Editor’s Note: We first met Rachel Brookhart on Twitter, where her wit, devotion to smart marketing, and love of both cats and whiskey caught our eye. We also share an academic connection: Rachel received her M.A. in Nonprofit Management from Antioch University L.A., where Atomic Tango Founder Freddy Tran Nager used to teach.
Now she’s published her first book, Start Your Engines: Nonprofit Management Made Simple, which we found both entertaining and insightful. It combines realistic advice (no naive idealism here) interwoven with a parable of a racing team trying to figure things out. Altogether it’s fast, fun, and informative. We think it’s mandatory reading for anyone dreaming of starting a nonprofit. Start here…
First, let’s start with what a nonprofit is… and is not. Nonprofit is a tax status. It is not a business model. Nonprofits can and should make profits. The term “nonprofit” means that because the work the organization is doing benefits the public, they are not required to pay certain taxes. Those who donate to these organizations are eligible for tax deductions.
A nonprofit is a business. Running an efficient and effective nonprofit organization takes all the same market research, planning, money, and old-fashioned elbow grease that a regular business does, only the government is looking at you more closely. The main difference between for-profits and nonprofits is what happens to the profits. In the case of a for-profit, it goes to the owner or stakeholders. In the case of a nonprofit, it is required to go back into the business.
Starting a nonprofit, no matter how small, is serious business and should not be taken lightly. The most important thing you can do before you open your own 501(c)(3) is to make sure the impact you want to make is not sufficiently made by someone else. You may be wrapped up in the idea of saving three-legged dogs, but if someone else is saving three-legged dogs down the street, a new nonprofit is probably not needed. It’s possible that the organization down the street is helping two-legged dogs, or perhaps they are saving three-legged dogs in a different way than you would. In this case, meet with them. See if there is a role for you there or if they are interested in starting a program (not a whole organization) that does what you would like to do. Volunteer there, get to know how things work, and get to know the players and the system.
Let’s say you have done the research and you know someone else is doing something similar, but you can’t reach an agreement with them, and they won’t hire you, so you decide to open your own nonprofit anyway. Well, imagine that you have opened a brand-new coffee shop… next to a Starbucks. Good luck.
“But,” you may ask, “How am I supposed to make a living if I’m volunteering there?” The point of starting or working at a nonprofit is not to give you a job. It’s to accomplish the mission. If you can’t find paid work doing what you want to do, then you’ll have to go about it a different way. Don’t start a whole new nonprofit just for the paycheck.
Another very important thing to note is that starting a nonprofit does not mean that all the products and services you need to run your organization will be free. It does not mean that people will hand you money as soon as you get your shiny new tax status. It does not mean you will receive grants immediately — or ever, for that matter. Make sure that you have people lined up to help you for the first few years. You can’t do this alone.
Would you, right now, open a restaurant? A coffee shop? A tech company? A pet grooming business? If opening any of these businesses sound like too much work or over your head, then do not start your own nonprofit. Running and working for a nonprofit requires real effort and know-how, and should not be taken lightly.
You also need to think about how you’re going to finance this endeavor. The start-up phase is expensive. If you can’t get enough monetary support from your board and potential donors, you may not want to bother starting the nonprofit in the first place. Grants are very hard to come by in your first few years, so you’ll have to think hard about where your money is going to come from and gather early support from individuals.
That doesn’t mean that you shouldn’t do it. What it means is that you’d better be sure that you have done the proper research and planning ahead of time, that you have the support system you need in place, and that you know what you’re doing.
Ask yourself these questions before moving forward with opening a nonprofit:
- Is anyone else doing the same or similar work?
- Is there a real, demonstrated need for the work I want to do?
- Do I have a support system of people who will be board members and donors while I get this organization off the ground?
- Do I have the skills necessary to get this up and running?
There are plenty of ways to do mission-based work out there. Starting your very own nonprofit should not be at the top of the list.
- Nonprofits can and should have profits.
- Don’t expect donors and funders to automatically hand you money simply because you have 501(c)(3) status.
- Doing your homework ahead of time is critical to the success of your organization.
To read more, download or order Start Your Engines: Nonprofit Management Made Simple on Amazon.