Giving Charity Start-ups a Better Chance at Success

As we start to figure out how to deal with the proliferation of nonprofit organizations in our society, especially when we focus on the problems many of them get into because they are not planned and structured propersly, I think we need to start with the premise that "it's a free country, and anyone should be able to do whatever he/she wants to do." Individual human liberty should not be abridged or constrained, unless the action anticipated is going to cause significant harm to others or to the society generally. But for the good of society, we do generally regulate human endeavor. You can't, for example, keep gaming arcades out of town, but you can use zoning ordinances to regulate where they can or cannot be placed. You can, however, pass an ordinance forbidding something like prostitution or gambling in your town because that action is deemed harmful to individuals and to the society at large. Let's see how we might apply that to charity start-ups in a helpful way without abridging the freedom of individuals to do what they wish to do.

Let's start with what it is we want to accomplish with regard to charity start-ups, then we can deal with how we might accomplish those objectives in a way that gives new charity start-ups a better chance at avoiding fundraising capacity problems down the road.

First, we want to ensure that every charity start-up begins its life with enough of the right strategic ingredients to keep it on an even keel financially and ensure that it will be able to perform its intended mission, thus bringing considerable good works to society over the long run. If and as we continue to think of the nonprofit organization as a public trust, we need to ensure that each one has the best chance of success, and we need, as a society, to ensure that each charity actually accomplishes the mission for which it is created. If we have 20 drunks in town and two de-tox units, are they both doing a good job, and are they working to, but not being pushed beyond, their capacity for service?

Second, we want to discourage the creation of too many new charity start-ups in geographic locations where similar charities have already been set up. We want to avoid duplication of effort, while, at the same time, encouraging new charities to care for needs that have been left unmet. We want to avoid the situation where there are more homeless shelters, or more drug and alcohol treatment facilities than are needed by the target population in a given geographic area. If you have 20 drunks in town, you may not need more than one de-tox unit. So we need information about target populations served by nonprofits vs. the number of nonprofits established to care for various classes of target populations.

Third, we want to help ensure that prospective donors in the community have reasonable clarity about the mission and accomplishments of the charities they are asked to support. We want to know that of the 20 drunks in town, 17 are under treatment and ten of them are now well on their way to getting off and staying off alcohol. So we need readily available information about, and some standards of measurement for, mission accomplishment by the nonprofits currently serving in our community.

Fourth, we also want to help donors easily find the information they need to assure themselves that their gifts will be effectively and efficiently used for the purpose the donor intends. As a member of the general public, can one easily find out how many drunks there are, what proportion of drunks are taking advantage of the de-tox units that exist, and how many are in what stages of treatment? So we need information on target populations, standards of performance, and numbers of charities serving.

Can you who read this think of other objectives that should adhere to a system of regulation for new charity start-ups? If so, let me have your comments. Or if you have objection to talking about regulating charity start-ups, let's have you point of view.