So, you have a great idea and a passion for a cause, and now you are considering starting a nonprofit.
It’s not an easy undertaking and requires research and groundwork to put a new nonprofit organization on a track for success.
It is widely accepted that as many as 80% of small businesses fail in their first five years. One reason for that is the lack of a strategic plan, says Ian Altman, a B2B Integrity-based sales and growth expert, in an article for Forbes, entitled Half of Nonprofits are Set Up to Fail.
Four Reasons for Failure
In addition to lack of a strategic plan, nonprofit businesses can also fail due to:
- Lack of clear vision
- Duplication of service
- Lack of start-up capital/funding
- Poor Board selection and development.
Still, people are eager to get the information they need to bypass failure and start a nonprofit for what they believe is an important cause.
First, there is a lot to know before taking that deep dive to start a nonprofit company and to set it up for success.
There are legal considerations and research to do in order to find out if another nonprofit already exists that addresses a similar cause.
Put together Your Board
A board of directors must be put together. You need to research if the community will support your cause with money and volunteers.
If you are thinking about starting a nonprofit, you need to conduct an environmental scan – find out if anyone out there is already doing what you want to do. If there is another nonprofit that is already addressing your cause, consider joining it. Foundations get frustrated when three or four nonprofits in the same community are doing the same thing but not working together. That means they are competing for the same dollars and that can be an issue for all of them.
Some who are upset with the way a nonprofit is operating will go off and start their own. That is usually a mistake because that means there will be more nonprofits out there serving the same cause, dividing up the money committed to it.
It is extremely important to find out who else might be doing what you want to do and if there is enough community interest.
Creating a Nonprofit Board
Creating a board, is probably the most important aspect of starting a nonprofit. The board is the nonprofit. Even the person who founded it is not the nonprofit.
Once an agency becomes a 501©3 charity, it’s the people’s organization.
The board, itself, is the entity responsible for the success or failure of the nonprofit company.
The board members are going to make the decisions to enhance it or lead it down a path of dissolution. It’s okay when you start out to have close associates, friends or colleagues on the board, because they may be the most enthusiastic about your mission. But you also must think about the expertise you need – legal, fundraising, governance expertise. You need all kinds of expertise that relates to your mission.
If you are creating a homeless shelter, for example, you need people on your board who understand the subject matter and have done research on issues around individuals experiencing homelessness.
At the same time, you also need people that understand the necessity of always having a revenue stream. That can include major donors. A big mistake is not asking them to be on the board. Having major donors on the board is a way for them to see what is going on with their investment. It may even encourage them to give more.
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If you are looking to start a nonprofit or would like more information about Boards of Directors, shoot us an email at info@davetheconsultant.com.