Ken Goldstein, MPPA

Ken Goldstein has been working in nonprofits and local government agencies from Santa Cruz, to Sacramento, and back to Silicon Valley, since 1989. He's been staff, volunteer, board member, executive director, and, since 2003, a consultant to local nonprofit organizations. For more on Ken's background, click here. If you are interested in retaining Ken's services, you may contact him at ken at

Friday, July 06, 2012

So You Want to Start a Nonprofit?

Yesterday, I tweeted out a link to the Donor Dreams Blog, asking "" In that blog, the author, consultant Erik Anderson, asks:
... Why is it that every time someone has a new idea, they want to start a new non-profit organization to do it?

I find this knee jerk reaction so interesting and confounding. Instead of starting a new organization, it could be “Ah-ha, I have an idea and think I’ll take it to a non-profit organization in my community that does similar things and work with them on starting a new program.”

... The truth of the matter is that the last thing the non-profit sector needs is more struggling non-profit organizations competing for similar resources. ...
The responses I got back all seemed to agree with Mr. Anderson: "There are too many nonprofits!" I addressed this trite bit of "accepted wisdom" just over six years ago in another posting here, and nothing much has happened since then to change my mind. While many people repeat this line, there is still no empirical evidence that this is actually true.

In all other sectors of the US economy we prize competition and entrepreneurship. But not, apparently, in the nonprofit sector. Elsewhere in this nation, we say, "Build a better mousetrap and the world will beat a path to your door." In the nonprofit sector, however, we're supposed to build a better mousetrap and then turn our plans over to the current leading mousetrap provider.

When people approach Mr. Anderson with an idea for a new nonprofit, he says in his blog, "It has become my standard operating procedure to sit down with these nice, well-intentioned individuals who call me asking for help and beg them to please not start another non-profit organization." He wants people with new ideas to get together with existing nonprofit organizations and "play nice in the sandbox."

How would that advice play in other sectors of our national economic landscape? "Gee, Mr. Jobs, why don't you just take your ideas to IBM and help them to develop it?" "Well, Mr. Bezos, people may well want to buy books online, but why don't you just partner with an existing store or distributor?"

How many of our mayors would be re-elected begging entrepreneurs to not start yet another small business in their city? "Another coffee shop? Please, just go be a manager at a Starbucks." "If there were a better way to make a hamburger, McDonald's would have thought of it by now. If you must be an 'owner,' why don't you just buy a franchise?"

This is the USA. We believe that competition is good. It weeds out complacency. It weeds out inefficiency. It encourages constant innovation. And it requires paying attention to constituents. Which of these goals is bad for the nonprofit sector?

Yes, a great number of start-up nonprofits will fail. Just as in the small business sector. And that's not necessarily a bad thing.

I too get many emails and calls from folks who want to start a new nonprofit. Many of them are unprepared. They have not researched the competition. They do not have a realistic plan for roll-out or revenue. They are not familiar with the laws in their state regarding incorporation, required by-laws, etc., etc. But I wish them well.

If you want to start a new nonprofit, go right ahead. But know what you are doing, and why, and where you fit in the marketplace. Then go and innovate.

Too many nonprofits? How can there be too many people working to improve our communities? Or too many groups feeding the hungry, or sheltering the abused? Or too many arts programs enriching our lives? Or too many entrepreneurs stirring things up in any sector of our economy?

The sad truth is most of us in the nonprofit sector only worry that "there's too many organizations going after my grants and donations." I guess we're just going to have to learn to compete.

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