If you work for or operate a nonprofit – or are thinking of starting one — you’re in it for the greater good it provides to your clients or cause. It gives you a great feeling to support the people, animals, or natural resources your organization serves. The business part of it is secondary, right?
Well, not exactly.
Nonprofit organizations may not be designed to return gains to owners or shareholders, but they’re businesses in every other way. Moreover, the better they’re run as businesses, the more successful they are.
That’s why good intentions aren’t enough and why so many nonprofits fade away not long after they start.
All the enthusiasm and selfless goodwill in the world still needs to be tempered by the realities that require a sound business plan and a steady means of financial support. A nonprofit needs the same strategic thinking that helps to secure success for a start-up or existing business of any kind.
How do you learn all that? The most direct way to gain the skills to create a strong foundation for structuring and running a nonprofit comes from earning a graduate degree in business. Even while you’re working, you can take advantage of an online MBA no GMAT required. Through the course of study you’ll learn the fine points of management and operations as well as broaden your scope of knowledge about effective communication, critical thinking, and creative problem-solving. Not only is it personally beneficial, it’s a valuable investment in the future of your organization.
Here are the things that cause nonprofits to fail, and the pitfalls to watch out for:
Lack of a Business Plan
In any endeavor, to get where you’re going you need a plan. You might want to make a difference for a single cause, a community, or even the world, but first you’ve got to lay out the steps that will get you there.
A business plan should identify the target and size of your mission, the services you plan to offer and the costs of providing those services whether in supplies or equipment, the staffing requirements needed as well as the cost of that staff, and the outside legal, accounting, and other professional assistance that will be required. Your plan also has to include the requirements and costs of office space, technical support, marketing, and all the other aspects of operations.
Most importantly, the plan has to identify the sources of your funding. How much money will you need to start and how much will be required to enable you to sustain and grow? How large are the potential individual, community, corporate, and foundation donor pools? How will you reach them and with what message? How will you involve and retain them?
Volunteers are the lifeblood of many nonprofits, but they need to be recruited, trained, and retained as well. How will you do it all? The business plan should outline that also.
Poor Record-Keeping and Oversight
Keeping precise records is vital for every business enterprise, but maybe even more so for nonprofits. State and federal government requirements mandate strict reporting and have regulations regarding ethical and fiduciary compliance. Running afoul of their rules will invalidate your nonprofit status.
A number of charity watchdog organizations like GuideStar, Charity Navigator, and CharityWatch also monitor compliance and report on how nonprofits make and spend their funds. Potential donors rely on these groups to help them decide where to give their money. Good ratings from these organizations can mean a lot in terms of support; bad ratings can put you out of business.
One nonprofit can’t be all things to all people. If you begin to reach beyond your initial purpose you run the risk of failing on all fronts. Your mission should be focused and clear, and you should keep a keen eye on pursuing it. Your resources can only stretch so far, and your donor base may dissipate if your mission strays from the reason it drew them in.
Not Keeping Up
Times change, new competition appears, the focus of your efforts develops new needs. Nonprofits have to keep up with what’s going on around them. Like a duck gliding on the water, beneath the surface you’ve got to keep paddling.