Starting a Nonprofit: Choose Your Own Adventure Carefully

We are living in unprecedented times. As a result, my team at Social Impact Architects is getting even more calls, emails and social media messages from folks who want to start a nonprofit as a way to help. It reminds me of my favorite books as a kid. Remember those “Choose Your Own Adventure” novels where you could make decisions along the way and customize your own ending? They all started with the same warning:

“The adventures you take are a result of your choice. You are responsible because you choose! … Remember — you cannot go back! Think carefully before you make a move. One mistake can be your last … or it may lead you to fame and fortune.”

Now that I’m an adult, these lessons have stuck with me and made me a better entrepreneur. And, after almost three decades in the nonprofit sector, I believe nonprofit founders need this warning label as well!

Here is a quick synopsis of the questions we get about starting a nonprofit and our best answers:

I want to start a nonprofit. How do I start?

First, I suggest starting at the beginning in what I call the “ideation phase” and ask yourself these viability and feasibility questions:

• What problem are you trying to solve? What is your unique solution? (HINT: Try to be as specific as possible.)
• What void are you filling that isn’t currently being served?
• How do you know that void exists? (HINT: Do competitive research to bolster your claim.)
• Why does this void exist? (HINT: The void might exist because there is no market, unfortunately.)
• What will you do differently and better than the competition? Will someone pay for your solution? (HINT: Do a feasibility assessment to test your assumptions on the market, competition and funding.)
• Is someone doing this venture somewhere else? (HINT: This is a good thing — you can learn from them!)
• Is starting a new nonprofit (a legal entity) the only way to solve for this void?

If any of these questions come back with roadblocks that signal to you not to move forward in starting a nonprofit, don’t be deterred. Remember that starting a nonprofit is only one way to create social change. You can also address issues through policy, as a social intrapreneur or as a board member.

Second, ask yourself tough personal questions, which I call the “gut check”:

• Are you passionate about this cause? Are you so passionate that you would do it for free and work 24/7 on it? If so, can you afford to do it for free for a while? If you are doing it for free, do you need another job? (HINT: I tell my students not to take this path unless they are passionate and have savings to live on.)
• Have you ever started an organization before and know what it takes? (HINT: If not, find some mentors or a great consultant to help you jumpstart the process.)
• Are you disciplined (can you balance your intense passion and creativity for the mission with the very real paperwork and fundraising needed for a nonprofit to survive and pay bills) enough to be your own boss?
• Do you have a strong accountability process to ensure you can manage all the day-to-day activities of running a nonprofit?
• How do you typically manage constructive feedback?
• Are you extroverted and love selling things?

I recommend proceeding only if you answered “yes” to at least 4 of the gut-check questions above. While each of the situations above can be mitigated, these are the make-or-break issues behind a startup. There are lots of good ideas out there, but good ideas fall victim to poor execution all day every day. But if an individual has a great idea that has been validated in the marketplace AND has the passion and stamina to pursue it, I typically encourage them to follow their adventure.

How is it best to get started as a nonprofit?

I always like starting a nonprofit venture under the careful eye of a fiscal agent, which is another nonprofit or foundation willing to sponsor you. First, it initially relieves founders of administrative burden. Fiscal agents typically have accountants, HR experts and even attorneys. Second, it is a good way to learn how to operate by being able to bounce ideas off experts. Then, once you have a strong track record and a solid foundation, you can spin off on your own as part of a strategic planning process.

What are some helpful hints to consider as a start-up nonprofit?

We work with all manner of nonprofits, but startups are their own breed. They are often run by founders who wear multiple hats and do not make a lot of money. But while founders may share similarities, there are two distinct kinds of startups. The first startup is intentionally small and thrifty, focused solely on a specific agenda. The second startup is created with growth in mind and a desire to become more sophisticated. This is where understanding the nonprofit lifecycle is key.

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Most nonprofits or social ideas start in the idea phase — where everything is new, exciting and full of possibilities. Typically, the buck starts and ends with the founder. Eventually, the founder is successful with proof of concept (and, hopefully, impact measurement), so they bring in reinforcements. This automatically requires a shift to a more sophisticated operational structure. Unfortunately, this phase shift often comes with growing pains. Sometimes this shift can feel suffocating to the founder, and they may have a hard time letting their original vision evolve with the input of others. Based on our research, we have found that this is the next make-or-break moment for start-up nonprofits — only about 50% are able to evolve beyond the original founder’s vision to an evolving, community-driven vision. You often hear people call this issue “founder’s syndrome.” It can be resolved but requires an open mind and several EQ skills to navigate successfully. We also find that strategic planning is a great way to develop consensus on next steps and help shift the organization purposely from start-up to growth phase.

Starting a nonprofit won’t likely lead you to fame and fortune, but it is a very satisfying experience. The end of this story is up to you. The more you familiarize yourself with the twists and turns of the story and carefully consider the consequences of each choice along the way, the more likely you are to succeed. Plus, like re-reading a “Choose Your Own Adventure” book, entrepreneurs are free to enact the storyline more than once and become serial social entrepreneurs. We’d love to hear if you’ve started a nonprofit and what steps were critical to your success.