Does the Age of a Nonprofit Matter?

Given the number of amazing nonprofits being created every day, it can be challenging to decide whether to give to more established institutions or consider funding newer (or “start-up”) organizations with potentially new approaches to addressing complex social issues.

At the Community Foundation of Utah, we have the unique opportunity to work with fundholders to navigate these decisions and help donors create giving strategies that meet their goals.

Our giving facilitation presents donors with engaging thought exercises to begin exploring their giving values. Within your giving goals, if you are unsure about whether to grant to more established institutions or start-up organizations, here are five questions to consider.

 

 1 Are you excited by new ideas and approaches?

Some donors are interested in being at the forefront of innovative solutions to pressing issues in their communities. When a start-up nonprofit emerges, leaders with an entrepreneurial approach to their mission’s programming may be more dynamic and flexible than an established institution with a longer history of set programming. If you are intrigued by pursuing new business ideas in your personal life, you may find granting to a start-up nonprofit a fulfilling experience.

 2 Do you enjoy seeing a project from start to finish?

Donors who grant to start-up nonprofit organizations may have the opportunity to provide initial or seed funding for newer or smaller projects. You may enjoy helping a nonprofit pilot an afterschool program, open a community center, or expand its services to a new geographic area. The opportunity to assist a nonprofit’s start-up programming from inception to goal, and invest as the work evolves, can be a meaningful role for donors.

 3 What about “financial risk” in giving?

Suppose your goal is to ensure every dollar donated is allocated for specific programming. In that case, you may prefer to grant to an established organization with a track record of performance within that programmatic area. Start-up nonprofit organizations are often at the early stages of working to find the best use of their resources, which requires flexibility as they test what is most effective in their programming. Donors who prefer that designated funding not have the potential to be reallocated toward changing areas of need should consider these risks when donating to a start-up organization.

 4 Do you have time to do thorough due diligence?

Performing due diligence on an organization is a worthwhile investment, however, not all donors have the time to allocate toward this process. However, donating to both start-up and established organizations without performing a base level of financial due diligence (i.e. reviewing the IRS Form 990, which is available online) may mean your donation is not deployed as intended. While not all organizations — for profit or nonprofit — are guaranteed to be in good financial standing, donors with less time for due diligence may prefer to donate to long-established nonprofits that have consistently built a credible reputation over time.

 5 What about personal connections to a nonprofit?

If you are considering donating to a nonprofit because of a personal connection to a founder or staff member, consider the grant objectively within the context of evaluating your broader giving goals. Some donors prefer to give based on relationships and will trust in a staff member’s ability to execute a vision based on their prior knowledge and experience together. Other donors may worry that without that staff member, the organization may change course and no longer align with their giving goals. Donors should consider these potential outcomes before donating to a nonprofit based only on a pre-existing relationship.

Want help getting started with giving? Email  to connect with our Philanthropic Services team.