4 Most Common Mistakes New Non-Profits Make

If you believe in a cause and want to drive change in the world, starting a non-profit is a great place to start. Doing so allows you to build an organisation with a mission that’s laser-focused on what you care about, and to attract others who are passionate about the same things. Passion, though, isn’t all that’s necessary to build and operate a non-profit. Like any other kind of start-up, non-profits can – and do – fail.

To avoid that fate, anyone seeking to build a non-profit from the ground up must be well-schooled in what it takes to succeed in the third sector. Having a business background helps, but there are also some industry-specific pitfalls that operators must know how to avoid.

If you’re interested in founding a non-profit, here’s a guide to some common mistakes new non-profits make and the best ways to avoid them.

1. Mission overlap

Today, there are more non-profits out there than anyone can count (including at least 168,186 here in the UK alone). That’s great news since there are so many worthy causes that need championing. The problem, though, is that it also makes it easy for a new non-profit to have a mission that overlaps with a larger, more established organisation.

Now, that in and of itself isn’t a reason to avoid starting a new charity, but it should highlight the necessity of doing some careful research and due diligence before jumping in with both feet. To get started, take the time to find out if there are other organisations already dedicated to the issue you’d like to focus on. If so, ask yourself these questions:

• Is the non-profit you’d like to start going to approach its task from a different angle than existing organisations?
• Is there room in the market and the community for a second non-profit with an overlapping mission?
• How will your organisation differentiate itself? Is that even possible?

If you answered these questions in the affirmative, you’re clear to move on with your planning. If not, it might be a good idea to consider working with the existing organisations you’ve identified either as an individual or through a strategic partnership once your new non-profit is up and running.

2. A lack of fundraising and financial management experience

For any non-profit to fulfil its mission, it must operate efficiently and be able to fundraise effectively. Sounds easy enough, right? Well, that’s not always the case. Getting operations right and connecting to donors quickly requires some industry-specific knowledge and some general business know-how that many newcomers don’t have. That’s why it’s critical to start your non-profit with a detailed business plan that includes a specific financial strategy you intend to follow.

Once that’s in place, it helps to learn about the various fundraising methods your non-profit will rely on to fuel its operations. Even if you’re going to build a department to manage that aspect of the organisation, it’s still essential for the principal to have a thorough understanding of fundraising to be able to guide the organisation in a sustainable direction.

3. Failure to invest in HR management

When building your charity, it’s easy to get swept up in the cause and surround yourself with like-minded people who share your ideals. Aside from financial resources, those people will be your non-profit’s greatest asset. That doesn’t mean, however, that you can take them for granted just because they share your passion – they require purposeful management and care, just like the employees of commercial ventures do.

For that reason, it’s essential for new non-profits to make provisions to create a human resources department early on. Human resource management is essential to success in the third sector because it helps make sure that an organisation recruits, retains, and cares for the very people that make it work. Also, the human resources function takes care of:

• Managing and coordinating volunteers
• Helping keep labour costs within budgetary constraints
• Creating processes for onboarding new employees
• Maintaining compliance with regulatory and legal requirements
• Manages and operates essential training offerings for efficient operations

The bottom line is that people are the lifeblood of the third sector – and they must be treated as such for any non-profit to thrive.

4. Not establishing an effective board of directors

When starting a new non-profit, success or failure can often depend on which doors are open to you when you begin operations. That’s why creating an effective board of directors for your charity is an essential part of your early work. An ideal board should consist of other individuals who have resources to bring to the table, from financial connections to the ability to influence others to join your cause.

The board members you recruit should stand ready to assist with early fundraising by using their knowledge and connections to the organisation’s advantage. Ideally, they should also be able to offer guidance as to the strategic direction the non-profit should take, drawn from their previous experience and specific expertise.

If you are new to the world of non-profits, finding the right board members may be the most challenging start-up task you face. To get started, it’s a good idea to get connected with industry groups like the Small Charities Coalition, who can get you connected with more experienced members of the third sector. It’s also helpful to use professional networking sites like LinkedIn and third-sector communities like CharityConnect to begin building a network that includes others who have been through the process before.

With luck, you may even find a mentor that will help you recruit the perfect board members to help guide your new non-profit.

Time to get started

Your passion makes for great start-up fuel. And if you do things right, you should be able to attract others to your side to build out an effective organisation that drives the change you’re after.

As long as you take care to avoid the common pitfalls described here, the only limit to your new non-profit’s effect will be in how well you can convince others that your mission is valuable and essential – so you can have a lasting and positive effect on the world around you.

Got any other burning questions about recruitment or attracting the best candidates to your new non-profit? Get in touch with our team at [email protected].