Six more things you must know before starting a nonprofit. Part 2: A Nonprofit Organization is Complex
Part one of the “Must Read Series for Nonprofit Founder” talked about the governing structure of a charity and the Board of Directors. Now we’ll look at ways that charities are different from for-profit businesses and how starting a charity is more complex.
I have spent my career in nonprofit planning and administration. I’ve been involved in the early start-up of five charities and now specialize in helping nonprofit start-ups succeed. There are many urban myths about the nonprofit sector. It’s almost as bad as losing weight or having a baby. Everyone may be entitled to their opinion, but wouldn’t you rather be operating from facts?
We at Thrive South have no desire to deter anyone wanting to serve their community. But, much like the medical field, there is a lot at stake when caring people try to help others. Well-meaning but knowledgeable people offer poor advice and founders often put too little effort into planning before filing legal paperwork. Then, they are not prepared to be fiscally responsible, legally compliant, and mission focused.
Read on to see some big misconceptions about how a 501(c)(3) charity is formed. You’ll find that some charities don’t follow these guidelines. Sometimes, leadership may be breaking the law. In others, they may not know better, or they just don’t care.
Before you seek to create a new 501(c)(3) nonprofit organization, consider if that is the best, most sustainable option for your community. Some in the sector will argue that as the United States allows more charities, the field becomes more crowded and less able to support the number of charities trying to do good. We are going to look at the different “good reasons” to start a charity separately so we can look at some examples. Here is the first one.
You have a plan that addresses a root cause of a problem.
I was speaking with a start-up founder this week and it was if I experienced de’ ja vu. Ken was telling me about the advice he was getting and in my head I was shouting, “Don’t listen to them! Every experience is different! They aren’t an expert and don’t know what they’re talking about!”
There’s something about milestone moments in our lives that invite people with advice to come out of the woodwork. Whether it’s having a child, buying a house, or making a major employment or business decision, everyone wants to share their story and share with you some helpful “tips.”
“Somebody told me I just need a couple of people on the board to help me get started.”
“I want my friends on the Board because we are comfortable with each other and care about the cause.”
If you are starting a charity and have had these thoughts you are not alone. In fact, most charities start with a founder and their friends, even though it’s not the recommended best practice.
The board of directors serves many roles. In a perfect world, charities would be founded by a group of like-minded people who through research and consensus create the mission, vision, and bylaws, then find an executive director to carry out the mission.
This is not usually the case. More often, one person identifies a problem in need of a solution. They define a mission and put together a Board of friends and family with some degree of interest or support. The founder often has limited experience in nonprofit management. With limited access to affordable nonprofit start-up training, they figure things out through internet searches and intuition.
Mentor Kimberly Massey
In addition to my work in the social impact field, I have a great husband of 27 years and an incredible 20 year old daughter. Our family lives in central Mississippi and we provide a loving, but sometimes chaotic home to two awesome dogs and a turtle.
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