Sound business strategies also work for nonprofits

Don’t let the word nonprofit fool you.

Starting a nonprofit organization takes just as much — or more — entrepreneurial skill as starting a for-profit business.

We talked to three local nonprofit founders, who explained the risks and rewards of starting an organization in which the mission matters as much as the bottom line.

“Starting a not-for-profit business can be a daunting task requiring patience, commitment, motivation, passion, drive — and money, of course. It requires basic understanding of the nature of IRS rules pertaining to nonprofits and also crafting a business plan to identify revenues and expenses — just like a for-profit business. While nonprofits receive special tax treatment, they are nonetheless very much a business entity,” said Juergen Kneifel, founder of the nonprofit Mission2Mentor in Lynnwood.

Frederick Lighter, an educational and environmental consultant, has assisted numerous nonprofits in Snohomish County, including the Snohomish Carnegie Library Foundation, agreed.

“All successful not-for-profit organizations, whether large or small, need to understand the impact they wish to make,” he said. “Like a business, you need to understand the organization’s mission and responsibilities, customer or audience, and the resources available.”

Mission and responsibilities

Donna Olson, one of the founders of the nonprofit Take the Next Step, a support organization for at-risk families in Monroe, joined Kneifel and Lighter in emphasizing the need for the uniqueness of the organization’s mission because of the tremendous growth of nonprofits.

In the past 10 years, the number of nonprofits registered with the IRS has jumped from 1.09 million to more than 1.5 million. These numbers don’t include the nine million grass-roots social enterprises not organized as formal nonprofits.

“The mission is everything: it provides direction, it causes donors to feel compelled to support the work and it tells the community at large what you’re up to,” Kneifel said.

Lighter stressed understanding the responsibilities of the future organization.

“Why will this organization exist, and exactly what will this organization accomplish? Furthermore, you must understand how these accomplishments will be different from those already being provided by the organizations which already exist,” he said.

Olson highlighted the need to find others who share your passion for your nonprofit work.

“Take the Next Step is supported by many, many volunteers who share the same passion. Each of us wants to encourage those who struggle in the Sky Valley. Together we are making a difference in the lives of our neighbors,” Olson said.

Audiences

Just like with a for-profit business, the nonprofit entrepreneur needs to understand the needs of their audience or customer.

Kneifel emphasized investing in relationships rather than having a single-transaction mindset, and anticipating and planning for changes in your customers’ preferences.

Lighter advises his clients to think carefully about finding their potential audiences, “those that directly benefit from the services you will provide, those that believe in your mission and will support you even if they do not directly benefit from the services you provide, and those that believe your future organization will be making a significant contribution to the community.”

Resources

Typically, start-up dollars can be more difficult for a nonprofit to raise than for a for-profit.

“You must know what resources you already have, and what resources will you need to find,” Lighter said. “Resources come in many forms — money, people skills, in-kind services, time donated, etc. But plan on doing it yourself, and having sufficient savings to pay the bills while you are getting your organization up and running.”

Kneifel agreed. “In order to start Mission2Mentor, I simply set aside cash reserves that I felt were sufficient to get the process started. I also partnered with my home church to become a ‘mission project,’ a strong endorsement that added credibility and some protection to the organizational startup.”

The support of a volunteer network is equally critical to your success.

“Much of what we offer at Take the Next Step, requires time from volunteers rather than funds: mentoring, being a friend, listening to a new perspective,” Olson said.

The outcome from that kind of work doesn’t translate neatly to a balance sheet. But she, Kneifel, and Lighter all encouraged entrepreneurs to apply their business skills to helping their communities. “Whether you’re operating a not-for-profit, a small business or a thriving multibillion-dollar enterprise, the keys to success remain quite similar … it’s only the scale that changes,” Kneifel said.

Pat Sisneros is the dean of Everett Community College’s Business and Applied Technology Division. Lynne Munoz is the director of EvCC’s School of Business Design. Please send your comments to economy@heraldnet.com.

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