You have been asked at least once by someone: How do I start a nonprofit?
Right?
Someone you know or someone who was referred to you because you are in the nonprofit sector lands on your doorstep with that question.
Me? I get asked all the time.
The conversation begins with pure passion. Maybe there is a legit gap in the community? Maybe the organizations out there don’t do quite what this person has in mind? Maybe there is a passion to honor someone’s legacy in some way not long after their passing?
Formal denials of 501(c)(3) applications are remarkably rare. One statistic from 2024 tells us that over 136,000 applications were filed and only 74 were denied. A decent number were abandoned or rejected because the paperwork was incomplete, but you get the point. The result? In the last decade, the number of nonprofit organizations in the United States alone has grown by nearly 25%.
Based on these stats, it seems that it is really quite easy to start a nonprofit.
But one built to last? Not easy at all. Exhibit A: Nearly one-third of nonprofits don’t survive past 10 years.
It does seem easy, though, right?
THE TYPICAL RECIPE
The typical recipe for getting a nonprofit off the ground:
- A founder or co-founders who are passionate and compelled to right a societal wrong, fill a critical gap, bring something unique and innovative to the world (or some combination)
- Roughly 3 devoted followers who agree to serve as board members on the application. Family, friends, neighbors will do the trick, right? Just need names.
- A completed 501(c)(3) application
- As an approved 501(c)(3), you can start to raise money—quite often it is the founder’s own dollars or someone the founder knows who wants to support your idea (figuratively and literally)
Follow this simple recipe, and you stand a good chance of being in that 30% of nonprofits that fail within 10 years and in the 12% that don’t make it past five.
This recipe is wildly insufficient. In our Nonprofit Leadership Lab, we see nascent nonprofits that, with our resources and community support, get out of the gate in a very strong position.
So next time someone tells you they want to start a nonprofit and are seeking your advice, maybe share this blog and certainly this recipe.
1. READ AND LEARN
Passion alone will not get you where you want to go.
- I recommend that all those considering a start-up read at least the first few chapters of Wendy Kopp’s One Day, All Children. Her idea became Teach for America, and I am aware that there are some big feelings out there about the program design. I don’t need you to dig into that part of the book—it’s about her priorities at the very beginning and how these decisions, combined with a relentless determination, created an organization now in its 35th year with an annual budget of roughly $250 million.
- Seek out other resources—the Kopp book is but one of many.
- Talk to other founders about what they learned—what they did that worked and what they would have done differently.
2. WRITE A BUSINESS PLAN
This exercise (which can be simple) will clarify your own thinking and will be a foundational document to draw in funders and board members (for starters).
A founder should seek out someone who knows a thing or two about basic business plans. It does not have to be MBA-worthy but should be something a prospective donor could read and feel confidence, excitement, and interest. It should include:
- Landscape analysis: Is there another organization that does similar kinds of work? If so, PAUSE RIGHT THERE. You have to explain to a prospective funder why your idea needs to be a standalone organization. And it has to be more compelling than “that organization isn’t very good.” And you have to look in the mirror and be sure that your ego is not in charge.
- Needed Skills/Experience: In order to launch a nonprofit, what do you need at the table?
- Numbers: The plan should include some very rough idea of revenue needed for year one (at minimum).
- Impact analysis: You could include a theory of change, or it could be a simple narrative that explains how you plan to execute this idea to maximize impact and how you define impact.
3. SURROUND YOURSELVES WITH THE RIGHT PEOPLE
Do your homework. Learn why you need a board and what its responsibilities are. Consider the skills and experience your board will need and then spend some time networking. Use your business plan to market your idea to those folks. Secure a few board members that will add value to your thinking as you get your idea off the ground.
The single biggest mistake founders make is asking their friends and relatives to join their board as they are filling out the application—what we call the “FoF” board, “friends of founders.” These folks may or may not have what is necessary to be effective partners; they are more likely to be “followers” and “cheerleaders” for your new social enterprise.
4. SECURE A COMMITMENT TO FUNDING
BEFORE you secure your 501(c)(3), secure verbal funding commitments. Use the business plan and your passion and dedication and transfer it to a few folks so you can hit the ground running.
And be clear about how much you are working to secure commitments and how you would invest it—this could be a final section of your business plan.
5. NOW GO AND FILL OUT THE 501(c)(3) APPLICATION
Instead of it being the very first thing you do, it should be the final step in a process that is not just filled with passion but one in which intentionality is embedded into every step. Now it could take 6–9 months to secure the approval, so a thought here is that you get the app started with “placeholder names” of family/friends, with the understanding that you are building out a board during the wait time.
Every day we help thousands of folks who have a 501(c)(3), a board, a mission and an abundance of passion. We offer them a community of support and just the right resources. The thousands who call the Nonprofit Leadership Lab home grow, mature, and transform and stay with us, keeping the Lab in their pocket.
Today I just busted a myth that starting a nonprofit is really quite simple. To be honest, nothing about nonprofit work is simple. Or easy. Don’t do it alone. For us, it is a privilege to support you. From the initial idea to a mature organization on the path to sustainability.