When Nonprofit Jenni Show listeners email me, about half of them are asking for my advice about how to start a new nonprofit organization. But is starting a nonprofit really the most effective way to create meaningful, lasting change in the areas that matter most? In this week’s star-studded episode of the Nonprofit Jenni Show, two of my favorite nonprofit thought leaders share their advice on what you should consider before you decide to form a new nonprofit organization.
Advice for Aspiring Nonprofit Leaders from Nonprofit Hub’s Randy Hawthorne
My first guest this week is Randy Hawthorne, Executive DIrector of Nonprofit Hub and podcast host of the Hubcast. He shares his perspective on how aspiring philanthropists and do-gooders should decide whether starting a nonprofit is the right way to support their favorite cause.
If you think you want to start a nonprofit, first look at the competitive landscape.
Randy receives lots of emails from people who want to start a nonprofit, and he says he first encourages them to look at the competitive landscape. I asked him to clarify what the competitive landscape means in the nonprofit sector because in general, nonprofit leaders should not see themselves in competition with other nonprofit leaders. When Randy talks about looking at the competitive landscape, he means you should look to see if there's already a nonprofit organization or some other type of entity that is already working on the problem that you want to solve.
From there you can ask yourself, “How viable would it be for me to start a brand new nonprofit organization in the same space? Would that set us up for a situation where we’re competing for the same dollars, the same volunteers, and the same attention from the community?” You can probably make a better and bigger impact by joining forces with the nonprofit which is already working on the issue, or by finding a unique niche to complement their efforts.
If you still think you want to start a nonprofit, consider your role.
If your nonprofit is successful, what type of role would you want to fill in the future? Would you rather:
Become the Executive Director,
Serve a term on the Board of Directors, or
Let other community members continue to run it without your direct leadership?
Many aspiring nonprofit leaders that I speak with seem to think that they can maintain ownership over the nonprofit, continue to control its vision and mission, and also make the day-to-day decisions... And this just isn't feasible because you can’t own a nonprofit organization or make all the big decisions by yourself.
The Board of Directors is responsible for casting vision, setting the budget, choosing the Executive Director, and making other big picture decisions. Each board member should respect term limits so the nonprofit can be supported with new ideas, perspectives, skills, and network connections.
The Executive Director is responsible for running daily operations, making hiring decisions, managing administrative tasks, and maintaining relationships with key stakeholders.
The IRS requires these roles to remain separate to help prevent fraud and illegal conflicts of interest.
If you feel uncomfortable with the idea that you can’t control an organization’s direction and operations, it may be best to start a social enterprise or other entity which allows you to maintain ownership.
If you’re stressed out about applying for 501c3 certification, Randy recommends slowing down for a bit.
You don’t need to set up a nonprofit organization before you can start carrying out your mission. Here are some steps you could take before you take the step of applying for a 501c3:
Develop a small pilot program to test your idea, measure its impact, and make improvements before rolling it out on a larger scale. (Tracking its success will help you earn support if/when you decide to form a nonprofit!)
See if you can partner with an existing organization, such as your place of worship or a community group which may be willing to help you find local supporters.
Tell your friends and family about your idea and see if they’ll back your mission with their time and donations. (If you feel uncomfortable asking your loved ones for donations, this may be another red flag that starting a nonprofit is the wrong way to go… Most new nonprofits begin with the financial backing of loved ones!)
Advice from the Founder of CROSO, Molly MacCready
My second guest in this episode is Molly MacCready, the founder and Executive Director of the nonprofit organization CROSO. She also happens to be the podcast host of Nonprofit Optimist, one of my favorite podcasts for nonprofit leaders. On the podcast, she shares the story of how she founded her nonprofit organization during her junior year of college, and what she would have done differently with the benefit of hindsight. But I also asked her to share her thoughts on some of the most common reasons people want to start a nonprofit:
I want to get paid to be an Executive Director so I can serve this mission full-time.
Unfortunately, if you’re looking for a paying full-time job, starting a nonprofit probably is not the way to go. Here are some of the reasons Molly and I discussed:
You can’t just decide to pay yourself, because that’s a huge conflict of interest. The Board of Directors has the responsibility of hiring an Executive Director, deciding on a salary, developing a job description and employee handbook, and acting as the ED’s collective supervisor.
Your nonprofit probably won’t be able to afford to hire an Executive Director for at least several years. Usually, new nonprofits take a while to build sustainable revenue, and much of that revenue usually needs to be directed toward the organization’s programs so the mission continues to be served.
Starting/running a nonprofit is so cool and selfless.
The idea of starting a nonprofit is often romanticized through documentaries and other media, but Molly reminds us of the reality:
A lot of your time is taken up with administrative tasks. Especially if you’re working as the sole staff member of a nonprofit organization, you’ll probably spend most of your time handling things like developing internal systems, managing key stakeholder relationships, and developing your own nonprofit leadership skills.
Another huge chunk of your time is taken up with fundraising. Your nonprofit can’t serve its mission without a way to purchase supplies and pay for overhead costs. Donor relationships take lots of time and attention to cultivate.
You don’t get to spend much time actually doing programmatic work. Many people become impassioned about a mission after they’ve faced an issue face-to-face, and they often fantasize about getting to work directly with those in need. However, it’s very hard to carve out time to implement programs when you have the many other responsibilities of an Executive Director.
People I trust tell me that I should start a nonprofit to serve this mission.
This is the exact situation Molly found herself in when she decided to apply for CROSO’s 501c3 certification. In our podcast interview, she explains that when she shared stories about her visit to Uganda during her junior year of college, her trusted friends told her she should start a nonprofit to support the needs of Ugandan students. One of them even offered pro bono legal services to form the nonprofit for her.
It’s awesome that Molly had the support of her loved ones to start her organization, and it worked out great because she was able to find people with experience in nonprofit leadership to develop systems and best practices for her organization. However, Molly wishes she’d had people in her life at the time who urged her to:
Do some research into what it takes to run a successful nonprofit. Molly had to rely heavily on her Board of Directors at first because she was completely new to nonprofit management. She wishes she’d known what it would really be like to run a nonprofit.
Ask the community what they really needed. In Molly’s case, the community she serves is the group of students served by Child Restoration Outreach (C.R.O.) in Uganda. Molly says she wishes she had asked C.R.O.’s leadership more questions about their needs so she would have known if starting a nonprofit organization in the USA was the most effective way to serve Ugandan children.
Find out if there were any other nonprofit organizations already serving a similar mission. CROSO has grown into a well-managed, sustainable organization which serves unmet needs in Uganda, but Molly still wishes she had known to research whether a US-based nonprofit was already serving this mission before she decided to start another one.
Get Professional Help Deciding Your Next Steps
I decided to create this podcast episode because I get so many emails and calls from people who want to find the best way to serve the mission they care about… And I can’t wait to get your email or phone call too! Schedule a free initial consultation call to chat with me about your idea for a new nonprofit, social enterprise, or other social sector organization. I would love to help you figure out the best next steps to take to serve the mission you care so deeply about. Also, don’t forget to subscribe to the Nonprofit Jenni Show for free so you won’t miss any new episodes about managing a sustainable social sector organization!
Also, I want to thank Little Green Light for sponsoring this episode! Little Green Light is our favorite donor management system, and they put together this free library of articles for Nonprofit Jenni Show listeners to help you learn about things like using online forms to simplify your work, how to ask for donations, and how to use Little Green Light at your school. Plus, you can get $150 off your first year when you use the discount code “Jenni” to sign up!