Why Not Start Your Own Nonprofit

In yesterday’s post, I noted that, upon reading that the husband and wife benefiting from the Houston episode of Extreme Makeover Home Edition started their own nonprofit, I rolled my eyes.

Here’s why.

Houston has roughly 15,000 nonprofits operating within the city limits. Once you start tacking on Houston suburbs like Sugar Land and The Woodlands, the number grows.

A few are hospitals, some are schools, and about a thousand are private foundations. If you live here, you’ve heard of some of them, and may even be able to describe their mission or point out their facilities.

No such thing as a nonprofit clearinghouse exists. The local United Way is made up of  about 100 organizations, not even 1% of the organizations out there.

The IRS is the only agency that touches all of these organizations in a significant and ongoing fashion, and all it does is certify that the organizations meet the legal requirements set by the federal government and then accept annual tax filings.

A few questions the IRS does NOT ask about when someone or a group of someones seek recognition as a 501(c)(3) nonprofit:

1. Is anyone else doing what you plan to do?
2. Is there someone doing something similar to what you want to do with whom you could affiliate to test the waters?
3. Do you have any experience doing what you plan to do?
4. Does what you plan to do require any specialized knowledge, training, certification, or other preparation?
5. Do you have any seed money to support your work?
6. Have you conducted a rigorous feasibility study to determine:
   1. whether there is a need for the service/s you want to provide
   2. whether funders have any interest in supporting you
   3. how you will find people to serve, and whether they want to be served by you?
7. Do you know how to keep the books?
8. Do you intend to use the funds you raise to hire your relatives or contract with your own for-profit business?
9. Are you under the illusion that you can become a nonprofit to gain access to an open spigot of government or foundation funds that you may or may not actually use for their intended purpose?
10. Are you willing to check your ego at the door?

Do you see where I’m going with this? Do you have a little more insight into why I roll my eyes any time someone tells me they want to start a nonprofit?

What if, instead of 50 (or 100, or 150) breed-specific dog rescue groups, Houston had a dog rescue group with a core support staff and breed-specific advisory boards, or committees? Think of the cost-savings and leverage such a group could have.

True, you’d have to find a way to get the poodle people and the pit bull people to work together, and that’s one of the biggest problems. Ego versus the greater good. I could reel off a list of nonprofits that could instantly consolidate back-office operations (HR, finance, operations) and leverage those cost-savings not only to serve more people, but make a stronger case for larger grants from funding sources, but very few CEOs are willing to enter into a merger of near-equals, because that means someone at the top will lose a job.

We’re at a moment of real opportunity, however, when it comes to the egos at the top.

The Bridgespan Group and other nonprofit think-tanks have determined that nonprofits are about to face a deficit at the leadership level, with many CEOs and top executives retiring (or, frankly, reaching an age when they may actually start to die unexpectedly in greater numbers – sorry to be so blunt). Everyone is panicked about replacing them, but relatively few people are talking about strategic mergers as a way to cope with this shift in leadership.

I could go on. My point, fundamentally, is that overall, we need fewer nonprofits, not more.

Are there exceptions? Sure. Some new nonprofits should form when none exist in a region, or those that do exist are so corrupt or inefficient that joining forces with them would not create positive change. And some people truly have revolutionary ideas that deserve a chance to grow on their own.

But, if you want to feed people, house them, offer them medical services, or provide any other basic needs, I think you owe it to the larger community and the people you want to serve to make damn sure that the greater good wouldn’t be better served by your becoming part of something already in progress.