So, you want to start a nonprofit?
You want to make a difference. You want to help others. You want to dedicate serious time and attention to spread the word that this matters.
But before you go down this nonprofit path, there are two questions that you need to answer.
Don’t worry. I’m not going to try to talk you out of your idea. The goal here is to help you make that impact quickly, efficiently, and sustainably.
Question 1: Are you sure it wouldn’t make sense to join an existing nonprofit?
Look, I get it. If you’re serious about starting a nonprofit, then you must be devoted to this cause. Maybe you’re frustrated that you’re not seeing progress on a certain issue.
But chances are there’s a nonprofit out there doing something like to what you envision. There are over 1.5 million nonprofits in the United States.
Even if you think your mission is pretty specific, it’s worth double-checking with some research.
Why do I bring this up?
Starting a nonprofit takes a lot of work. Maintaining that nonprofit can be even harder. You’ll need to incorporate, write a mission statement, and develop a financial plan. Then create a board of directors and communicate with the IRS. You’ll also have to worry about managing finances, promoting the heck out of it, and building reliable income. Plus, you’ll be responsible for doing this all yourself or creating a team to help you.
If you can find an existing nonprofit, then your life just got a lot easier. Joining a nonprofit is always the more affordable option. And by “affordable,” I’m referring to your time as well as your money. You’ll likely achieve more by collaborating with an existing team for a cause you want to fight for.
“Alone we are smart. Together we are brilliant.”
— Steven Anderson —
Where to look for existing nonprofits?
If you want to search nonprofits in your area, here are some great databases to check out:
- Great Nonprofits
- The National Center for Charitable Statistics
If you can’t find a nonprofit with a similar mission, then move on to the next question.
Question 2: Are you sure you want to rule out a for-profit business?
Before you decide to dive into the nonprofit world, here’s something to keep in mind.
For-profit businesses CAN do good.
A profitable mission doesn’t prevent a business from having a charitable purpose
It’s not uncommon that a for-profit company would have social responsibility programs. In fact, today’s consumers expect companies to do good while making a profit.
Exhibit A: Warby Parker.
Warby Parker has been disrupting the eyeglasses industry lately.
Its online store offers affordable prescription eyeglasses and sunglasses. With its “Home Try On” business model, customers can try on frames and return what they don’t want to keep.
But there’s a deeper level to the business. Warby Parker donates a pair of eyeglasses every time one is purchased (a la Tom’s).
Warby Parker isn’t alone. There’s an increasing number of businesses who marry profit with purpose.
Don’t limit your options.
Sure, nonprofits and tax-exempt companies have features that will help with your charitable goals. Receiving donations can be crucial to sustain your cause. But, depending on how you want to implement your mission, there might be advantages to choosing a for-profit entity.
So don’t get stuck in the notion that a nonprofit is your only option if you want to give back in some way.
If you’ve gotten this far, then here’s some actionable advice:
- Talk to an attorney about your options. Before forming your nonprofit, ask your attorney about other business structure options that she would recommend. Some states have created alternative structures for social entrepreneurs. For example, Illinois and other states have created a “low-profit limited liability company” (or “L3C”). An L3C is a business structure that helps facilitate for-profit ventures that are socially beneficial in a way that complies with IRS rules.
- If finances might be an issue, consult a legal services agency or a law school clinic. Starting and running a nonprofit (or any business, for that matter) is expensive. If you think it’ll be a financial challenge to get your business up and running, there are great resources that may be able to help you. (Sidenote: As a graduate of St. Louis University School of Law, I can tell you from personal experience that their legal clinics provide excellent service and personal attention.)
Go make that dent in the universe.
If you’re looking to create a positive impact in your community, go for it. Whether that means joining an existing nonprofit or starting your own business, don’t let the maze of legal options slow you down.