I’m often asked, what's the best advice I'd give a person thinking about starting a nonprofit. I'd like to answer that question by saying: If I had three wishes, I would make it impossible for a Founder to do these things (this is the advice I’d give anyone thinking about starting a nonprofit).

Wish Number One: I’d make it impossible for a Founder to start a nonprofit organization without first doing the same level of extensive research about nonprofits that for-profits are required to do. In a for-profit organization, owners are required to develop to research their competitors, to determine if the market is saturated; and if it’s not, how their product or service is different. New owners are required to develop a business plan, describing how they will be able to sustain their company.

They explain where are they going to market their product or service, and they have to provide marketing research that proves there is a need/demand. 

For-profit start-ups must discuss the type of revenue they will secure, and how they will continue to generate income in order to sustain the company. 

Doing Market Research would be completely mandatory for anyone considering starting a nonprofit.

Founders start nonprofits without ever looking at the data or asking these questions:

• How many organizations are there in the community that want to start their nonprofit?

• Is there really a need?

• Or, is the area saturated with organizations delivering the same or similar services?

You’d be surprised how many organizations are doing the same things just blocks away. Founders don’t check first to see. This lack of due diligence impacts an organization’s long-term sustainability. A saturated area means organizations will fight for clients and funding. It means there are other needs in that community that are not being met. And, it also means that other communities that could use those services are missing out.

My second wish is sort of like Drivers Education. I'd make it mandatory for Founders to take a skills test before they are allowed to open up a business. It's very challenging to help individuals who want to start a nonprofit but have absolutely no business skills. What they have are passion and commitment, but those are not enough to sustain the organization.

Nonprofits are businesses. Businesses require leaders with the skills needed to run them: finance, management, human resources, marketing, program development, fundraising, networking, outreach and recruitment, and business development (I can go on and on). Businesses require revenue to cover operations, pay salaries, run programs, and pay bills and expenses. Without the skills to generate revenue, the business is going to fail. 

Over half of all nonprofits that are chartered are destined to fail or stall within a few years because their Founders had good intentions—but didn’t have a clue about what it takes to effectively run a nonprofit business.

They invest their time, energy, and money, but when their personal money runs out, they are forced to close their doors. This is a double tragedy because:

1. The Founder experiences major financial and emotional loss

2. The community no longer has access to the resources the nonprofit was providing

Having business skills, experience, and talent would be completely mandatory for anyone considering starting a nonprofit.

People obtain degrees to learn how to run a successful business. Understanding finances, forecasting, and management are crucial to a successful business. Yet people start nonprofit businesses without one ounce of experience and expect them to be successful.

It’s unrealistic. And it’s hard.

By the time they get to me, these beautiful, well-intentioned, souls have spent hundreds of hours and thousands of their personal dollars on an organization that needs to be gutted and rebuilt, usually, from square one.

The IRS has established how a nonprofit should be operated in order for it to maintain its tax-exempt status. Many unknowing Founders make up “running” their organizations as they go, usually breaking IRS rules and regulations they had no idea they were beholden to. They never quite figure out the purpose of a nonprofit, how it’s supposed to be run; the infrastructure, and the roles of the Board of Directors vs. the Executive Director and paid staff. Without a basic understanding, the nonprofit is almost doomed to fail.

And it breaks my heart.

Most of the heartbreak could be avoided if it was mandatory for Founders to pass a business skills test before they were authorized to start a nonprofit business.

My third wish would be to prohibit any Founder from allowing friends or family members to serve on their Board of Directors. Right now, the way the application is worded, Founders have to identify any family members serving on the board and list any potential conflicts of interest.

I would completely prohibit family members from serving on Boards altogether.

Unless they could demonstrate that the family member (and I am still not 100% sold on the idea) or a friend is a seasoned board member with years of governance experience. 

What happens now is Founders just throw three people who love and support them on their board—husband, wife, cousin, mom, BFF—just to fill in those three spaces on the application, so they can file the paperwork to be approved.

This is the absolute worst thing that a Founder can do in terms of long-term sustainability for the organization. Board members are legally responsible for raising funds and governing the organization. It’s called “Fiduciary Responsibilities.”  

But these individuals don't have board experience; they are not equipped to guide and fundraise (their primary responsibilities).  So, in two years, when the Founder has depleted their personal account and needs help to fund the organization;  these board members who love and support them (but really have no desire to fundraise) are useless. And the poor Founder who's still passionate and committed to their cause is burnt out trying to manage it all on their own. And eventually, is forced to close their doors (and cut off valuable resources to their community).

So if I had three wishes, they would be to prohibit: 

1. Individuals from starting a nonprofit without first doing the necessary research

2. Unqualified individuals from starting a nonprofit, and

3. Friends and family from serving as board members

These shortcomings prevent founders from creating strong, stable organizations that are able to sustain themselves for the long haul. It prevents them from making an impact in communities where people need them the most.

I'd circumvent all the wasted time and energy, and powerfully position organizations to be well-equipped to deliver programs and services in a manner that's going to honor the residents of the communities they choose to serve. 

Those would be my three wishes and my advice to anyone thinking about starting a nonprofit.

Where's my magic lamp? I'd like to rub it and make these wishes reality. 

If you’re thinking of starting a nonprofit and are unsure what direction to take, check out my eBook “How to Define Your Nonprofit.”