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Yeah, I can’t think of one reason why you should

22 Nov

I could say I’m lazy, but the truth is–I could not finish my thought, I wanted to end the “should I start my own nonprofit” series with a clever “Take arms against a sea of troubles” post that was meant to give you reasons why and tips on how to do it right, but…

Just don’t do it.

I probably shouldn’t say that. There have to be good, legitimate reasons why you’d need to do that, but I haven’t been able to think of any since June. June, people. Since I last blogged, I’ve had a birthday, a friend has gotten a new car, I’ve started a new side business (www.cowgirltreatery.com) that has nothing to do with grant writing and the seasons have changed–on paper. It’s still mostly summer in Texas.

If you don’t agree with me, here is your proof. See, even The Chronicle of Philanthropy thinks it’s a bad idea.

But if you press me, I guess I can come up with a few exceptions. Like…if you have an existing program that outgrows the parent organization. Mission drift may be a good reason to split into a new organization. But let me stress, in this case the project in question has been in operation for some time, has a track record, has been successful.

One example is AIDS Services of Austin, which few people remember started out as Austin AIDS Project, just a little tiny program of Waterloo Counseling Center. This was 1984, when everyone thought we’d have this AIDS thing over and done with soon enough. I wish this had been the case, but seeing the need only growing and seeing that the services needed for people living with HIV/AIDS included, but was well beyond, counseling, some good people created ASA to be able to respond to those needs as they changed and not create mission drift for Waterloo. That transition happened in 1987, and I think ASA has proven its relevance over and over in the past 24 years.

Another example is Con Mi MADRE, which had a fantastic 17-year run as a project of The Junior League of Austin. Back then, it was the Hispanic-Mother Daughter Project, which went from serving 30 girls and their mothers in 1991 to over 700 mother-daughter teams (that’s 1,400 people) last year. Again, the neccesary response was so large that it was not able to be fulfilled by the League, and in fact, association with the League held it back as much as it helped. Many people and funders assume that the Junior League has unlimited resources and couldn’t see why they should support one of their projects. The truth is that the Junior League does not have infinite resources, has irons in many important fires and is full of a bunch of shrewd, money-minded women who can make a dime screech. Me being one of them. We watch our pennies carefully. So spinning off Con Mi MADRE in 2007 was the only way to grow the project, meet community need and create a pool of independent donors and volunteers dedicated to Con Mi MADRE, not just the League.

Another good reason is that perhaps you live in an isolated community and residents lack access to proven models of social services and attempt to access them in other communities, but fail due to barriers like cost or transportation. If you live in the Valley and the nearest domestic violence shelter is in San Antonio, you need to start a shelter. But you have to document that need. You have to follow a proven model, you have to set outcomes and plan how you will track data. You have to have an accounting system. Even if no one requires that of you yet. Because without voluntary accountability, you’re just runing a hobby.

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Whether ’tis nobler in the mind to suffer the slings and arrows of…becoming a 501c3: Part Deux

28 Jun

Alas, poor Yorick did not budget correctly.

Last week I took you to task for thinking of starting your own c3. I questioned motive, intent and frankly–sanity. I do think most people have good intentions when dreaming up the latest way to save the world. So forgive me my skepticism, I just think there is also a healthy dose of naivety that comes with wanting to start a new charity. So let’s talk one more time about hurdles.

M-O-N-E-Y. You’re gonna need money. How much? “Lots” is not the answer. “Eh, probably not that much” also isn’t the answer. The true answer lies in making a realistic budget. It’s a myth that nonprofits don’t run like businesses. They do. They have budgets and financial statements and budget to actuals and people track that stuff monthly and are held to it. Which is more than most people do with their own personal money. So now that you’re wanting to be that top notch charity that operates better than everyone else, you need to start with a realistic line item budget that details all–ALL–the expenses you will incur within a 12-month period. That includes staff (including payroll taxes), rent and utilities, office supplies, mileage, training, advertising (they have to hear about you somehow), phone and internet, equipment (computers, phones and a copier) and whatever inventory or other some such supplies you will expend in direct service to your clients. Add it all up. Wow. That’s a lot. Okay, now start cutting back where you can.

Time. Oh, we don’t need staff! We’ll run it all with volunteers! You sure could do it that way, but I assume you have to eat and pay the mortgage just the same as everyone else. How much of your time will this take? Estimate and then add 30%. Because you won’t just be doing the fun stuff. You won’t just be handing out the food or playing with the kids. Someone has to do bookkeeping, reconcile the bank statements, deal with the IRS to make sure your application for c3 status is okay, recruit and supervise board members and other volunteers and do all the other boring administrative stuff. How will splitting your time between two full time jobs affect your family? Your professional life?

And those volunteers? Where will they come from? You will need more hands than you think you will. Be careful not to expect as much from your volunteer as you do from yourself. This is your dream, not theirs. They may like the services you propose to offer, but the building of a brand new entity to leave a new legacy in your community probably isn’t on their agenda. they just want to make sure all the animals have homes or that all the senior citizens have food. Maybe they don’t want two full time jobs.

Expertise. So you have an adequate cadre of great volunteers–or maybe you do have the bandwith to hire staff. Can they actually deliver the services? Is there anything legally or morally obligating you to deliver services through people who have a certain amount of expertise or even licensure? If you want to have people walk dogs at the shelter, they probably just need a bit or training. If you want to counsel pregnant teens, you’re looking at someone with licensure. Or you better be. What will a licensed social worker run you? Do you need someone bilingual? That’s extra. You don’t want to mess around with this and call it “advising” when it really operates like case management or therapy. Remember? You’re better than everyone else, so act like it.

Data! Mmmmm, good! I love me some client data! It’s the basis of everything you do. So do you have plans for what data you will collect and how you will store and retrieve it? How will you secure it? Data is one of the most important things you’ll spend your time on. It ties directly into money. You have to show what you will track and what outcomes you expect to achieve to be credible to any funder.

Next time? I might just give you some hope.

To be, or not to be a c3–Part I

10 Jun

Where do I even start? Without the eye rolling, that is. Okay, so let me just get it out there front and center that the answer is not always starting your very own nonprofit agency.

These are not decision making tools.

I know, I know–you’d do it better or different or there are people who aren’t being served well or at all or you have this great idea that NO ONE ever thought of or you just know that Bill Gates/Michael Dell/Red McCombs or some other Richey Rich would fund you in a heart beat. Or maybe you buy into the guy in the suit with all the question marks who pops up on late night TV and promises you there are millions in government money going unused and super easy to get with no reporting required.

Allow me to gently burst your bubble. Sadly, it is probably just your opinion/belief/hope that all of the above is true. Much as you want to, you cannot will these things into being.

Pair reality with the fact that there are about 3,000 charitable organizations registered with the IRS just in the Austin area. You gotta lotta comeptition when wooing Mr. Gates/Dell/McCombs.

However, if you are serious about looking into dipping your toe in the 501c3 pool, I suggest you start here, with some advice from the San Antonio Area Foundation. They can talk you down, er, help you decide what to do. But for now, let’s breeze through a quick checklist to help you get your thoughts order.

Who will govern your nonprofit? Your mom and your brother don’t count. You need a minimum number of board members to file for “c3” status. While your organization is in its infancy, you won’t have a large board and they will be do-ers as well as governors. But try to diversify your board so they aren’t all related, otherwise it looks like a vanity project. If your cause is really universal, you will be able to find other people who believe in it, too.

Are you sure you don’t just want to start a business? A nonprofit organization isn’t a way to start a business without paying taxes. There are no stockholders who receive a payout and, unlike a for-profit business, you can’t do whatever you like with it.  It’s a zen creation, both owned by no one and everyone, grasshoppah. You have to remain true to your mission and follow your bylaws and articles of incorporation or you risk losing your c3 status. Meaning all that tax-free revenue you generated? Taxable. So check your intentions. Starting a business isn’t a bad thing. Businesses do good things all the time.

Are you ready to relinquish control someday? If the answer is no, start a business. Because a nonprofit is owned by the public and hopefully you have created it in response to a real and ongoing need, your charity is meant to withstand the test of time. Meaning you can’t and shouldn’t run it forever. If you can never see delegating responsibilities to others or even stepping out someday, then maybe the c3 life is not for you. Your nonprofit should be your legacy, not your life.

More to come. The ugly stuff about budgeting and reality and stuff like that.