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5 Reasons New Nonprofits Are Just Like Startups

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Published May 25, 2015 Reading Time: 4 minutes

Entrepreneurs and startups are experiencing a resurgence. With small businesses of all kinds popping up around the country, the entrepreneurial spirit is now highly valued in many sectors. Nonprofits, however, are often overlooked in the discussion of launching a new organization and building an audience and impact.

While new apps and technology might get most of the media attention, founding a nonprofit actually has a lot in common with launching a startup. Check out these five ways in which nonprofits embody the entrepreneurial spirit.

1. Nonprofits Have Investors

Both nonprofits and startups need funding to put their ideas into action. Startup founders often court others to invest in their company. If the business continues to grow, the startup may go through multiple rounds of fundraising. Nonprofits usually rely on donations and grants to fund their work. While startup investors support an organization in the hopes of financial return, donors invest in nonprofits in the hopes of a different kind of return: impact.

Despite their differences, startups and nonprofits approach this expectation in a similar way. Most nonprofits produce annual or quarterly reports for donors, summarizing their work and presenting their impact. Startups also produce these reports, intended to show investors that the business is succeeding in its objectives. In both cases, the organization is responsible to their financial supporters and satisfies them with regular updates and metrics.

2. New Solutions

No one starts an organization with the intention to do what has already been done. People start organizations when they have an idea for a new product, service, or solution to a problem. Ride-sharing services like Uber and Lyft were created to provide a faster, less expensive way to get from point A to point B. Transportation isn’t a new industry, but they were bringing a new solution to it. Similarly, people start nonprofits because they want to solve problems, often in innovative, new ways.

The Emilio Nares Foundation began when the founders realized children in San Diego were missing cancer treatments because they didn’t have a ride. Their solution was to send vans to pick up families in need and take them to and from the hospital. Both startups and nonprofits are created to offer new solutions. People may be hesitant to jump on board with these new ideas, but they can revolutionize an industry. Uber now operates in 57 countries. Meanwhile, The Emilio Nares Foundation is expanding their work into Orange County and investigating how to institute programs all over the United States.

3. Must Market Themselves and Build Awareness

One of the hardest parts of gaining a foothold in your sector is simply building awareness and name recognition. Especially when your staff is small and money is tight, organizations have to get creative and work hard to market themselves. Social media is one way both new businesses and nonprofits can take control of their brand and gain exposure. Even if your website isn’t totally finished, new organizations can quickly set up a Facebook page or Twitter account to start connecting with people.

In fact, tapping into social networks is how many apps have gained widespread use. Venmo, a popular finance app that allows friends to easily pay each other back or split bills, spreads quickly because users recruit their friends. Venmo users encourage friends to download the app, so it becomes a regular part of social events.

Peer-to-peer fundraising is one way nonprofits tap into social networks to find more supporters. When someone makes a fundraising page for their favorite nonprofit, they ask friends and family to donate. The organization doesn’t just get much-needed funds, it also gains exposure to new audiences and supporters.

4. Founders Wear Many Hats

You can’t delegate when you’re a one-man shop.

Many nonprofits start as passion projects before they become well-known or expansive. Whether you are starting a food bank or a clothing boutique, starting an organization requires founders to wear many hats and handle a wide variety of responsibilities.

A single nonprofit founder might negotiate partnerships, update social media, develop a website, research their cause, recruit board members, and plan programs over the course of a week. Whether there’s profit involved or not, founding an organization involves a lot of hard work.

5. They Risk Because They Believe

Starting a small business is a big risk. Founders pour time, effort, and money into startups with the knowledge that 90 percent of these organizations will fail. Nonprofit founders do the same, but without the prospect of selling the enterprise for millions of dollars. Wouldn’t it be easier and safer to join a successful existing organization?

Easier? Yes.

Safer? Maybe.

But easy and safe doesn’t change the world.

The founders of nonprofits risk time, money, and sanity because they believe in their cause and they believe in their solutions. Entrepreneurs, whether they make a profit or not, go after their mission because they want to make a lasting impact, and without these small beginnings we wouldn’t have revolutionary businesses and nonprofits like Facebook and charity: water. Founding an organization takes the courage to face the unknown and pursue a dream with no guarantee of success.

The conversation around startups and entrepreneurship has long celebrated the hard work and creativity it takes to succeed, but these qualities are also essential in the nonprofit space. Founders and staff at both startups and nonprofits should look to each other for inspiration and advice. Their shared challenges and experiences lay the foundation for a future in which the worlds of for-profit business and social impact better identify with each other and work together.

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