(In this post we use the term ‘charity’ generically to include such terms as public good entity, non-profit, registered charity, society, foundation, ngo and so on.)
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Charity work is a “noble cause”; many are attracted to it because of the satisfaction and fulfillment that comes with helping others. Starting a charity may seem like a good idea, but there are a number of reasons why it may not be the best course of action. In this blog post, we will explore (in no particular order) just a few of the reasons why you should think twice before starting a charity.
Startup Costs
One of the biggest hurdles in starting a charity is the (often) significant upfront cost involved. From legal fees to fundraising expenses, starting a charity can easily cost thousands of dollars. In addition, there are ongoing expenses such as rent, salaries, and marketing costs that must be considered.
For many people, these costs are simply too high to justify starting a charity.
Duplication of effort
There are already countless charities of various ilks out there (something like 27,000 currently Registered NZ Charities and 120,000 non-profits) in NZ, each working towards a specific cause or goal. Starting a new charity may mean that you are duplicating the efforts of an existing organization, which can lead to a waste of resources and funding.
Before starting a charity, research the existing organisations in your locality and area of interest and see if there is a gap that needs to be filled. If there is an existing organisation that is already doing similar work, consider partnering with them instead of starting from scratch.
Lack of sustainability
Starting a charity requires time, effort, and resources (a lot of each!), and it can be difficult to sustain in the long term. Even if you are able to raise the funds necessary to start your charity, it can be challenging to sustain it over the long-term. Charities are competing for limited resources, including donations and volunteer time and starting a charity does not give automatic access to funding. With so many worthy causes out there, it can be difficult to attract and retain support. Many charities start off with a burst of energy and enthusiasm, but then struggle to maintain their momentum. This can lead to burnout, a lack of funding, and ultimately, the failure of the organization.
Before starting a charity, make sure you have a solid plan in place for sustainability, including a reliable source of funding, a long-term strategy for growth, and a succession plan.
Administrative burden
Running a charity involves a fair amount of administrative work, including fundraising, accounting, (possibly) legal compliance, and so on. These tasks can be time-consuming and require a lot of expertise, which may not be readily available. If you don’t have experience in these areas, you may need to hire staff or recruit volunteers to handle them, which can be expensive and add to your administrative burden. Administering the charity can divert the time and resources available for the actual work of the organisation.
Consider partnering with an existing organisation that already has the infrastructure in place to handle these tasks, rather than starting from scratch.
Ethical considerations
Starting a charity involves ethical considerations, including how to distribute funding, how to select beneficiaries (financial and/or services provided), and how to measure impact. These decisions can be complex and require a lot of thought and research. If you don’t have experience in these areas, you may unintentionally make decisions that are harmful or ineffective.
Consider partnering with an existing organisation that has experience in these areas, or seek out advice from experts before making any major decisions.
Limited impact
Starting a charity can be a great way to make a difference in your community, but it can also be a limited way to impact a broader issue. Charities often focus on specific areas, (e.g. education, healthcare, the environment, animal welfare, or poverty alleviation, but these issues are often complex and interconnected.
If you want to make a broader impact on a systemic issue, such as income inequality or climate change, starting a charity may not be the best approach. Instead, consider partnering with organizations that are working on these broader issues, or advocating for policy change at the local or national level.
Personal cost
Starting a charity can be emotionally and financially draining, and it can take a toll on your personal life. You may have to put in long hours, sacrifice your own time and resources, and deal with the stress of running an organization. This can lead to burnout and impact your personal relationships and well-being.
Do not rely on being able to draw a payment for services rendered to the charity. This will not be legal unless your founding document (deed, constitution etc) specifically allows (or does not prohibit) board members such as trustees to receive payment for services to the charity, As noted earlier, funding cannot be guaranteed.
Before starting a charity, make sure you are prepared for the personal cost, and have a support system in place to help you manage the stress and workload.
Difficulty Scaling Up
If your charity is successful, you may find yourself facing the challenge of scaling up your operations to meet increased demand for your services. This can be particularly challenging if you have relied heavily on volunteer support or have limited resources. Scaling up can require significant investments of time and money, and may require you to make difficult decisions about how to allocate your limited resources.
Conclusion
Starting a charity can be a rewarding and fulfilling experience, but it invariably bring with it a number of challenges. High startup costs, limited resources, legal and regulatory hurdles, administrative burdens, difficulty scaling up, competition for funding, and the need for specialized expertise are all factors that must be considered before embarking on this journey.
For many people, supporting an existing charity may be a better option than starting one from scratch. By supporting established organizations with a proven track record of success, you can help make a meaningful impact on the causes you care about without the significant challenges and risks associated with starting a new charity.