6 Common Mistakes People Make When Starting a Nonprofit Organization

2019.08.02 05:24 PM By Joshua Taddeo, Principal Consultant

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 nonprofits every day. But if there's a very active organization in your community, you don't need to start another preemie-based association yourself. We're not saying you have to establish a nonprofit that's never been thought up or done before, 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 ask if they have plans to or accept ideas for extending their scope of practice, where you could open another branch (so to speak) of the existing nonprofit.

2. Not Treating it Like a Business

There's virtually no difference between a nonprofit 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 nonprofit 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, nonprofit business plans or work one on one with someone that can help you.

Surveying the Market

If we're treating your nonprofit as a business, that means you need to know if there is a market for it. Are there people or things/animals you want to serve in your area? For example, if you're starting a nonprofit to protect homeless youth, you'd go to the homeless shelter or 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 go about it in the traditional ways, with surveys and phone calls to neighbors.

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

Nonprofits 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.

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 nonprofit, but do you know what a grant is? It's a very long and distinctly worded way of selling yourself and your services. You're competing with hundreds of other organizations for funding, so you need to prepare. When you're appealing to investors, funding sources and writing grants sell yourself and your organization. You must believe in your mission and what you're doing. If you don't, it'll show, and you'll just be wasting 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 under served. Cite other organizations with similar demographics that are successful 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.