For many of us our dreams are not wealth or material items but rather a consuming desire to better the world in some way.
The following is the first of six posts about how (or if) to start a charitable organization.
It was my genuine pleasure to work in the non profit field for 23 years including starting a non-profit (with a great partner) and running its fiscal side for ten years. This series is a result of my experiences as a founder, teacher, and consultant in this field.
THREE INGREDIENTS YOU MUST HAVE TO BE SUCCESSFUL IN STARTING A NON PROFIT
If you have the following three ingredients I can almost guarantee that you’ll succeed at creating a new, highly successful, non profit organization.
◘The first is passion: an impenetrable belief and desire to do something—to act on some issue—around a common cause. This cause must be held in the minds and hearts of the public as something that not only requires an investment of human time, energy, and resources, but that it is also a situation(s) that can be made better.
If, for example, you want to fund research for a cure for autism you will have the public knocking on your door wanting to help, wanting to destroy this heart-breaking condition.
“Passion makes the world go round.
Love just makes it a safer place.”
Ice T, The Ice Opinion
◘The second absolutely crucial ingredient is knowledge.
If you want to start that autism research project you must have a working knowledge of autism and the basic components of the research. It doesn’t mean that you have to be a doctor, or a researcher, or an educator, but you must know about the different forms of autism, the treatment methods, the services available and those that are lacking. You may be a parent, a teacher’s aide, a nurse, a social worker, etc. It doesn’t matter so much what your past experience is but you must be very, very knowledgeable.
“All the knowledge I possess everyone else can acquire, but my heart is all my own.”
Johann Wolfgang von Goethe
◘The third ingredient is the unmet need. If you want to build a bridge to the North Pole you are not going to get much funding or have much success. Who would want it? If, on the other hand, you want to bring safe drinking water to the world you will have a great opportunity.
This is the essence of the entrepreneurial endeavor to marry passion with knowledge to bring about something new, effective, and greatly needed.
“Draw a crazy picture,
Write a nutty poem,
Sing a mumble-gumble song,
Whistle through your comb,
Do a loony-goony dance
‘cross the kitchen floor,
Put something silly in
the world
That ain’t been there before.”
Shel Silverstein
So…if you have the passion and the knowledge the $64,000 question you should be wrestling with now is: SHOULD I ORGANIZE AS A FOR PROFIT OR A NON PROFIT? Why is this so important? Let’s compare them.
$$FOR PROFIT-
The business is yours—you own it!
♥NON PROFIT-
The business is a public entity, you own nothing. Your Board of Directors controls your destiny and can even vote you out (if you’re the chair of the Board), or fire you (if you are the paid director. The minute you accept a penny for compensation you instantly become “staff.”)
$$FOR PROFIT-
You steer the ship—what you say goes.
♥NON PROFIT-
You have influence on the course of the ship but the Board of Directors has the final say.
$$FOR PROFIT-
You have to find your own start-up and operating money.
♥NON PROFIT-
You can receive donations, government funding, and/or grants.
$$FOR PROFIT-
You have several incorporation options including an LLC, S-corporation, C- corporation, Sole Proprietorship, or other entities.
♥NON PROFIT-
Most likely you will incorporate as a 501 (c) 3 charitable corporation. (You must have your charitable status from you state and federal to receive most donations and grants.)
$$FOR PROFIT-
You can sell it or you can leave it to your loved ones as a legacy. You are building wealth.
♥NON PROFIT-
You own nothing, you may walk away with a gold watch or a plaque—if you’re lucky.
You can have an influence on the world.
$$FOR PROFIT-
You can have an influence on the world.
THIS IS THE MOST IMPORTANT DETERMINING FACTOR:
$$FOR PROFIT-
You can only provide what your customers can pay for. (In other words if a customer comes into your restaurant he will only receive what he can pay for. You do not have a grant to cover his deep dish pizza.)
♥NON PROFIT-
You can provide what your customers need. (For example, you run a literacy program for people fresh out of prison with the goal of employment. You cover these costs through fundraising, donations, and grants. The participants pay little to nothing.)
Forming a charitable organization, many times, is the only option. If you want to set up an Irish setter rescue group you are going to need donations and grants to keep you running. No one is going to pay to have you receive an unwanted dog. No one is going to pay the foster home the dog enters. No one will be there to pay the vet bills. All of these services fall in the for-the-good-of-our-animal-friends-and-our-community-but-I-don’t-have-to-pay category.
Just realize that this entity you are creating, many times your life’s work, will not belong to you. It will have a life of its own as soon as you empower that board of directors, obtain your tax exempt status, or accept a donation.
Things are not so clear cut in other situations where some people (or their insurance, or parents, etc.) would pay for the services, such as a counseling or a rehabilitation center.
When you are examining this choice I advise you to look very closely at the differences between “ownership”—what will you have when you leave–and “control.” As entrepreneurs these are key issues.
The next post will cover whether or not you should start a charitable organization.
NOW HERE’S ONE OF MY FAVORITE QUOTES:
“Do not go where the path may lead, go instead where there is no path and leave a trail.”
Ralph Waldo Emerson
Face Your Dreams, Embrace Your Loves
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