Nonprofit Organizations: Don't Do It, Unless...
Nonprofit organizations in Orlando can be many. For instance, if you were to take a look at Guidestar for the Orlando area, you'd find 632 results. And while good intentions are a good thing, you have to consider the changing landscape. As an example, for many years, donors and people have been saying that there are way too many nonprofits in the U.S. For years, there have been about 1.5 million charities, give or take a couple of hundred thousand.
Many people want to understand how to create a nonprofit. They want to make a difference. And in recent years, there's been a lot of change in the industry.
- Because of the increase in transparency, the public has lost trust in nonprofit organizations.
- Small- and large-dollar donors have increased their desire to see results and impact. As a result, they have become more suspicious of requests for money with little to show for it.
- Corporations have increased philanthropy as part of their business model and strategic work. In other words, they've become much better at corporate social responsibility.
- Impact investing and other financial tools are available to donors. And it allows them greater flexibility in how they donate and to whom (e.g. businesses).
- Nonprofits are no longer the only tool available to entrepreneurs who want to do social good. For example, they can create a for-profit social enterprise.
Understanding all these changing facets in the industry is crucial. People who want to create nonprofit organizations should think long and hard.
Thinking Beyond ‘How to Create a Nonprofit’
As I mentioned earlier in this article, there are many nonprofits. In fact, there are so many that there's a lot of duplication. Many leaders in the industry, including me, have been voicing their concern. With many nonprofits and budgets of less than $100,000, why shouldn't we reconsider? It's not a lot of money for making a broad and sustainable impact. So, if you have a genuine interest in helping people, look at options beyond creating a nonprofit.
Ask yourself if what you're going to create is something that you want to grow to scale. In other words, by developing a nonprofit that dominates, you will attract more resources. That means, in turn, that you'll have the chance to make more of an investment in program development. And what will follow is that you'll have the opportunity to help more people in a more meaningful way. You want your group to be one of the nonprofit organizations that supporters turn to in your town. What you don't want is to be one of the many organizations treading water.
You also want to ask yourself if creating a nonprofit group is going to make the difference you seek. Is it better to create a charity, a social enterprise business — or become a philanthropist to charitable organizations?
Questions to Ask Yourself as a Nonprofit Founder
If you ask a few of the previous high-level questions before adding to the charitable organizations in your town, you're not done. There are more things to ask yourself. When I founded a nonprofit, which grew to more than $70 million, I asked myself a few deep questions.
What makes you an expert?
Any successful business, nonprofit or social enterprise requires leadership. Have you heard that you're a leader? Do you think you have the skills necessary to lead? Let's say you're someone who wants to make a difference with a health-focused nonprofit organization. What makes you the expert? These aren't easy questions to ask yourself. But, you have to think about them and answer them, because someone else will ask you in time.
Whom are the nonprofit experts who will work with you?
You may know a lot, but you don't know everything. Charitable organizations need expertise similar, and not, from nonprofit businesses. For instance, you'll need people who have experience in marketing and finance; but you'll also need professionals who have an understanding of fundraising and program development. Remember, you want to focus as a leader on the goals and strategy development. So, you'll need to rely on a group team of experts to help you succeed.
What makes you better than the nonprofit on the other side of town doing the same thing?
It's common knowledge that about half of businesses fail. Many might make it through the first year, but more than half will close their doors before the fifth year. One of the primary reasons is because of cash flow. You might be thinking, “Well, I'll get grants.” Not so fast. Corporations and foundations aren't going to give you money without having confidence that you can succeed. Thus, a business plan is necessary for successful nonprofit organizations, including any you create.
In conclusion, it's great that people want to create nonprofit organizations. Social good and making a difference is positive and necessary for our society. But before you leap, you have to think about what you bring to the table.
In other words, why should anyone support your cause instead of one of the nonprofit organizations in your town?
Wayne Elsey is the founder and CEO of Elsey Enterprises. Among his various independent brands, he is also the founder and CEO of Funds2Orgs, a social enterprise that helps nonprofits, schools, churches, civic groups, individuals and others raise funds, while helping to support micro-enterprise (small business) opportunities in developing nations and the environment.
You can learn more about Wayne and obtain free resources, including his books on his blog, Not Your Father’s Charity.