Social enterprises Startups

Tips for Creating a Non-profit Startup

Startups with a social conscience are hot. For example, Fund Some Fun provides crowdfunding of up to $1000 to give sick children fun items such as an XBox One or a GoPro camera. Florida’s HiveSpace business incubator is devoted to fueling a series of startups that will positively affect the world. And, in the United Kingdom, there are an estimated 70,000 social enterprises.

Nowhere is the spirit of service to others stronger than among military veterans. Many vets wish to build on their military service by continuing to serve others in the civilian world. Often their hope is to create a non-profit organization that will help other vets make a smooth transition to civilian life.

I have been a member of the teaching team for Florida State University’s Entrepreneurship Bootcamp for Veterans with Disabilities (EBV) since the program’s inception in 2008. This free and intensive program helps military veterans with service-related disabilities start their own businesses. In working with the EBV vets, it has become clear that success as a non-profit startup requires developing a good answer to one key question: Why should donors invest their dollars in your organization rather than in some other non-profit?

The competition for charitable donations and sponsorships is fierce. There are far more worthy causes than there are donor dollars available to support these causes. Donors therefore target their money at social enterprises that they believe will provide the strongest return on investment. As a result, non-profit start-ups must have viable value propositions even though they are not pursing a profit motive. The experiences of Juan Charlie and Heather Delta illustrate this point. Although they are actual social entrepreneurs, their names have been disguised.

Juan Charlie had a difficult time navigating the various support programs available to soldiers who are leaving military service. There were so many veterans’ initiatives and each had its own stipulations and nuances. After Juan finally navigated the system to fill his unique needs, he believed – like most aspiring entrepreneurs do – that “there had to be a better way.” Although Juan had no background in advising, he decided to start a non-profit advisory organization. Juan was convinced that his recent experience had given him valuable knowledge that other veterans would seek.

Heather Delta believed that the major problem facing transitioning veterans was the lack of a ‘one-stop-shop’ clearinghouse for information. Furthermore, Heather recognized that each veteran potentially qualified for different programs depending on a number of variables, such as whether he or she had been disabled during service.

As Heather considered different options, she realized that a web-based solution could deliver individualized information given the unique variables surrounding a veteran’s service. Based on her past experience in fundraising, Heather had ideas about how the site could be monetized using grants and donor support. She began crafting a message that clearly identified the problem and then presented her solution. Heather was ready to start raising money.

Both of these aspiring entrepreneurs had their hearts in the right place, but only Heather was destined for success. Heather’s plan centered on constructing a computerized system that would match each veteran’s unique situation to the best fitting programs among the many that are available. Such algorithms are a proven process; they have fueled the success of online dating start-ups such as eHarmony, for example.

Meanwhile, Juan’s plan simply lacked a viable value proposition. The veteran support system that Juan had navigated requires an individualized approach. Juan could not provide such an approach because all he had to build upon was his own idiosyncratic experience. Juan felt he just needed to get the word out and donors would support his gallant cause. However, potential donors could not be confident that supporting Juan would reap strong rewards for veterans.

Serving others is a noble calling and creating a non-profit startup can be a powerful means of service. To stand out among the crowd of social enterprises, however, entrepreneurs must make it clear why donors should invest dollars in their organizations rather than in other non-profits.

 

This article is adapted from Blass, F.R. & Ketchen, D.J. 2014. So, you want to be an entrepreneur? Lessons from the Entrepreneurship Bootcamp for Veterans with Disabilities. Business Horizons, 57, 5-9.