Starting a nonprofit takes courage, veracity, and a solid group of leaders to guide the organization from the very beginning. In those aspects, there’s not a lot of difference between starting a nonprofit and starting a business.
Lack of a Cohesive Business Plan
Nonprofits – or any venture, for that matter – are begun with a compelling vision or energetic initiative on the part of the stakeholders. But good ideas can only get an organization so far. Just as a business needs a solid, sustainable business plan before deploying services, every nonprofit needs a fully-developed business plan to ensure future success. Whether you choose the DIY approach (the Small Business Administration has good templates to help you get started) or hire a consultant to get things off and running, it’s crucial that this plan is in place before fundraising and operations can begin.
No Funding Model
Like it or not, fundraising is the lifeblood of a nonprofit. Expect to commit the majority of your efforts to finding and securing funding. Moreover, you should plan to dedicate a fair percentage of the money you bring in toward even more fundraising. While this may seem counterintuitive (and even greedy), the realities of the nonprofit sector dictate founders, executive directors, and staff members should embrace the fundraising process rather than treat it as a necessary evil or forced expense. Implementing a solid, coherent fundraising plan at the outset of your organization’s inception can help equip it for future challenges and milestones.
Dysfunctional Board of Directors
Once again, the similarities between the nonprofit world and the business one shine through here. Without effective leadership and a solid set of executives ready to put in a committed effort toward the success of the organization, your nonprofit may be doomed to premature failure. Additionally, while having the title “board member” is nice, it’s important to choose individuals who are actually invested in the future of the organization. A functioning, participatory board is essential to ensuring the future success of the organization – even if their roles are background or hands-off. They should be valuable resources to your organization, leveraging their partnerships and relationships in different avenues to help your nonprofit succeed. Without that, doors may remain closed to you.
Amateur Financial Skills
Selecting a board is more than assembling a knowledgeable team or finding members who can open important doors. Board members who have a solid understanding of finances is crucial to ensuring the future of a nonprofit organization. Not only is responsible accounting and reporting essential, but so should a funding model (with projections) and a complete breakdown of expected budget items for the coming year before your nonprofit even begins operations.
Weak or No IT Solution
Much as with business ventures and NGOs, it’s important to consider information technology as a vital wing of your fundraising and marketing efforts rather than an expense to be ignored until absolutely necessary. Because the highly visible nature of nonprofits combined with the fundraising aspects, hackers routinely target and attack organizations who are otherwise unequipped to handle a cyberattack. This not only leaves the organization crippled, but it could result in serious consequences for donors who may have entrusted their personal information to the nonprofit in question.
For more insights into getting a nonprofit off the ground while reducing hassles, contact the specialized nonprofit accounting professionals at Jacobson Jarvis & Co.
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