One of the greatest pieces of advice I’ve received in recent weeks is this: “You can’t get a return off an investment you didn’t make.”
It appealed to me because of where I am in my career and my desire to get to the next level. I have mentors in my life to help me in this process, but they can’t do the work for me. I have to make an investment of my time, talent and my resources, including finances.
As this advice applies to my business, it also applies to nonprofit organizations, especially start-up nonprofits.
I truly believe the term “nonprofit” has become a disservice to many start-up leaders. It has been my experience that many are misguided and confused by the term.
The term “nonprofit” is primarily a distinction that identifies your tax status. It lets everyone know you’re a charitable organization, and a benefit of that is you and your donors get a tax break from the IRS. Other than that, you are still a business. Therefore, normal business principles apply.
There is no other industry in which you’d start a business and not have the expectation that you need to make a financial investment. Unfortunately, since nonprofit organizations are eligible to receive grants, there is a misperception by many that they don’t need any other funding sources to operate.
That mindset creates a dependency on grant funding and less focus on innovation, creativity and entrepreneurial skills. I have also seen it create a “give me” mentality, whereas the expectation is that everything should be free. If you start out with this mindset you will be unable to sustain your organization.
There are more than a million nonprofit organizations registered in the U.S. Many of them aren’t operational. A large percentage of those organizations exist in name only. They registered with the secretary of state, they applied for their tax-exempt designation with the IRS, and then expected the grants to start rolling in.
They didn’t prepare for success. They didn’t set up the right structure or governance with their board of directors, and they didn’t have any skin in the game. Basically, they made a minimal financial investment by paying the fees to get organized and did nothing else.
For many, the expectation was they could get free labor, free resources, and free money (grants). Once the reality set in, they were stuck.
Obviously, there are a lot of successful nonprofit organizations that exist. I’ve worked with or for several of them. But they all have something in common. They are organized, strategic, collaborative, and fiscally sound.
They realize they need multiple streams of revenue, and raising money through grants is just one part of their overall fundraising plan.
It’s naïve to think you can be a successful nonprofit organization without a strategic plan. It may be cliché but it’s true – if you fail to plan, then you plan to fail.
So, here are five tips to help start-up nonprofit organizations succeed:
1. Develop a Plan BEFORE you become operational. Commit the time to develop a comprehensive strategic plan that includes a plan for funding that goes beyond just applying for grants. You need multiple streams of revenue. Funders want to see that. It demonstrates your fiscal capacity.
2. Start small. Before you start trying to serve the masses, serve from your current capacity level. You may not be able to serve your entire city, but perhaps you can serve the people in your immediate community. This allows you to fund the work you’re doing, get a realistic idea of what it costs to operate your program, and it gives you the experience funders want to see before they feel comfortable funding your organization.
3. Collaborate with other organizations. Use the first year to build relationships with key community partners, especially people who provide similar or complementary services and programs. It could be an organization that offers wrap around services that your target population needs. The important thing is that you establish a credible reputation. Allow people to get to know your work. People do business with people they know. If nobody knows you, then it becomes more difficult to get organizations to work with you or agencies and foundations to fund you.
4. Make a financial investment in your organization. If you haven’t put any skin in the game how can you ask someone else to. If you and your board members aren’t willing to make a financial investment in your organization, nobody else will. Most funders want to see your financials before they make an investment in you. If you don’t believe in your vision enough to put your own money into it, then you shouldn’t even start a nonprofit.
5. Invest in professional development. Get the training and the credentials you need to do your job effectively and successfully. There is some education and training you can access for free, but you need to allocate funds in your budget for professional development. You need to recognize the value in paying for training and services that will benefit your business and your clientele.
Once you’ve put the time and energy into setting the right foundation for your nonprofit organization by doing these things I’ve suggested, then you can start pursuing major funding to help you get to the next level.
If you’re not willing to put in the work and get some skin in the game, you need to seriously consider why you’re doing it.
Until next time….
Peace & Blessings!