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Why Some Nonprofits Fail

In my work with small nonprofits, I’ve found a common feature in new nonprofits that eventually become successful – they have a strategic plan. They have a board of directors that is passionate and willing to learn, and they have a clear focus of their work and where they want to be in a few years’ time.

If this is what they do, here is what they don’t do –

  1. They don’t “fly by the seat of their pants.”  They know where and when their funding is coming in, how they will operate their programs, what resources are needed in advance, and so on.
  2. They don’t try to do everything at once. Often, passionate founders and founding boards bite way off more than they can chew. Start with one program, get that program going and self-sufficient, then add another program.  In their eagerness to impact more people, they try to operate too many programs simultaneously, and that is a set-up for financial disaster. It is more desirable for success to run one program very well than to run 5 programs poorly.
  3. They don’t have the infrastructure they need up front.  They don’t operate as a nonprofit organization for years without a donor database program, an accounting system, or proper legal documents.
  4. They don’t look at the landscape to see if similar services already exist in their community. They operate in a vacuum without doing their market analysis.

Is your nonprofit set up for success?  I’d love to hear from you if any of the above items are a needed area of focus for your organization.