I really shouldn’t limit these mistakes to faith-based organizations. Similar challenges exists among all nonprofit start-ups, regardless of their faith or lack thereof. But drawing upon the experience of 30 years in the nonprofit sector in about every conceivable position imaginable, and assisting in the launch of over a dozen agencies, I would like to share some common mistakes I’ve seen along the way. Among the “every conceivable position imaginable” list there is one title I’ve cherished called “pastor,” a position I held for at least 20 years. I guess that’s why I have an affinity to faith-based organizations. Reflecting upon experiences with my Christian community development clients, I’ve noticed 5 common mistakes that start-up agencies may want to avoid.
1) A Quick Launch. Recruiting your initial board of directors, filing the necessary paperwork, including the 1023 application for nonprofit determination status can take as little as 4 months or as long as a year. My experience in fulfilling these regulatory requirements leans closer to a year than 4 months. Registration requirements differ from state to state. Pay close attention and follow all applicable laws. Fulfilling your legal and fiduciary responsibilities is just the first step. Starting a nonprofit is not much different than starting a for-profit business. It takes time to grow. Launching a start-up nonprofit, much like its for-profit counterpart, works more like a crock pot than a microwave. The key to avoiding this mistake is by spending greater time developing the “what” and “why” of your ministry or organizational launch than the “how” and “when.” In other words, take more time developing relationships rather than accessing resources. Take time to talk to others (the community, fellow practitioners, potential supporters, etc.) about the feasibility of a new launch. Explore opportunities to offer services or fill existing gaps through existing structures before launching out on your own. Exercising faithful stewardship in this regard will help stem the rising challenge of duplicating services and programs in ministry and community development work. If the need still exists, use available non-profit, organizational assessment tools during the initial launch to serve as both a guide and benchmark for measuring the organizational health of your organization.
2) Something for nothing. No one is an island when it comes to a nonprofit launch. Eventually, you will need help. And expect to pay for that help. There are wonderful people out there who are more than willing to assist you. If you are fortunate enough to be surrounded by such a cloud of witnesses, except them…welcome them…learn from them. But more often than not, you will need more help to launch a faith-based ministry than you will find within your circle of friends and associates. Do not expect to launch a faith-based, non-profit without start-up costs. And don’t expect everyone to give you everything just because you are “nonprofit.” Join professional associations that provide resources, tools, and support for nonprofits such as your state chapter of the National Association of Nonprofits or the Association of Fundraising Professionals. Formal connections with such organizations are usually membership-based, which means it will cost you a modest fee to join. Most of the services you will need, such as accounting, legal, and fund-raising assistance, may be available and at your disposal. But don’t lean to heavily on a friend-of-a-friend who may or may not have the expertise to provide what you need. Going “cheap” often costs much more in the end than if you had simply reached out to professionals or associations in the sector that specialize in providing support for non-profit organizations.
3) Relying solely on grants for start-up operations. Typically, grants do not pay for the start-up costs. Like in the for-profit world, you will need to give, raise, beg, or borrow the financial support needed to get started. How much do you need? That depends upon such things as your location, mission, goals, and initial support you already have on hand. You may find an exception but grants rarely pay for “brick and mortar” projects such as construction or acquisition of buildings or property. Neither will they pay for full-time salaries before the launch of any programs or services. There are always, of course, exceptions to the rule. But the general pattern is that funders look for existing projects or programs to support, not ones that are “waiting for the money to come in.”
Ethical and experienced grant-writers will not contract based upon the percentage of a grant that may be awarded. They don’t get paid “after the money comes in.” So don’t even ask. What if you don’t get the grant? How is a grant-writer compensated for the work they put in to research, find, and write a proposal? And how do you include the cost, which is an operational expense, in a programmatic budget? How will a grantee respond when they know that a portion of their gift will be used to pay your grant-writer, especially if it’s based upon a percentage of the grant award? It is a standard-industry practice to avoid arrangements based upon a percentage of the grant award.
If you’re launching a faith-based nonprofit, don’t expect to find grants that will immediately fund or underwrite full-time salaries. Grants for small and new agencies rarely include enough funding to support full-time staffing. It takes time to grow to that. Don’t look at a nonprofit launch as a way to supplement your income. And don’t quit your day job just yet! Nonprofit work is about seeking to serve, not to be served. There’s nothing wrong with anticipating or even working towards an opportunity to be compensated for your work, you’ll just want to be realistic about how soon those expectations may be realized. Your agency may grow to the point where it requires full-time staff support, but don’t expect that anytime soon. Unless you were able, on those rare occasions, to secure the start-up capital upfront, you’ll simply have to press ahead with “what’s in your hand.” Needed resources will come with time, the trust of the community, a record of accomplishment, and a clear mission which your community, constituents, and board all support. And resource development strategies for faith-based, nonprofits (new or existing) rarely depend on grants as the sole or primary source of revenue. Typically, financial support will come from individual donations and contributions, rather than grants.
4) Avoid operating your faith-based, nonprofit like a sole proprietorship. In planning the launch of a nonprofit, clarify your role early, especially if you are the “founder.”
(For “founders” only: If you’re interested in making decisions and setting policy, position and align yourself as an initial board officer, typically the president or chair. If you’re interested in managing the day-to-day operations or drawing a salary at some time in the future, consider positioning yourself as an unpaid volunteer or executive director for now.)
One of the challenges in launching a faith-based ministry or organization is that of church leaders seeking to maneuver themselves into roles for which they may not be qualified. Another challenge is seeking to control the elements of a nonprofit launch in which they have little or no experience. It’s often difficult to clarify or synthesize the roles of existing church leadership with its new start-up nonprofit. Like birthing and child-rearing, it’s not always pleasant and painless. Clear boundaries, goals, and objectives need to be defined up front. A process should be in place that allows for natural organizational growth and development to take place. If the “parent” organization, typically a church or group of churches, “weans” the “child” organization too long, it may stifle its growth by becoming too dependent on the parent. If it “lets go” too soon, it will leave the fledgling new ministry or organization defenseless and deprived of the necessary resources to sustain itself for the future. It’s a delicate balance in which no two cases are alike. Oftentimes, throughout the developmental stages, decisions are made based upon personal relationships and other subjective biases instead of sound, personnel management principles and practices. Be sure decisions are made as a body and not by one individual and that the decisions of the body are based upon the long-term interest of the organization. A helpful way to avoid this is by securing the assistance of a neutral or third-party consultant (what I call an “organizational nanny”).
Sometimes spiritual disciplines are substituted for sound business practices. I guess a note of clarity would be in order here: I believe in prayer and the power of prayer. I’ve witnessed it in my own life. But prayer is no substitute for work. Planning and implementing proven standards of accountability in the nonprofit sector will position and sustain your faith-based organization for the future. Power struggles often arise in faith-based organizations or ministries when the founder makes attempts to hang on to power and refuses to delegate responsibility to those more qualified to lead. This situation is not too far removed from the definition of what we call in the non-profit field, “founderitis.” I cannot tell you how many faith-based, nonprofits I’ve come across that struggle with this very issue. Nonprofits are public charities, not sole-proprietorships. They are typically set up to respond to an issue or constituency by providing direct services or advocating in some way on their behalf. And they are always managed by an actively involved and engaged board or through the consensus of a membership that both reflects and respects the mission and values of the organization as spelled out in its organizing and board-approved documents.
5) Using organizational health as a barometer for spiritual health. There may be no correlation between the success or failure or a faith-based nonprofit and your own personal, spiritual journey. If a faith-based nonprofit has seemingly insurmountable challenges or even ultimately fails, it is not necessarily an indication of the lack of faith of those associated with it. And when a faith-based, nonprofit has phenomenal, unimaginable success, that is, by contrast, no indication of proof that it bears the stamp or approval of God.
There too often exists among faith-based practitioners this gnawing, irritating association between the health of the agency and the spiritual health of those associated with it. When things are going bad, faith-based practitioners not only struggle with the existing challenge, but also expend energy on an introspective process that seeks to identify some spiritual flaw that may be contributing to the problem – when no such relationship may exist. In this regard, faith-based leaders often compound the problem by adding guilt to their existing inadequacies.
It is not my purpose to argue a theological treatise on the relationship between sin and its immediate consequences. There are a number of examples in sacred texts to make a case for reaping the consequences of what you sow. What I am suggesting, however, is that in most cases it is a self-defeating exercise. The answer to an organizational problem is an organizational solution, not a spiritual one. Because faith-based organizations are, by their very nature, faith-based, the faulty assumption is sometimes drawn that organizational failure is somehow related to spiritual failure. Here’s a news flash for you…whether the nonprofit is faith-based or not, you’re going to experience challenges along the way. If you have more than one person involved in a project or program and everyone can fog a mirror (to know their breathing!), you’re going to experience misunderstanding and conflict from time to time.
Get over it. Don’t look for mystical, esoteric reasons while ignoring sound, business principles and practices. So have faith. Continue to utilize your God-given gifts. And when you’ve reached the limit of your own capacities, or come across challenges beyond your ability to cope, then simply accept your human fallibility, go to others more experienced and don’t always assume or accept spiritual defeat or lack. It doesn’t have to be a choice between looking to God verses looking to self or others. Do all three, but don’t substitute one for the other.
I hope these five simple admonitions will provide some guidance as you or your ministry team consider a non-profit launch. It takes more than money – it takes patience, sacrifice, prayer, discernment, and a heart open to the advice, wisdom, and counsel of others to make it operational and sustainable for the long-haul.