing if it is being done, not knowing if they can in fact develop the mission. I offer these as part of the library on whoa, slow down, think about what you are doing when starting another nonprofit:
The Stories of Nonprofits Dying
http://dongriesmannsnonprofitblog.blogspot.com/2009/08/stories-of-nonpro...
See What the IRS Demands of Your Tax Exempt Organization After it is Recognized as Tax Exempt
http://dongriesmannsnonprofitblog.blogspot.com/2008/11/your-nonprofit-li...
The Nonprofit Business Plan - Program Precedes Money. Planning Precedes Program
http://dongriesmannsnonprofitblog.blogspot.com/2008/07/nonprofit-busines...
You Can Pay Me Now Or You Can Pay Me Later -
28 QUESTIONS TO ASK YOURSELF BEFORE INCORPORATING
http://dongriesmannsnonprofitblog.blogspot.com/2008/07/you-can-pay-me-no...
Fiscal Sponsorship or Agent: A Yellow Light
http://dongriesmannsnonprofitblog.blogspot.com/2008/08/fiscal-sponsorshi...
My best,
Don
Hi
This is an excellent post - it has really made me think. I have recently come up with what I think is an innovative fundraising campaign idea for a cause that I am passionate about - but I'm not going to set up a new organisation. I am going to start by talking to the other established NGOs in the field and see how my idea could fit in with them and help raise funds / awareness for these existing organisations. Hopefully this will be a lot faster / lighter / less expensive / more effective than spending time and money on a new startup.
It does require supressing your ego a bit and letting go a bit. But if the most important thing is impact - then that has to be the focus. Your post has definitely encouraged me to open up my mind in terms of thinking about the best route to achieve the greatest impact.
Thanks very much!
Jo
Oh and did I mention that http://www.oceangrand.org sets up 501c3 status for $285? Yeah $285 and we were all set up about 3 weeks after we filled out the application. They rock
Just discovered this thru twitter; found it interesting to read thru and review the comments, as I have been slowly but surely making progress on starting a social venture.
I think on one level what is being disccussed is essentially Leadership: difference between transactional (managers) and transformational leaders (innovators) ...
In my opinion a couple points worth mentioning
1) convincing existing non profits to expand the scope of their efforts to include a new brilliant 5 star project that you might have envisioned is probably just as challenging as starting your own organization (regardless of whether it is for-profit or non profit). Going thru this process (which I have done) and failing to convince np's to take on your project will ultimately just fuel your passion/ drive, clarify your vision and make you more successful in the long run. There are a whole host of 'established' regional non profits who corral funding dollars, fail to innovate /progress & evolve by developing more efficient operating practices based on collaboration(the collaboration we all discuss but that seems in so many cases to be just lip service). Behind these orgs their are good people doing good work, but they are doing the same thing they were doing ten years ago. And the problems are still here.
Chances are these organizations are hiring to fill x slot, and are looking for a person with x qualifications... probably are not looking for disruptive visionary geniuses right? Instead looking for cookie cutter MBA's with polished resumes. In the city I am currently writing from I can think of a few leaders that rose thru the system of established np's and were successful in leveraging new cutting edge innovative programs into reality (essentially changing the system from within), but they are definitly a minority... in most cases people seem to be adopted into a culture of mediocrity and fail to realize their potential as changemakers.
2)We need more social innovators, and I think it is worth mentioning in this conversation that I hope more young people decide to go the for-profit route in the future as I believe socially responsible businesses will be the true change making powerhouses of the next millenium. Reflecting on evolution of company Virgance and comment from SOCAP twitter stream "If you have a business model with which you can make money, I always suggest a for-profit structure." Todd Johnson ...
Of course starting your own venture brings risks. But youth and idealism bring with them an almost delusional self confidence that can break down the doors of impossibility, put in 500 hundred hour work weeks, climb the figurative slopes of unclimable mountains and enable you to manifest your intuitive understanding of the world in a way that will authentically restore a balance to your community that is as just and sustainable and as integrated as nature itself.
Thanks for the interesting discussion,
JT Hessert
www.lastfrontierecoalliance.com
Thanks everyone for contributing to this great discussion and adding your thoughts, links and additional resources. It's clearly an important issue for the future of the sector, and we're looking forward to more conversation around this.
I'm glad to see JT's broader vision jump in here. I work for an international nonprofit, One Street, that has a goal of increasing bicycling around the world. But we are unusual, because the way we aim to increase bicycling is to offer our services to existing organizations - nonprofit, for-profit and government agencies - already working to increase bicycling. Unfortunately, when it comes to the nonprofit organizations, we spend WAY too much of our time helping them out of organization emergencies rather than on bicycling programs and campaigns.
It's easy to get caught in a narrow discussion about what is right and wrong in the nonprofit sector and lose sight of the goals that initiated every one of these organizations - old and new. The fact is, the nonprofit sector is mired in inefficiencies. Our accepted practices - such as giving total authority to distracted, volunteer boards and distributing templates of bylaws and executive director agreements that actually create leadership factions - cause nearly every nonprofit to come to a near standstill once all the "paperwork" is in place.
Discouraging new organizations or forcing mergers is not the answer. In our current sector environment, very few nonprofit leaders will find their way through the maze of accepted nonprofit inefficiencies to actually reach significant results for their missions. To blindly scythe down nonprofits with the dull goal of "fewer is better" would be foolish at best in light of our great need for these rare visionaries.
In fact, we must beware of any silver bullet pronouncements. For example, while I appreciate the comment about fiscal sponsorships, at One Street we have had to respond to organization urgencies caused by the perceived comfort of these partnerships. Fiscal sponsorships are great for groups of folks with finite, time-limited goals. But when such folks want their organization to continue, any time they've spent under a fiscal sponsor will be nearly void of the branding their organization needs to gain strength. Sure, they can have a great website and brochure, but when donors are writing checks to a different organization, those donors will not gain allegience with the sponsored organization. And once an organization has settled into a fiscal sponship agreement, it is nearly impossible to convince their distracted volunteer board to go through the effort of filing for their own 501(c)(3) designation.
I believe that until we as a sector clean up our act and finally weed out our flawed and ineffecient practices, we must celebrate and applaud all new leaders courageous enough to enter our treacherous sector.
Sue Knaup
Executive Director
One Street
www.onestreet.org
Here's a question for existing nonprofits...why do people with big, innovative ideas and passion feel compelled to start their own thing? Could it be we've ignored or dismissed them? Did we try to identify them, coach them and help them grow in the cause? Are we spending so much time with our 'major' donors that we've missed the NEXT visionaries for our causes? Shouldn't working with them be among our top priorities?
Kristin,
Thanks for writing this. A Facebook friend turned me on to your blog positing. It's been great to read the conversation.
I too am concerend about the proliferation of nonprofits and have often wondered about the perceived lack of alternatives when people think they have an issue they want to solve or a problem they want to address. I am a grant reviewer for a local community foundation, and I cannot tell you how frustrating it is to read nearly identical grant proposals from nearly identical organizations doing nearly the same thing. We have limited resources, and it makes it really very challenging to decide which of these well meaning organizations - all of whom are struggling - deserves to get a grant and which do not.
You lay out a very thoughtful set of steps that someone should take before diving in to starting a new nonprofit. Other folks responding to this posting have raised some excellent issues, and I recognize some of the good resources being suggested such as Tides and others. But I think you offered a nice starting point.
The call has also been going out to the nonprofit sector about the fact that more organizations should collaborate, work together or even merge. The problem with that is that there are not enough successful models out there, nor are there enough incentives for nonprofits to move into this potentially challenging issue. Funders say they want this to happen, but it's still not clear how funders will support organizations that want to work together. Further, funders themselves are not very good about collaborating, so they are not modeling the kind of behavior that they want to see out of nonprofits.
Lastly, if you want to see a different perspective on this issue of too many nonprofits, I urge you to check out Kathleen Enright and Jonathan Spack's column "Foundations' Agenda for Charities Should Include Money, Not Mergers" in the October 1, 2009 issue of the Chronicle of Philanthropy. http://philanthropy.com They offer some interesting thoughts on this issue. I do not agree 100% with everything in the commentary, but I like some of their conclusions. Enright is the head of Grantmakers for Effective Organizations. www.geofunders.org They put out some interesting research.
Thanks again for starting this conversation.
Marshall Ginn CFRE
Capital Development Strategies
http://capdevstrat.wordpress.com
Great article, very interesting and thought-provoking, especially because that's what I'm trying to do now - start my own non-profit. I already run a for-profit company, Tutorpedia, and we work with K-12 students providing academic tutoring, test-prep, and enrichment workshops. We're really hitting our stride now: I hired my first full-time employee, we have 7 part-time employees, 50+ tutors (contractors), and we're expanding to LA (we're based in the SF Bay Area). We've already provided over 4400 hours of free tutoring to low-income students over the years, paid for by Title 1 funds, but I want more money to provide more free services to students who could not otherwise afford it. We need 501(c)3 status to raise money, pure and simple.
Sure, there are lots of other non-profit tutoring companies out there - but they don't do what I want to do - and that is provide real, rigorous, relevant 1-on-1 tutoring - all built around personal relationships. Most tutoring companies provide structured classes and outside curriculum - but I want to help students where they are, with their school work initially, and teach them life skills that translate beyond the classroom and then beyond school. Sure, I could suggest this to another non-profit doing similar work and partner with them (we already do that - volunteering with other NPOs, offering free resources, free tutoring scholarships, etc.) - but their bandwidth (like ours) is limited. I want full control - so sure I'm a control freak, who isn't? - to do what I think is best for our kids. As a former teacher and tutor myself, educated and experienced in both one of the wealthiest suburbs and the poorest cities, I feel I have a unique understanding of what works and what doesn't - and what needs to be done to fix our broken education system, especially here in CA. By leveraging Web 2.0's open, interactive, free content, our tutors bring a personal touch - trust, confidence, motivation - to a student working alone. And a hybrid for-profit + non-profit model I hope will spawn others just like this, where companies can do well AND do good. Check us out: tutorpedia.com (tutorpediafoundation.org coming soon...)
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