3 Reasons Nonprofits Fail Within 3 Years
Failure is what many nonprofits experience within a few years of operating. It’s a challenge to keep your organization afloat. A nonprofit begins with someone having a passion or believing in something for the good of the public or social benefits. The purpose is to advocate or push a certain societal issue. While this notion promotes the advancement of the general public, many nonprofits find themselves becoming stagnant and or unstable towards growth and development. Here are 3 reasons why nonprofits fail within 3 years.
Reason 1: Lack of Experience and Knowledge
You want to change the world with your idea, so you decide to start a nonprofit. Some founders grab their friends or family members to begin developing their organization. While this is a great way to get your family and friends involved and create change, your nonprofit may not last long because of this. The lack of knowledge and experience in the nonprofit sector is a driving force for failure. Although it is possible to grow a nonprofit with no experience, it is not substantial and not recommended.
Family and friends are great to have as board members however, you need individuals with a background in the nonprofit sector. If you insist on having only family members and friends, make sure to train them appropriately. Take them through the Board Governance Training. This includes the following topics and concepts:
Ongoing, cyclical training - Making governance training and conversations a consistent part of your organization’s routine, helps ensure all board members, both new and old, are all on the same page.
All nonprofits have a life cycle - Your board needs to be equipped to provide your organization with the most relevant skills, perspective, and leadership it needs. It is important to know what point your organization is in its life cycle and seek a critical understanding of what your board needs to provide.
Legally liable - When you know what your nonprofit can be held legally liable for, you are inclined to make more informed and responsible decisions.
Effective meetings, effective decisions - When each board member is well-trained and understands their roles, this leads to effective decision-making and business management.
Enhanced impact - A board that consists of trained and informed experts, is one who advocates for its organization and inspires action.
Increased in secured funding - Your organization cannot afford to operate in a mediocre meets-expectations fashion. You have to be on top of your game!
Lack of experience is one thing, but many new nonprofits also lack a clear focus. There are usually no mission and vision statements; these statements serve as a guide for decision-making. They allow the organization to have a focus point and identify who the targeted population will be. This is key for strategizing programs or services you will provide to your audience.
Reason 2: No Strategic Plan In Place
Even though you’ve trained your members and your mission and vision statements are in place, the structure of the nonprofit is lacking. Your organization is only as good and strong as its foundation. It’s similar to a new house, it doesn’t matter if you have the best joists and framing, if the foundation is lacking, all of the other parts will fail. A nonprofit with no structure isn’t sustainable. It’s missing a strategic plan, without this, an organization is unable to identify and implement evidence-based strategies to advance the organization’s mission and vision.
A strategic plan is a nonprofit’s framework. It defines how the organization will carry out its mission and vision statements and overall goals. Because a new nonprofit will encounter many challenges, the strategic plan can be improved as many times as needed to develop an impactful plan for success. There are 3 must-dos for developing your nonprofit’s strategic plan:
Determine your goals: Why did you create your nonprofit? What are your long-term and short-term goals? Write them down and make sure everyone understands the goals your organization wants to accomplish.
Strategize methods for actions: This is where you formulate your course of action. How will you reach those goals? It’s a good idea to see any step-by-step plans or methods that your competitors use.
Consider possible outcomes: You can’t foresee the future but you can try to predict it. Analyze how your methods for actions and how they will lead you to meet your goals.
These are just 3 minimum steps you need to take to form your strategy plan. Developing a strategic plan will take a great amount of time and effort to prepare your organization for success.
Reason 3: Missed Opportunities
Starting out, you may find it difficult to find additional funding, resources, development, and more. The following are the 3 most often missed opportunities by nonprofits:
Fundraisers v Fundraising: There is a distinctive difference between fundraisers and fundraising. Fundraisers are events or activities that some host and hold, to engage the community in order to raise funds quickly. These activities and events may vary and are held throughout the year. Fundraising is an event that an organization holds annually. These types of events keep your nonprofit sustainable. Typically, you’ll want to invite community members, top donors, and other well-renowned organizations to learn more about your nonprofit, its story, and its accomplishments. Here, you are essentially selling and marketing your organization.
Collaboration & Partnerships: Oftentimes, organizations miss opportunities such as visibility and funding due to working in their own silos. To be successful and sustainable in the nonprofit industry, it’s imperative for organizations to collaborate with other organizations. This leads to both expanding their reach, increasing awareness, and securing more donors, sponsorships, and volunteers.
Grant Readiness: Many believe that once they have received their 501c3 Tax Exemption Status, they are immediately ready to begin applying for grants. This is not the case. There are some important things that should be in place before the grant-seeking and application process.
It’s an exciting time when starting your nonprofit. It’s also a challenge, but one that any nonprofit organization can overcome when the right systems and structures are in place. Innovative Changing Consulting Group (ICCG) can help you with the following tasks to make sure your nonprofit doesn’t fail.
Consulting: The team will assist with developing and implementing strategies and methodologies to elevate your organization. ICCG will reframe its current infrastructure, this includes your board governance, strategic plan, and evaluate your programs and services.
Implementation: Implement systems and structures to ensure the organization can capitalize on every opportunity that presents itself. This includes increasing the organization’s organization’s visibility within communities, funding opportunities, and partnerships and collaborations.
