Thinking of Starting a Nonprofit? Ask Yourself These Questions First…

Is this a cause that needs a champion?

According to the National Center for Charitable Statistics, there are more than 1.5 million registered nonprofit organizations in the United States. Before you consider starting a new one, take a look at related organizations serving your target population. Is there an organization doing the same or similar work? Consider reaching out to nonprofits with related missions to share ideas and discuss possibilities for collaboration.

Are you doing the cause a disservice? 

If there are, indeed, organizations working toward the same cause, you might actually be doing harm by starting a new nonprofit organization. There is already massive competition for limited philanthropic dollars, why would you further dilute the potential fundraising pool? Ultimately, it is more effective for the cause if there is a more targeted effort, rather than a scattered approach. Do your research to make sure the need exists. Search for nonprofits on GuideStar.org

Is 501(c) status the best option?

Often, founders decide they want to start a nonprofit organization before determining if that structure is really the best fit. There are many possible structures for your new entity – make sure you choose wisely. Could your idea be successful as a program of an organization with a similar mission? Wouldfiscal sponsorship be a better option? In a fiscal sponsorship arrangement, programs begin under the umbrella of another nonprofit’s tax-exempt status for the initial launch, providing an opportunity to test an idea without the administrative burden of a new nonprofit organization. Or is a for-profit entity a better structure for this idea? A B Corporation is a relatively new option for a socially-responsible business structure that gives entities idealist street cred, without some of the limitations of a 501(c) nonprofit organization. Learn more about B Corps

“Social enterprises should not be confined to a single type of legal structure. The most important part of choosing the right structure is starting with your mission, and then adopting a structure that allows you to best achieve it.” Harvard Business Review

Can you separate your ego from the equation?

When you cannot separate your personal goals from the mission and vision of the organization, the result can be catastrophic. A nonprofit is owned by the community, or the taxpayers, not by the founder.

An arts organization founder I spoke with recently shared his personal story of founding a nonprofit and subsequently being booted off the board a year later. He had a personal vision for the organization, but it was not representative of the community which became evident immediately. You have to be comfortable with this organization not being YOURS but OURS, with goals being driven entirely by the mission and the population served. Sometimes, that means you are not a fit within the organization’s leadership.

Ego can compromise that mission-first mentality. Ego can also cloud an entrepreneur’s view of whether there is a real need in the community. There might be five other organizations working on this very cause, but the egotistical founder wants their own. Taking the ego out of founding a new nonprofit is a crucial first step. Before you begin your application for nonprofit status, make sure you’re comfortable with stepping away if it best serves the mission.

If nonprofit is the best option…

If you do decide a nonprofit organization is the best option, check out the National Council of Nonprofits’ resources on How to Start a Nonprofit.

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