Once upon a time, there was a middle-aged man named Peter. Peter had a decent job, a loving wife, but he was just not happy. Peter was good at his IT job and had been doing it for years, but what he really wanted to do was open a bakery to sell broccoli cupcakes. Peter loved broccoli cupcakes! They were his passion. He made his family try them, and his wife said they were "OK", and the dogs ate a bunch of them, including most of his wife's. When he mentioned the idea at a party, a couple of his friends said the concept sounded "interesting." (They never said they would purchase any.)

Peter cashed in his 401(K) and sold all the stock he owned to raise startup capital. He incorporated a baking company, and the company leased a storefront in a strip mall. The company bought a lot of equipment and all of the supplies required to bake cupcakes. Bright and early one morning, Peter went to his new store, fired up the oven, and made a huge batch of broccoli cupcakes. He waited. There really didn't seem to be a lot of people around, although the donut store across the street seemed busy. Nobody bought the broccoli cupcakes. A couple of people asked if he had any "regular" cupcakes, and then wandered out when he said, "No." Late that night, he threw out the batch as stale, and the next day, he made a new batch. Nobody bought them, either, even after offering some free samples.

After a few weeks of no business, Peter closed the store. He lost a lot of money. He abandoned his dream. He went back to IT.

Some people will read this and say, "Poor guy. He had a dream and it failed. At least he tried his dream."

Some people will read it and say, "What an idiot! Nobody will buy broccoli cupcakes! That sounds disgusting!"

A business major will say, "He never did any market analysis to determine the feasibility of broccoli cupcakes as a viable product in his neighborhood."

Never assume your passion is a good business idea.

It's the same with nonprofits.

With nonprofits, there is an additional layer of complexity, because if you are trying to provide your products or services to clients that can't afford them, you are not only selling cupcakes, you are selling them to people who are paying so other people can eat them. You need to find people to buy the cupcakes and other people to consume them. (Generally, these people are not in the same neighborhood.)

Nonprofit does not mean "needs no money." Nonprofit means "give us money so we can give stuff to other people and give you a receipt."

Just because a cause is important to you doesn't make it important to other people. The other people provide your funds. If it is not important to them, they won't.

Suppose you think it is very important that millionaires have access to private jets. Who really thinks this is a problem (besides you?) The people that do think it is important (millionaires) already have private jets. So, you may be very passionate about it, but there may not be a lot of support available.

If a cause is important to you, are you the first one to think of it? Nonprofits have competitors, just like regular businesses.

Suppose you think there are a lot of stray dogs around your house, so you want to start a pet rescue. There are a lot of people that think stray pets are a problem in Dallas, where I live. Starting a pet rescue here, for example, you will find there are already literally hundreds of pet rescues, all fighting for the same donors and the same pets.

Before you start your nonprofit, ask yourself:

  • What service am I providing?

  • How many other organizations are already providing the service?

  • How long have the other organizations been in business?

  • How much does the service cost to create and provide?

  • What licenses or permits do I need?

  • Who are my clients?

  • How many are there?

  • How long will a client remain in my program?

  • Where are my clients located?

  • Who are my funders?

  • Where are my funders located?

  • Do I want to run a company?

After you have those answers, determine how much it will cost to run your nonprofit. Are you going to save the world or are you making broccoli cupcakes?