Giving Compass’ Take:
• Fredrik Andersson, writing for Nonprofit Quarterly, discusses observations of the processes that nonprofit entrepreneurs go through before starting an organization.
• Why is it useful to follow an entrepreneur’s process? How can this understanding help funders gauge future effectiveness of a nonprofit organization?
• Read about how funders can support new nonprofit mindsets.
While organizational creation is not a linear process, it remains depicted as one. Last year, I visited the “how to start a new business/nonprofit” section in my local bookstore, and the vast majority of books were organized as manuals, providing road maps or step-by-step instructions on what to do and how and when to do it. And perhaps the most common instruction given to would-be-entrepreneurs that comes out of this literature is to begin by generating a business plan.
Given that there are many unknowns when attempting to initiate a new organization, writing a business plan before moving forward seems reasonable and useful.
I have nothing against nonprofit business plans, and planning is indeed a powerful and important process for any organization—but nonprofit emergence is so much more than a plan, and creating a business plan, as we know, is not a necessary condition for starting up a new nonprofit.
Nor is creating a business plan a necessary condition for start-up success. Plenty of research in the for-profit field has examined the link between business plans and organizational performance, but the evidence to date is inconclusive. In addition, it is often noted how highly successful entrepreneurs, including Steve Jobs, Bill Gates, and Michael Dell, did not write formal business plans before starting their ventures, and many entrepreneurs consider producing a business plan a waste of scarce resources and time that ought to be devoted to more productive activities.
Finally, an underlying assumption of the business plan is that the entrepreneur can figure out most of the unknowns of a new organization in advance—but in today’s dynamic and often uncertain nonprofit environment, making plans can be inherently difficult, and relying on a plan can be unwise if the conditions change.
Read the full article about building organizations by Fredrik Andersson at Nonprofit Quarterly
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