Starting a Non-Profit Organization Will Probably Kill You

The world is pretty heavy.

People my age are obsessed with non-profits. In fact, it seems like everyone’s obsessed with non-profits. Our museum is a non-profit, and we’ve quickly learned that the best way to get donor money at least trickling is to stick “The museum is a non-profit organization” on all our brochures, letters, and fliers. Whenever you see them, they’re doing cool stuff: organizing marathons against breast cancer, collecting food for the homeless, selling cheap shoes for African orphans, giving out free hugs–well, the list has gotten weirder in recent years. What you don’t see is the epic horribleness that sometimes–I’m tempted to say often–lurks behind closed doors.

Starting a non-profit is like voluntarily stepping into quicksand and then pressing your foot down as hard as possible. Here’s why:

1. YOU’RE GOING TO END UP DOING ALL THE WORK. So, you have a group of eager “friends” or even “family” who have promised to chip in for whatever your godforsaken cause is on weekends and holidays? Take their pictures, because they’re about to disappear faster than Marty McFly after his mother starts falling for him. It’s like getting a dog, okay? The kids SAY they’re going to help, and they do for about a week. Then they realize that not only are they not getting paid, they’re also not having any fun. Oh, these people will probably run in your marathons or show up at your festivals, but don’t expect them to fill out tax forms, e-mail performers at 2 AM to beg them to lower their prices, trudge through mud the day before an event to set up tents or do dishes, or just generally finish any project they start.

2. YOU’RE GOING TO BE BROKE. The main problem with most non-profits, really, is that the people who run them are idealists. They don’t CARE about being broke–they think it’s some sort of civic virtue (God, how far America has fallen). But this isn’t about you. It’s legally about your organization and your mission. People are going to want checks, and they’ll be very angry if they bounce. All kinds of people. Everywhere. People you’ve never met. People you only met once, briefly and informally. People who sort of implied they’d do things for free but never formalized it and then demanded cash. And unlike your personal bankruptcy, this one’s gonna end up in the local paper. Think: “Local Free Hugs Non-Profit Defaults on Debt: Founder [Insert your name here] Faces Allegations of Financial Mismanagement.” Yes, consequences. I know, they no longer teach you about that in college, but you’ll find out soon enough. It’s amazing how the best intentions can lead you down a path to a reputation so ruined you can no longer even show your face in your home town.

As I’ve said before, our little museum’s operating budget is about $50,000, give or take. We have one huge event a year for which we regularly put out about 2 times as much money as we have to our entire organization’s name. If we don’t make that back, we’re in big, big trouble. Board meetings are tense. The executive director sits in the upstairs office and cries. Everyone contributes out-of-pocket: a tent here, a few crayons for kids’ projects there, and it adds up. Checks bounce. Income/expense sheets become embarrassing. It’s bad.

This could be you...alcohol included.

3. FUNDING SOURCES ARE UNRELIABLE, UNFAIR, AND DRYING UP QUICKLY. Here’s a question for you: What the hell is a “non-profit” anyway? I mean, you WANT  to make a profit, right? One the major benefits of being a non-profit is being able to accept a lot of donor money no-strings-attached. Why does the government allow this? Because they know that most non-profits eventually struggle to get any donor money whatsoever. It would cost more in paperwork processing fees to collect taxes from non-profits than they would even be able to pay. Sure, there are few well-known ones that are raking it in, but these are the exceptions.

Look, you’re going to have about three major sources of funding: membership, grants/corporate sponsors, and fees for special events. I’ve written extensively about grants (see previous posts), but the general situation with both grants and corporate sponsors is that they’re very risk-averse and give money to the already-rich. There’s also less of them, and they’re giving out less money. There’s this little recession thing going on these days–you may have heard of it.  Anyway, they’re also a lot of work (see point #1 above for more about who will be responsible for that work).

Fees for special events are the biggest fundraiser for us. That’s dismal. It’s a few thousand a year, barely enough to cover expenses even with great attendance. If you’re running an outdoor event and you’re not in Arizona, Godspeed. You may enjoy Atlantic City. If you lose out REALLY big, see point #2 above. In fact, even if you only do okay, see point #2 above. Organizing special events are also a lot of…you got it, work! See point #1 again.

Anyone who’s managed a solvent non-profit will tell you that memberships are absolutely the most important funding source. They pay dues, yes, but they also come to events, help out at the occasional special event, and give you good press. Here’s the bad news: It takes a lot of work to recruit, cultivate, and keep them (see point #1) and the economy means they’re dropping like flies at many non-profits.

In summary, see point #2.

4. IT’LL PUT YOU IN THERAPY. I’m serious about the following point, so all kidding aside for a minute: You will not come out of the experience of starting and running a non-profit without some sort of psychological condition, so budget in therapy. In addition to working long hours for no money or even appreciation, you’ll be dealing with a staff of volunteers who will fight (sometimes to the point of police intervention) about whether your organization should promote tofu or granola bars for inclusion in public school lunches. You’ll be mediating your suppliers’ marital problems by email, wheeling-and-dealing with sleazy local politicians for park-use permits, and all the while meeting very, very destitute people. AIDS patients, cancer survivors, orphans, the homeless, some hard-up inner-city minorities–people with real problems that you’re getting a government tax break to try to solve. Oh, yeah, and the CPA wants the budget sheets. Don’t include the $200 of your personal rent money you paid out to an MS patient and father of five who just lost his job and came knocking on your organization’s door. Oh, yeah, and don’t forget to respond to the nasty letter from Competing Organization, Business, or Senior Citizen accusing you personally of being a thief and racist who clubs baby seals because you decided that your cancer advocacy organization wasn’t going to take a position on gay marriage. Your own board will try to rescind you.

All of this will happen. At once. Don’t be surprised if the letter-writer is someone you once called a friend. No, scratch that: it’s more likely to be one of your kids who now hates you because you’ve sacrificed your entire life for this cause, and you’ve probably pulled them along for the ride by coercing them into volunteering at events. Now, there they are, on Dr. Phil. Okay, maybe it won’t go that far. But I won’t promise that it won’t.

5. THEY’RE HARD TO DISBAND. This is the best-kept secret of the non-profit world. When you decide you want out–be prepared for wanting that–you have to jump legal hurdles by the thousands. Objects you acquired need to be disposed of, assets re-organized, creditors paid, forms filled out, etc. When you’re starting a non-profit, in that burst of misguided idealism, the forms are just a nuisance on your way to awesomely saving the world; when you’re closing a non-profit…well, let’s just say packing to come home from vacation isn’t nearly as fun as packing to go. It’s awful. You are a personal failure, your life and maybe your reputation are ruined, and you’re probably hundreds of dollars in the red in your personal life and thousands in the red in your rapidly-expiring non-profit life. Sounds great, doesn’t it?

Non-profits do great things. Thank God we have them. But you need to think long and hard before you start one. One final piece of advice: Just because it’s a “non-profit” doesn’t mean you can’t have a business plan–in fact, please, please, please have a business plan. This isn’t going to be easy. The same decision-making process should go into starting a non-profit as deciding whether to go to graduate school: Are you really ready to make a serious emotional, social, and financial commitment–we’re talking YEARS and THOUSANDS OF DOLLARS–working on this ONE project? No matter how much you love it now, you’ll end up hating it. Are you ready to persevere through that?

Like grad school, an “I don’t know” is the same as a “hell no.” So treat it that way and save yourself loads of hardship.

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