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April 27, 2017

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Starting a Nonprofit - Preparing For Success

by Jan Batts



The woman sitting across from me was crestfallen. The truth had dawned on her that there was a significant hole in her planning. She had researched and followed through on the basics of starting a nonprofit organization and she certainly had the zeal to make a difference. But after talking with me about the hidden costs of starting a nonprofit, she was beginning to realize that zeal and a 501(c)3 designation are not enough to be successful in today's fiercely competitive philanthropic world.

It's not that information about the hidden costs wasn't out there. The problem was that she, like many people who care deeply about a cause, are inexperienced and do not know the right questions to ask. Her dream was built without a strong structure under it and now she had to decide if she were willing to pay the price to build that structure.

It was the decision to succeed or fail. It was that simple.

Nonprofit management tools required for success

The hardest obstacle to overcome when starting a nonprofit is inexperience. That's not to say it can't be overcome, but it's not easy.

My client was going to have to work at it. Though she had done some volunteer work, most of it was as an event helper or in other non-management jobs. She had served on a board, but it was more of a window dressing position. She did not learn the basics of nonprofit administration, finances, board organization or development. She had never been on the inside, where the business is done.

This lack of experience kept her from even assessing correctly what it would take to run a successful nonprofit. In fact, she thought it would be easy because she had never been required to do anything when she volunteered before!

To overcome her lack of experience, my client needed to volunteer or seek employment with an established nonprofit that was associated with a cause similar to what she had in mind. She needed to apply herself to absorbing everything she could, all the back-office management ins and outs, both the good and the bad ways of doing things.

Time and the truth

In the course of discussing the cost of success, my client confessed that she didn't have time to spend equipping herself properly. She wanted to learn as she went.

The reason why she didn't have time was that she needed a job. She genuinely had a heart for a worthy cause that was not being addressed by the philanthropic community. As far as she knew, anyway. The ideal solution was to set up a nonprofit to address the need, do some fundraising, help people and get an office, a salary, benefits and an IRA. It was, she said, a win-win!

She had missed the greatest hidden cost of them all. The reason a person starts a nonprofit is to benefit a cause outside him- or herself. He can't go into it looking for personal benefit, although nonprofit professionals deserve and need appropriate compensation for their efforts.

Starting a nonprofit will cost you time and effort and you may not ever have enough donations to pay your salary. That's why it's called a nonprofit. The hidden cost was right there in plain sight.

Building a strong foundation

For a nonprofit to be successful today, its founders must become knowledgeable, equip themselves for success and build an organization with an eye toward longevity. If you are willing to pay the price for success, here are some of the places where you should spend your time and effort:

  • Are your personal skills suitable to starting a nonprofit? Interview yourself as if you were applying for a job.

    How are your people skills? You'll need them to raise money, recruit board members and volunteers and to run your office. Are you an enthusiastic networker? Are your computer skills competitive?

    Nonprofits fail when they don't manage money well enough to address charity issues and keep the organization functioning. Therefore, you will need the ability to maintain your heart for the cause without taking off your business hat. Can you do that?

    If you aren't equipped personally, get powered up before launching your nonprofit.

  • How are your office skills? A successful nonprofit administrator should have a basic understanding of how to use appropriate office software, such as word processing, accounting and donor tracking. You should know your way around the Web. If your skills are out of date, are you willing to bring them up to speed?

  • If you're just starting out, you may not have a paid staff. It's possible that you won't have one for a long time. Even if you have great volunteers helping you, you may need to be available 24/7 indefinitely, or close to it. Are you willing to sacrifice the personal and family time that is required to run a successful nonprofit?

    Can you financially afford to spend the necessary time, considering that you may not be paid?

  • Do you know what the financial, legal and insurance requirements are? You will need professional advice from those who specialize in nonprofits. Work at educating yourself, as well.

  • Are you willing to spend the time identifying and soliciting the right board members? You will need an experienced, skilled board you can count on. Research how to construct a board and recruit based on the criteria. You will end up doing the work all by yourself if you choose board members based on friendship or availability alone.

  • Donors and corporate sponsors are requiring more accountability from nonprofits than ever before. Tugging at the heartstrings is no longer enough to generate support. Donors want to be assured that you will be a good steward of their money or gifts in kind.

    Do you know what donors are looking for and how to provide it to them? What kind of documentation do they expect? How are you going to build an on-going relationship with them? Even more basic, are you afraid to ask someone for money?

To be successful, you must be willing to invest the time it takes to create a realistic, workable fundraising plan. Committing the time and energy required to develop and maintain relationships with donors and volunteers is equally important and demanding.

Preparing for success

If you are starting a nonprofit and haven't addressed these issues, you've got the same decision to make as my client.

You have many of the same challenges that starting a for-profit business presents, but in addition to those, your competition for funding is stiff. There were almost 1.5 million nonprofit organizations in the United States in 2006, according to the National Center for Charitable Statistics*. To be successful, you have to maximize every potential for success.

Do you have the patience to prepare well? Can you keep the dream alive while building the foundation that will enable that dream to mature?

Plato said the beginning is the most important part of the work. Give your dreams a chance by starting strong.

* National Center for Charitable Statistics. Table, "Number of Nonprofit Organizations in the United States, 1996-2006." The Center on Nonprofits and Philanthropy at the Urban Institute. 24 July 2008. http://nccsdataweb.urban.org/PubApps/profile1.php?state=US



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About the Author:

Jan Batts, a public relations strategist, helps nonprofit organizations build their brand; interact positively with donors, corporate sponsors, the media and the public; develop fundraising campaigns; create communications materials and recruit and train volunteers. She is especially interested in helping new nonprofits establish strong foundations on which to build. Ms. Batts consults with for-profit and not-for-profit businesses and organizations. She lives in Texas.







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