If I were to take a poll of everyone on earth, I would be willing to bet that a majority of people have a dream tucked away somewhere for three things; it’s become one of my favorite icebreaker conversations because of my hypothesis.
The three dreams include 1) an app they would develop, 2) a restaurant they would open and 3) a nonprofit they would start. Getting a nonprofit dream off the ground is not always as glamorous as it seems. When starting a nonprofit, there is never a shortage of passion, but almost always a shortage of resources.
Before starting a nonprofit.
Before starting a nonprofit, it’s important to consider not only what you are doing, but why you’re doing it. A lot of times when people decide to start a foundation or a nonprofit, it’s because of a personal connection with a cause, so they want to solve it with their bare hands.
If the real reason you’re starting an organization is to solve a problem like ethical treatment of animals or issues surrounding poverty, a lot of times the best way to do it is not to start yet another organization, but to partner with an organization already working to solve the same problem. They likely already have a following, programs set up and at least some resources at their fingertips.
Competition in nonprofits vs. for-profits.
In the similar way that a for-profit has to consider its competitive advantages over other companies, nonprofits should consider if what they’re trying to accomplish is different than the organizations already working towards the same mission. At the end of the day, the goal is to raise money to fund programs to solve a problem, not gain more donations than the next NPO.
A donor’s perception is that they’re giving $20 to help fund programs that benefit kids on reduced lunches. They’re not giving to your organization over the one across town working towards the same goal. For this reason, “competition” doesn’t exists in the nonprofit sector as it does in business.
Options other than 501(c)(3).
If you come back from your research to find that truly no one is trying to solve the same issue as you, go forth with your plan to start a nonprofit and crush it. If not, you have several other options outside of a registered 501(c)(3). A more recent organizational form that bridges the gap between for-profits and nonprofits is called an L3C, which allows entities to make taxable profits and investments, as well as donations and grants from private foundations for impact-driven programs.
This episode of our nonprofit podcast with Randy Hawthorne and Kishshana Palmer digs into all of this and more.