During today’s conversation on a Modern Nonprofit Podcast, Tosha welcomes Dr. Krystal White. Outside of a Doctorate in Clinical Psychology with a Masters degree in Christian Leadership, Dr. White also has a Masters degree in Mind, Brain, and Education from Harvard University. Needless to say, Dr. White is a skilled professional and we are excited to welcome her! She is the founder of The Executive Shaman and founder of Free Leadership, Inc. The latter is key for today’s conversion as Tosha and Krystal discuss what it takes to start a nonprofit from the ground up.
3 Reasons People Start Nonprofits
Tosha seeks out Dr. White’s perspective on the main reasons nonprofits begin from startup to successes. Krystal shares 3 reasons people may follow this path.
- Need for Positive Impact
People have a desire to have a positive impact for themselves and those around them.
More often than not, people will likely have soft hearts for something in their community that needs to be seen. Dr. White says, ‘How you lead your life impacts those around you. Period. End of sentence. That’s a fact.’ When a life is led positively, then the consequence is impacting the community around them for good, and perhaps one of the main reasons individuals start nonprofit organizations.
- Personal Ambition
A second idea here is that people may believe that if they don’t do it, then no one else will. Or in Dr. White’s words, ‘no one else can achieve it but the person who is willing to set out and do it themselves.’ She curates this to a personal ambition or entrepreneurial spirit inside of someone. They want to create something, so the task or startup becomes very personal to them.
- Transforming Negative Experiences
This idea is rather interesting. Dr. White believes that many people who decide to start a business on their own, could have experienced something negative within other organizations. This overall experience leads them to do it on their own terms in their own way. This also runs parallel with the second idea, Personal Ambition, because ultimately, someone may deal with a negative experience long enough until personal ambition kicks in to make a change.
Tosha pulls us all together with an extremely valid point. The overall theme between starting any form of business, for profit or nonprofits, is the motivation inside of someone and why exactly they want to do it. So the question is, many people seek to start a business, but why specifically a nonprofit organization?
Social Enterprise & Tradeoffs
This is a buzzword that you need to know. Dr. White continues the conversation by pointing out that more and more people want to monetize something that feels like a social mission to them, which is actually termed social enterprise. So, in essence people want to do good, but believe their only route to achieve this is through a 501c3.
Investopedia defines Social Enterprise as, a social enterprise or social business is a business with specific social objectives that serve its primary purpose. Social enterprises seek to maximize profits while maximizing benefits to society and the environment, and the profits are principally used to fund social programs. Or more simply put, a business with social objectives.
Education is a major variable here, because the need that is sought after fulfilling may not necessarily require a 501c3 classification.
For example, Dr. White shares that she decided to take the nonprofit route when starting one of her businesses. After nine to ten months of practice, she began to realize that the exact same model could have been effective under a for profit classification. She learned that many people think this format is the only way to achieve a social mission, but when it comes to what is required of a 501c3 and how they generate revenue, it may be a quicker route to consider a for profit organization.
The goal here is to help bring light to the trade offs involved with starting a nonprofit business.
Tosha shares from her experience that some of the tradeoffs could include sharing intellectual property or assets with the organization. When creating a nonprofit organization, these are things to be thinking through because what’s being created is not individually owned, but rather becomes property of the public.
Another tradeoff to consider is that of answering to a Board of Directors. Their purpose is to help the nonprofit organization succeed and establish standards for the organization to follow. When starting a nonprofit as its CEO, and inviting a board to participate in organization’s decision making, there are sometimes difficulties associated with this. This is absolutely something to consider because although it may be your idea and your business baby, a board is going to challenge you based on standards that are set forth. In short, the tradeoff may be sacrificing the absolute freedom of decision making that comes with a for profit entity.
The Real Cost of a Nonprofit Founder
Landing the conversation under the perspective of costs, Tosha raises a very important question to Dr. White.
‘What have you seen in your experience as the real cost of being a nonprofit founder?’
It’s important to consider start up costs in any business, especially when they require fundraising to get things going. In the nonprofit space, you may find business owners investing their own dollars into the beginning stages of establishing the business. On top of dollars, there is the investment of time and energy. And as you’ll recall, these are more or less donations to a nonprofit because the entity becomes publicly owned once it is established.
With any business startup, the investment of time is required to get the train moving. In for profit start ups, one may understand that they won’t see any dollars for a year or longer, with nonprofit startups this number can be extended much beyond that. Momentum is important as well. Half effort equals half results, so it is certainly a trade off of time to get things going.
Overall, when it comes to starting a nonprofit organization, there are many things to consider. Outside of what it takes, there are more subjective things like burnout and intentionality. Entrepreneurship is a difficult career path because of the short term sacrifices required to get the ball rolling.
When considering starting a nonprofit organization, start by understanding as much as you can. Start with the deep considerations and learning from others’ experiences. Learn the playbook before going out on the field.
In our culture today, so many newcomers are creative and motivated, but may hit burnout or give up too quickly. When taking a more intentional approach, efforts will produce more fruit in the long run. Stick with it!
Tosha and Krystal’s conversation today was less about how to start a nonprofit and more about how to help others consider what it really takes to start a nonprofit from the ground up.
If you are considering this, check out the conversation! You can connect with Dr. Krystal White at krystal@theexecutiveshaman.com or find her on her websites below:
Please be sure to engage with the interview. Whether you enjoy listening to it, reading about it, or watching us on YouTube, make sure you review, share, and engage with A Modern Nonprofit Podcast. You can find Tosha and the Charity CFO team on Youtube or our website, thecharitycfo.com!
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