December 15, 2017; Conversation

What is the impulse behind the desire to create a new nonprofit? Is it the same as the urge to create a new for-profit business? Why do some new nonprofits succeed and others muddle along or even fail? Anyone who wishes to partner with a new nonprofit, whether as a donor, a programmatic collaborator, or a government grant program, would want to know what signs to look for. But, according to Assistant Professor Fredrik Andersson, there is scant credible research on the subject.

Andersson, who has written several articles for NPQ and is on its editorial committee, says some very common and very easy mistakes are made when it comes to research about the life cycles and success of nonprofits, and that because of this, we really do not have a good understanding of what makes a successful startup. There are a few basic problems with the research:

  • Researchers have an “obsession with success.” To identify what makes a successful nonprofit, the researchers look only at successful nonprofits. By looking at only one subset, the researchers are assuming that every nonprofit that behaves this way would be successful. Instead, he argues, researchers must look at all subsets, including nonprofits that have failed, to get a less biased picture. Andersson quips, “Imagine that researchers want to investigate and isolate the factors that make gamblers successful. If they study only the gamblers who win all the time, they would reach the obviously false conclusion that gambling is always profitable.”
  • The second issue is that researchers do “snapshot studies,” meaning they look at a nonprofit at only one point in time. This ignores the fact that the creation and development of a new nonprofit is a process that takes place over time. A prime example of this that has recently been covered by NPQ is the story of Growing Power. A few years ago, the founder was awarded a “genius grant” and now the whole nonprofit is in foreclosure.
  • A third issue is “memory distortion.” Since researchers only ask successful nonprofits about their startup phase, it means that the founders have to recall what they did and thought years before, when they were just starting. As we all know, memory is a funny thing; we remember what we wish to remember and it’s not always what really happened.

So, the answer, according to Andersson, is for researchers to engage with a variety of nonprofit startups from the very beginning and to stay with them over time, watching and evaluating what they do and how it works. Studying nonprofit entrepreneurship in this way, he argues, avoids the stilted binary analysis of win-lose/succeed-fail and replaces it with an understanding of evolution and process.

Of course, it’s much easier to find interview subjects willing to talk about successes than their failures. Still, Andersson is clearly right. Perhaps we can encourage investors and prospective partners as listed at the beginning of this newswire to adopt this approach. Using this approach, an investor would stay with the nonprofit over time, helping when it is just an idea and continuing to invest. If something went awry, it would mean identifying and investing in the course correction. It also means investing in the nonprofit entrepreneurial spirit.—Rob Meiksins