by Mandy Pearce

We teach a lot of workshops around the country, and one of our more popular events is Grant Writing Bootcamp, or a Grant Writing & Research Workshop.

One of the first things I do in this workshop is ask who is in the room, the organization they represent and what brought them to my class that day. You might be surprised at the number of folks who do not work for an organization that currently qualifies for grant funding. Many folks are either considering starting a nonprofit or just want to learn more about the grant writing process. Interestingly enough, when/if I drill down a little further, what I find out is many folks are under the misconception that grants are indeed easy money and they can cover their salary through grants and should start a nonprofit so they don’t really have to do much work.

Boy is that wrong!

For those of you who work in, have worked in, or consult for nonprofits, you know how wrong this is! Am I right?

Additionally, what I find is that many folks who think they want to start a nonprofit have NO business knowledge whatsoever.

Nonprofit is tax status, NOT a business model. Nonprofits ARE businesses. Not having any knowledge of, or understanding of how to run a business successfully is one HUGE issue with many potential startup nonprofits, as well as many that already exist.

Nonprofits use the term ‘strategic plan’, which in the world of for-profits is a business plan. Either way, it is a plan that illustrates what you are going to do, how you are going to do it, what the measurable goals and objectives are AND includes a budget (revenue and expenses).

When I am asked to talk with someone who ‘has a great idea for a nonprofit’, this is where I start:

  • What is your idea?
  • If it is even a viable business idea, I then ask, “Why would you want this to be a nonprofit?”
  • This is typically where the conversation breaks down and I have to help them along by saying, “Does it have anything to do with the fact that you can fundraise and/or write grants?”
  • If the answer is yes, or seems like it is but they don’t want to admit it, I quickly sum up the rest of the conversation by saying, “The ability to fundraise or write grants is the WORST reason to start a nonprofit.”
  • Then I ask if a business plan exists for this ‘idea’. The answer is never ‘yes’.

If no business plan exists for this great idea, I read that as ‘no idea how to raise money, nothing to sell, no diversified funding streams, etc.’ Why in blue blazes would anyone want to start a nonprofit if you had a viable option to bring in dollars through sales of a product or service?

Running a business is a LOT of work. I can attest to this first-hand!

If you don’t want the hassle of administrative work, the bother of scheduling meetings, the trouble of managing other peoples time and the burden of constantly figuring out how you will pay the bills, then do NOT start a business of any kind.

I have several previous clients and friends who, after starting a nonprofit of their own, have said, “I just want to do this, teach that, offer this, etc. I don’t want to do all the admin stuff. It’s SO much work!”. Yes, yes it is!

If you don’t want to do that kind of work, don’t start a business, much less a nonprofit. Go work for someone else.
There is no easy money to be had by starting a nonprofit. In fact, many might argue it is MORE work.
You don’t just have one boss, you have an entire board to manage, You don’t just have staff, you might have none. You have volunteers too. You don’t just manage your finances, but you have to be transparent to the community, report on your impact (which means you have to be tracking it). This list goes on and on.

Yes, as a nonprofit you have some tax benefits, you can write grants and fundraise, and you could theoretically share that workload with a board and volunteers (as I stand laughing at my desk). But more than likely, you are going to do a majority of the work yourself, be frustrated at all the hoops you have to jump through, realize that fundraising is an amazing amount of work and that there is no such thing as free money. You might also realize for profits, governmental agencies and individuals qualify for some grants too and anyone can raise money through crowdfunding!

I say all this for a few reasons:

1. To encourage you to consider the motives of anyone wanting to start a nonprofit. There are some good ideas and organizations that need to be organized in the nonprofit sector, and that is another blog. But the majority of people could collaborate with another group to avoid a duplication of services if they want to provide something to their community.
2. To discourage anyone from thinking grant dollars are a reason to start an organization or the funding stream through which to fully fund any general operating budget.
3.  To motivate you to educate yourself and your board of how any business should be run and start building your capacity and your operating dollars. No business model that I have seen ends every year with a balanced budget. This concept is ludicrous. If you are not making money and ending your year in the black, why are you in business? If you want to do everything, all the time for free, perhpas you don’t need a business model, but a group of good Samaritan’s who get together to help in a particular capacity. It costs money to run organizations. Create budgets that allow the business to run without having to throw around phrases like ‘shoe-string budget’ or ‘beg, borrow and steal’.

In last week’s blog, Marie pointed out that once you start a nonprofit you are often faced with the question of serving as a board member or staff. Both have advantages and disadvantages. Click Here to check out last week’s blog to learn more. 

As you work to grow your organization, work with clients, or establish your own business, I hope these thoughts will help you identify some of the ways you can help create success for yourself moving forward.

Have a great rest of the week! – Mandy

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