Thursday, December 2, 2010

Starting a Non Profit Takes Money

Almost every week, I speak with someone who has just started a new non-profit organization. Many of these fine, well-intentioned folks call me because they want to find grant money to help them get started. I am not surprised when some of their expectations are a little out of alignment with reality because anyone who would go to the trouble and expense of starting a non profit organization is a bit of a dreamer and idealist to begin with. Sometimes people dive in on faith without checking the depth of the water and that can be a painful mistake.

The trouble is starting a non profit organization is an expensive undertaking, and dreams don’t always align well with reality of implementation. The legal paperwork, the tax deposit, and the time and effort to start a non profit all add up to a sizable sum of money. Many of the people I speak to are already “tapped out” by the up front expenses of becoming a legal entity. They’ve got the status, but not have no money to do what they wanted to do, so they call me about seeking grants. But grant seeking costs money too if you want someone else to do it for you, it’s a lot of work with no guarantees.

I know from first-hand experience that it’s a lot easier to start a non profit than to raise the money to keep it going. I learned this through direct experience serving ten years as a founding board member for a national non profit, starting my own non profit organization (which failed to thrive), and serving on the start-up Board for another non profit that did thrive (due to good leadership).

Here are ten things my experience tells me you should consider before paying the up front legal expenses to start a non profit organization. Attending to these things may help you avoid finding yourself in a financial hole before you even get started. I advise you to delay filing the legal paperwork until:

1. you have recruited a large enough Board with sufficient connections and resources to provide a base of local funding and support for a basic level of services;

2. you have completed a thorough assessment of the need for the services you want to provide including competing agencies and services;

3. you have surveyed potential participants on their need for the services and their preferences in terms of service delivery;

4. you have identified a sustainable entry level of service delivery;

5. you have at least explored finding a suitable and available location and/or facility to house your services;

6. you have developed at least a rudimentary fund raising plan that includes multiple funding streams and an identifiable donor pool (a fund-raising plan that may include grants, but is not dependent on grants);

7. you have recruited a Board member who is a CPA, or you have enlisted the assistance of a CPA firm willing to donate or discount their accounting services;

8. you have, or you have Board members with, credentials, experience, and connections in the area of service you want to provide;

9. you and your Board have written a mission statement that is meaningful to the community you’ll be raising funds within;

10. you have listened - really listened - to the “devil’s advocates” who can give you an alternative perspective on what you want to do (might be your wife!).

You can’t be afraid of examining your mission through the lens of the devil’s advocate. You must be courageous enough to listen to alternative points of view as you plan your non profit. If you don’t, you’re going to miss something important and you may just spend a lot of money starting a non profit that has a noble cause and no money to support it.

Funding is the life-blood that your heart-based operation must function on. Not all good ideas are fundable. Few brand new non profits are fortunate enough to identify a deep enough pocket to establish themselves. You can’t count on securing a huge grant to kick off your non profit! (In fact, as a start-up, you can probably count on not securing a huge grant) It’s probably going to take the shallow pockets of lots of people who believe in your mission to fund your project.  Take the time to test the waters before you dive in!


Rasilliant Rhetoric said...

Veronica--what a wonderful reference point. In the past 3-4 years, I have had this same conversation with at least fifteen individuals seeking to establish non-profit entities. To this day, only a couple of those non-profits are still even existing. While it is a very humane effort to want to delve into these endeavors, most are not professionally equipped to do so. It's a harsh reality, and with the economy the way it is, seems everyone is strapped for cash and resources. Everyone wants to be funded without supplying the proper compensation it takes to research, find, and apply for the appropriate grants. Unfortunately, that has led to me providing hundreds of $$$s of service per gratis. :'( I will hold onto the tips that you have provided and definitely refer back to them in the future. Thanks for the continued wealth of information. You are a jewel! :-)


Derek said...

Hi Jason,

Just a quick comment on behalf of the company. Veronica has been on the road and buried in deadlines! Thanks for your comment and we're happy you found the post helpful. We're so delighted when someone takes the time to post a thoughtful comment! We hope you'll keep reading our blog and helping to spark conversations here!

Grant Goddess said...


Thank you so much for your thoughtful comment! If I had a nickel for every call from a good hearted person with a great idea who just wasn't prepared to make it happen, I'd be rich...and so would YOU, I suspect. Bless you for all the giving of yourself you have clearly done for the non-profit world. Please feel free to share any of our tips with anyone who could be helped by them. Also, if I can be of any service to you in the work you do, please don't hesitate to call. Those of us trying to change the world need to stick together!


Sharpie said...

This is excellent advice! It's a bitter pill to swallow for someone starting a new non-profit and wanting grant money NOW, but still very true. I had to deal with this recently, knowing it wasn't what the potential client wanted to hear. Your advice confirms my instincts. It helps to have resources like this to refer to when turning down a client. That helps make it less personal - it's just the fact of the matter. Thanks for all the great resources!

Grant Goddess said...

Thanks to everyone who has commented on this topic, it obviously touched a nerve for grant writers. My experience is that new non-profit leaders are not resistant to hearing about grant reality, but they do want to have some advice on where to begin. We're always happy to talk them through the process of fund raising as we understand it from our own non profit experiences. Fund raising is tough but a good idea implemented by the right people can always find support.
Cheers everyone!

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Creative Resources and Research is a consulting firm specializing in grant writing, grant seeking, program evaluation and professional development training. We have worked with hundreds of clients including public and private schools, school districts, universities, non-profit organizations, and social service agencies throughout California, securing over $155 million from federal, state and private foundation funding sources over the past decade. Our primary grant writers and program evaluators have over 50 years of combined experience in the education and social services fields. At CRR we prefer a personal approach to the clients we work with; by developing long term relationships, we are better suited to match client’s needs with available funding sources. We provide a variety of services to help assist you, including grant writing, evaluation consulting, professional development opportunities, and workshops.