For those of you who are my neighbors, you probably know that an 11 year-old girl was killed when an out of control truck struck her while she was dancing in the Raleigh Christmas parade on November 19. It was a tragedy that absolutely could have been avoided.
A friend of her family set up a GoFundMe page as a way to support the family during this difficult time. When I visited the page, I was thrilled to see that they had raised over $90,000 of their $25,000 goal.
What I wasn’t so thrilled to see? This paragraph:
“The hope is that this campaign will generate enough funds to not only support the family, but also allow them to establish a non-profit organization in Hailey’s honor with the goal of carrying out her legacy.”https://www.gofundme.com/f/38wzr-hailey-brooks
Here’s the thing: Starting a nonprofit to honor someone is a lovely idea IF the organization’s mission is something that is truly needed—it fills a gap in society and makes up for a shortcoming of the services provided by the government. If not, I vehemently encourage the consideration of another way to honor someone’s memory.
According to many sources, including Candid (the merged Foundation Center and GuideStar), there are approximately 1.8 million nonprofits in the US. That’s almost two million organizations with IRS-recognized tax-exempt status (not that it’s hard to get, which is its own problem).
With nearly two million 501(c)(3) organizations out there, I’d be curious if one already exists that does the same (or similar) good work to what this GoFundMe is planning. (I couldn’t find any information about the purpose of this future nonprofit.)
And while there are nonprofits out there that have plenty of funding and resources, the more common story is that they are struggling. Struggling because they are underfunded, under-resourced, have little to no staff, little exposure, poor leadership, and poor governance. Even if there are grants available, it takes time, effort, and know-how to apply for them. And then, if you’re lucky enough to be awarded one, the amount of documentation and reporting required to collect is often unreasonably burdensome.
Which brings me to another point: Starting and running a nonprofit is not some little hobby. Sure, some require a heavier lift than others, and many people have successfully started and managed nonprofits on top of their day jobs; some organizations that are run that way have made a wonderful difference in the lives of those they serve. But I beg you to understand that just because it’s a nonprofit, it does NOT mean that it shouldn’t be run like a real business. It is a real business. And it can be brutal.
I’ll give you an example.
I worked at a for-profit that generated revenue by contracting services out to clients. The company was not profitable, but was able to make ends meet because it had investors that made up the difference between revenue and expenses. As the company grew, the CEO would work to bring in more investors to help pay for that growth, like hiring more employees or investing in infrastructure. Bringing in more contracts was also important, but the company would not survive without the funds from investors. (Of course, the point of investing is that eventually, the company would become profitable and then the investors would get their money back or they’d have ownership in this profitable company.)
I worked at a nonprofit that, similar to the for-profit, generated revenue by contracting services out to clients. There were no other forms of funding: no donors, no grants; just contracts. In order to stay afloat, the organization had to break even (at the very least) every year. The contracts had to pay for payroll, rent, tools and services, insurance, etc. If the contracts covered more than that, great! The extra money could be invested back into the organization or it could be put in a savings account for a rainy day or in an attempt to (slowly) build an endowment. If the contracts didn’t cover the expenses, leadership had to find a way to cut expenses, from subleasing office space to laying-off employees.
(I should add that many nonprofits have access to credit, which can help when expenses are larger than revenues or if they need a boost to purchase something important. But I shouldn’t have to add that relying on credit to make payroll every month or to balance a budget every year is not sustainable.)
The intent of this post is not to pick on or criticize people who are grieving, but instead shine a light on something that I see over and over again. If you or someone you love went through something incredibly terrible, challenging, or tragic, it does not mean that you should start a nonprofit. I know the urge to do so comes from a good place! You want to prevent something bad from happening again! You want to make the world a better place! That is all so wonderful and we need more people who want their (side or main) hustles to be for good.
So, I urge everyone who’s had this thought to:
- Identify what gap you want to fill (focus on the mission);
- Research whether another organization already does what you want to do (or similar) and think about how you might support it; and
- Think about the amount of work it takes to run a business, and if you’re up for it.
Do all that and still want to start a nonprofit? Great! I wish you luck! Let me know how I can donate.