So You Want to Start a Nonprofit?

Yesterday, I tweeted out a link to the Donor Dreams Blog, asking "What do you think? Are nonprofits not "playing nice in the sandbox"? http://ow.ly/c2acO" 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.

If Your Fundraising Budget was $20...

Yes, twenty dollars. This is not joke. What could you do to bring in money to your nonprofit if all you had to spend on your fundraiser was $20?

That is basically the question that Reverend Michael Eden, of the Church of St. Peter & St. Mary in Stowmarket, England, asked his congregation. Eden took a £900 donation (just under $1,800) and distributed it in £10 notes to ninety of his parishioners with the request that they do something with it to increase the donation within six months.

As reported in the Telegraph, "Vicar puts his faith in a parable and harvests the profits." Yes, the investment paid off, with a total return of about £5,000. (The point of the fundraiser was to increase the repair fund for their 14th century church building).

Here are some of the ways that they increased the donation:

• One parishioner bought ingredients to make cakes, scones, and jams. She kept re-investing the profits into more baked goods until her total raised was £410.
• Five parishioners pooled their money to organize a barn dance.
• One woman bought materials to knit scarves and tea cozies that she sold at a profit.
• Another took in ironing.
• One cooked breakfasts to sell at the church.
• A group of children bought candy that they re-sold at a party.
• The Reverend himself made pickled onions that brought in £35.

The more religious among my readers will recognize this as being inspired by the parable of the talents. In the story, a master gives his three servants money before leaving on a sojourn. He returns to find that two have doubled their money, while the third buried it in the ground. As Eden told the BBC, "I challenged the congregation to use their God-given talents and they responded accordingly."

You do not need to be religious, however, to recognize that there are some great fundraising ideas and practical lessons to be learned from this small news item. Personally, I am fascinated and inspired by it.

If you gave each of your board members and volunteers a $20 bill and asked them to use it to raise money, what would happen? What other $20 ideas can you come up with that would at least double the investment? I have some ideas of my own, but I want to hear from you first.

Send your $20 ideas to me at ken at goldstein.net - I'll compile them and post them here at a later date.

Tags: nonprofit, fundraising, volunteers, parable