A new nonprofit organization almost always comes into being when a good-hearted, smart person sees a need that is not being met and sets out to address it.
There are many challenges of starting a nonprofit, beyond getting 501 (c)(3) status, just as there are challenges in starting any for-profit business. But, there are also many more resources — books, seminars, college courses — that provide guidance for those starting a for-profit than for those starting a nonprofit, making it all the more challenging for a nonprofit to successfully navigate those early years.
Here are four common mistakes that we see new and emerging nonprofits routinely making and how you can avoid them.
- Putting Any Warm Body On The Board Of Directors
We have a saying at our firm: “No organization can rise above the level of its board.” The makeup and commitment of a nonprofit board is its lifeblood. A great board can propel an organization to unimagined heights, and, conversely, a poor board will mire it in quicksand until it finally sinks.
All too often, young nonprofits are more concerned with filling all their board seats than with making sure the people they are recruiting are going to be good, dedicated, supportive, hard-working board members who can really lead the organization to success.
It’s much better to have a small board of all the right people than a large board full of the wrong people. Nonprofits need to look for people who have a shared passion for the cause they are addressing, along with another needed characteristic. Perhaps you need a lawyer or a real estate expert or someone with a background in social services on your board — these candidates also need to really care about the issue. And it does not hurt if they have the ability and desire to make a significant financial contribution!
- Telling Board Members They Will Not Have To Fundraise For The Organization
Time and time again, we encounter organizations that, in their zeal to get someone to say yes to joining the board, have promised them they will not be asked to help raise funds for the organization. The No. 1 responsibility of a nonprofit’s board is the fiscal health of the organization, and in a nonprofit setting, that is going to mean fundraising.
Young organizations need to be honest with prospective board members about what is needed of them from the initial conversation in order for the organization to succeed. If your potential board members are not willing to fulfill those responsibilities, then they should not be on the board (see item above).
Every organization should have a board member job description, just as they have a job description for every other position in the organization. Prospective board members should be evaluated for their abilities to satisfy the job description, and the prospective board members need to evaluate if they are willing to fulfill those duties.
- Being Too Lean To Succeed
Yes, as a startup, money will be in short supply. But, we often see new organizations who are committed to having 100% of donations go directly to services. This philosophy impacts how they build the organization — the people they do or don’t hire, office space, technology, etc.
Sound infrastructure is not overhead! You need resources to fundraise, manage finances, deliver services and lead the organization. If 100% of the money goes to services, your organization is going to have a short lifespan. Don’t starve your organization to death by refusing to invest in building a solid business. Yes, I said business.
A little-known fact is that a nonprofit organization is a corporation. It is simply one that does not have shareholders and is organized for public benefit. The same sound operational and business practices apply to both, so don’t starve a new nonprofit by denying it sound operational resources.
Look at the key operational areas in the organization, and develop an organization chart. At the beginning, the same person’s name may appear in multiple boxes, but the long-term goal is to have a different staff person in every box. Don’t fall into the trap of thinking that an executive director or development director is overhead. No organization can succeed without a quality CEO providing leadership and a talented chief development officer working to secure the resources to fund the organization.
- Making It Up As They Go Along
According to Giving USA 2017: The Annual Report on Philanthropy for the Year 2016 (purchase required for full report), there are more than 1.2 million nonprofit organizations registered in the United States. With that kind of volume, there is virtually nothing a new organization will encounter that someone else has not been through already. As a result, there are many great best practices already established for nonprofits.
These run the gamut from governance to accounting to fundraising to gift counting and acknowledgment to, well, everything. New and young organizations need to seek out and adopt best practices from their bigger, well-established cousins. Don’t reinvent the wheel when a perfectly good wheel is just a Google search away. Another great idea is to find an experienced mentor who has a long tenure in the nonprofit arena and who can be a sounding board and adviser as you build out your organization.
Nonprofit organizations, like all organizations, have growing pains as they mature. But if they can avoid these four common mistakes in their infancy, they will find the process of growing up much less painful.
This article originally appeared on Forbes.com.
