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Common Reasons Why New Nonprofits Fail and How to Avoid It: Part Two

limiting beliefs

new nonprofits

Wherever there’s a problem, there will be someone trying to fix it to various degrees of success. The nonprofit sector does just that, applying itself to make things better with a can-do spirit and that tangible sense of optimism. If only optimism was enough! In reality we need the counterbalance of realism and an understanding as to why new nonprofits might actually fail. It’s not pessimism but precaution to look into why some may thrive while others sink without a trace.

Here are another five important factors which, in my experience, increase the likelihood that new nonprofits might fail. 

1. Failing to realize the website is your shop window

Like it or not, we are judged on appearances. Making your online presence the best you can matters tremendously.

We’re not all technology wizards, but we all can recognize the good from the bad. So if you’re wondering where to start, spend time browsing as many nonprofit websites as you can. There’s no harm in learning from the best. You should also pay special attention to recognizing the ones you visited which left you cold. 

Make notes and then reach out to qualified friends, family members, or professionals to improve your nonprofit’s online effectiveness. Make sure you ask around for a good price though. I’ve heard some horror stories about how much people have paid to get their website revamped.

In particular, pay close attention to how the best nonprofit websites encourage donations. It’s normally pretty easy to become a donor, not buried away in a back page. 

The big organizations have paid a lot over the years to figure out what works best, and we can all learn from their set ups. It only takes a little homework. 

2. Failing to plan

Use good software like Bloomerang to plan as much as possible. Take time to organize in detail your budgets and timelines, goals, and objectives. Then stick to your plan. 

Making a plan to succeed isn’t hard, but in order to hold true to it, you need to go that extra mile. 

Using experience-based and expert-driven software is good advice, not a sales pitch.

3. Mismanaging finances 

Like in any business, finance management is so important and it can’t be left to the last minute. Don’t think that the tax agencies won’t come down hard on you just because you’re a nonprofit. 

They will expect you to do it right. Educate yourself as much as you can. The information is all out there!

I’ve met very few people who enjoy this kind of thing, but there is a special super breed of humans we call accountants! And they thrive off it. 

It’s worthwhile getting one to cover your back. It’s a crucial investment and many nonprofits fail through this mundane blind spot. 

4. Taking donors for granted

Donor retention and expansion is not a secondary function — it’s everything! You don’t need me to remind you of that, but unfortunately taking donors for granted is one of the major stumbling blocks leading charities to stagnate. 

Send personal thank you letters and keep up a genuine interest in the donor.

Ask for their advice on further donor drives. If it’s their idea, they will be far more likely to be a financial force behind it.

5. Not realizing a nonprofit is sharing the market space

How often on Shark Tank does someone come up with an idea which we’ve all seen before but the inventor refuses to see that they are not unique? How often does someone tell you the story of the book they are about to write and you cringe knowing it’s the same as a dozen others? 

It’s easy for nonprofits to display a similar lack of awareness, ignoring how similar their mission is to another organization’s. Only later do they then wonder why they struggle to secure financing. 

Face reality as soon as you can, even if your heart is set on doing something particular. 

If you find out others are already doing that same mission in the same place, then perhaps it’s time to change tact. Carving out your own patch is more likely to succeed than trying to grow in the margins of someone else who’s already claimed it. You risk being overshadowed and overlooked. 

In the mall you don’t want two stores selling the same thing next to each other. It’s better to have two stores which complement one another. For example, one sells cheese and the other wine; it’s a perfect match and both succeed. 

Nonprofits need to be aware of where they fit in. This takes a degree of pliability, molding the mission to fit the requirements rather than subconsciously duplicating what someone else is already doing. There is room for everyone but not with everyone in one room.

Securing your funding will depend on your mission, not overlapping with others. 

So there’s a few strategic pointers to keep in your eye line, but not only for new nonprofits. 

We all can adopt the beginner’s perspective, if only to better understand where we can improve and challenge our preconceptions.

Feel free to let me know if these were helpful. I believe every nonprofit has a place and there really is no reason that any should fail. It’s just such a tricky climb. The good news is no one wants you to trip up. In fact, quite the opposite is true. 

The nonprofit sector is filled with some of the most talented and dedicated individuals that I’ve ever had the good fortune to meet, virtually or otherwise. I’m constantly surprised by their resilience and fortitude. Good luck!

Nonprofit Sustainability

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