Tuesday, December 20, 2011

Creating A Start-Up Nonprofit Isn't Easy

If you were ever thinking of starting your own nonprofit, take a step back: It's not as easy as it sounds.

In a piece written for The Huffington Post, Marty Zwilling, a start-up expert, explains the complications of starting your own nonprofit.  He explains that although most people looking to create a start-up company see nonprofits as the easy route to success, there's a lot that goes into the process.  This includes a healthy business model, which was recently outlined in an article on The NonProfit Times website.  A nonprofit still has to make money on everything it sells in order to maintain its operating expenses.  This is true even if it relies totally on donations.

All this is not to say that you shouldn't try to make your own nonprofit.  You just need to be aware of some of the challenges that come with it.  Zwelling listed five reasons creating a start-up nonprofit can be a challenge.  Here are a few I found most compelling:
  • You know that 501(c) form you have to fill out to become tax-exempt?  It requires a lot more than just filling out a form, and it can take a long time to be approved.  The form has to be accompanied with a $850 fee, and it can take as long as two years to completely finish.
  • Start-ups require willing investors, and it can be a challenge to get them interested in a nonprofit since it will be hard to guarantee an excellent return on investment.
  • Private start-up companies don't have to disclose their salaries or spending practices to anyone other than the IRS.  Nonprofits, on the otherhand, undergo trememndous public scrutiny.
Make sure to read the rest of Zwelling's points on The Huffington Post.

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