6 Common Mistakes People Make When Starting a Nonprofit Organization

2 August 2019

March of Dimes, The American Cancer Society, Doctors Without Borders, UNICEF - these are some of the most famous nonprofits in history.

But at one point, they, too, were just an idea. Their founders had to figure out the process of starting a nonprofit, and so do you.

But you can't just wake up one morning and decide to create one. You'll need to plan, then plan some more.

While you're planning, avoid these common mistakes.

1. Creating a Non-Profit That Already Exists

People around the world start non-profits every day. But if there's a very active say, March of Dimes in your community, you don't need to start another preemie based organization yourself.

We're not saying you have to establish a non-profit that's never been thought up or done ever, but it shouldn't serve the exact same community as something else in your town.

If you're really passionate about something and it's already established, become a volunteer. Get on the board of that organization, make donations - reach out and ask how you can get involved.

Or reach out and ask if they have ideas for extending their scope of practice, where you could open another branch (so to speak) of the existing non-profit.

2. Not Treating it Like a Business

There's virtually no difference between a non-profit and for-profit, in the planning process. You still need a business plan, advisors, funding, grants - everything you'd need if you were trying to make money.

Too many people go to start a non-profit and treat it as an organization - like they were starting a club or association. If you don't treat it like a business in the planning stages, it won't operate as a business later.

You can buy premade non-profit business plans or work one on one with someone that can help you.

Surveying the Market

If we're treating your non-profit as a business, that means you need to know there's a market. Are the people or things/animals you want to serve in your area?

For example, if you're starting a non-profit to protect homeless youth, you'd go to the homeless shelter and talk to police officers about need.

Or maybe you want to save a specific species of tree. Does that tree grow in your local area? And does it pose any threats to homeowners/businesses that would make them want to remove it?

What are the specific benefits of saving this tree? How many homeless youths are there really?

Market research is essential, and you can even go about it in the traditional ways, with surveys and phone calls to neighbors.

3. You Don't Run it By a Lawyer First

Non-profits are classified by the government as organizations that don't benefit one individual or operate to create profit.

To be considered a 501(c)(3) nonprofit, which is the most common kind, you have to prove charitable purpose. That charitable purpose has a pretty wide scope, as you know by existing charities.

You also can't have political alignments (for the use of fundraising) for your charity. Sure, in an election year you can state your support for someone, but you can't operate a front for the purpose of campaign fundraising.

4. You Have a Weak Mission

Mission statements are the backbone of a nonprofit. You know, back in school, when you had to write a thesis in a paper? Think of your mission statement as your organization's thesis.

It states what you believe is true, what you're going to do, and how you're going to do it.

A good mission statement answers the following questions.

  • Why is this necessary/the clear purpose?
  • What change will happen, what services will you provide?
  • Whom will these services help?
  • Who is fit to deliver these services?
  • How services delivered/what are your methods?

Now you see why mission statements are usually a full paragraph, there's a lot to cover.

5. You Don't Sell Yourself

There are grants you can apply for as a non-profit, but do you know what a grant is? It's a very long and exactly worded way of selling yourself and your services. You're competing for hundreds of other organizations for funding, so you need to act like it.

When you're appealing to investors, funding sources and writing grants sell yourself and your organization. You HAVE TO believe in your mission and what you're doing.

If you don't, it'll show through and no one will give you money and you're wasting yours and everyone else's time.

If you've really thought it through and you're passionate about the cause, your enthusiasm should sell the idea by itself.

But - preparing for pitch meetings like you would for any other investment meeting doesn't hurt. Find graphs of your population, prove that this area is underserved.

Cite other organizations with similar demographics that are doing something and can prove positive change.

6. Not Creating a Great Board of Directors

Here's a secret to fundraising - it's only as successful as the board members you hire. Those board members need to have access to resources and contacts who have money - and other contacts.

Fundraising for a nonprofit is a group effort, and a thrown together board isn't going to get you funded, or even halfway there.

Starting a Nonprofit

If you're truly set on starting a nonprofit, good for you! You're going to do a lot of good in the future, and we can't wait to see those positive changes.

Remember to treat your nonprofit like a business, take it seriously, and ask for help from consulting firms that specialize in a variety of specialties such as operations consulting or marketing consulting. If you do that, you should be well on your way to lasting change.