Nonprofit Entrepreneurship is the founding of new nonprofits with the goal of solving important problems. It is a career path that has the potential of creating enormous positive impacts – though carries a high risk of failing (and in some cases, even doing harm). It requires a lot of investment and sacrifice, as well as a wide range of skills to be successful. However, for those that fit its requirements well and are willing to optimize for evidence-based impact, this path could lead to incredible impact. There is also a lot of support you can rely on within the Effective Altruism community.
It covers a wide range of advice, and is likely to be among the most comprehensive sources you’ll be able to find about this career from an impact-focused perspective. It’s the result of considerable internal research, as well as consultation with the following domain experts:
Note that the experts we consult don’t necessarily endorse all the views expressed in our content, and all mistakes are our own.
What do we mean by nonprofit entrepreneurship?
By nonprofit entrepreneurship, we mean the process of founding new nonprofits, also known as “charity entrepreneurship”. People sometimes refer to this path as “social entrepreneurship” as well, though that term has different interpretations by different people so we don’t include it in our terminology to avoid confusion. This profile focuses on the founding of nonprofits. However, we think it often makes sense to decide on your organization’s goals first, and only decide its business model later (nonprofit, for-profit, or somewhere in between). We hope to publish more information on for-profit social entrepreneurship in the future. We also limit ourselves to discussing only nonprofit entrepreneurship that focuses on maximizing impact, relying on evidence, and measuring its work in a transparent and reliable way. We believe that charities that do not live up to these standards can often do more counterfactual harm than good, and we do not recommend starting them.
Finally, the career path of nonprofit entrepreneurship, which can also be called charity entrepreneurship, should not be confused with the similarly named organization Charity Entrepreneurship, which aims to support the creation of highly effective charities, and which we also reference several times in this article.
How promising is nonprofit entrepreneurship?
Potential impact through nonprofit entrepreneurship is a high-risk high-reward business. Though statistics vary by country, it is well known that a significant portion of nonprofit organizations fail and disappear within their first few years. Even worse though, are those that succeed (or at least survive) organizationally while continuing to fail in their actual mission. Famous examples of this include PlayPumps and Scared Straight – two interventions that have been shown to do active harm many years ago, but continue to operate and receive donations. Yet charities don’t have to choose a harmful intervention to do harm. A majority of social interventions have weak or no effect when rigorously evaluated, meaning they continue to waste the resources of both the founders and the donors they fundraise from.
However, we still identify this risky path as one of the most promising that (well-suited) people can pursue – and this is due to the immense positive impact successful effective charities can have. There is no lack of examples to generalize from:
Rob Mather founded the Against Malaria Foundation in 2003, and has since (with only a handful of team members) distributed more than 100 million anti-malaria bed nets, saving an estimated tens of thousands of childrens’ lives.
Of course, many charities have longer term goals, which are harder to measure but may be even more effective. The Good Food Institute founded in 2016, for example, engages in capacity building, law and policy influence, and academic research to promote cultivated meat and plant-based alternatives to animal products. They’re been estimated to be the top organization globally for promoting alternative protein sources, which could significantly reduce factory farming, produce cheaper food, and improve sustainability globally.
While each of these examples (and others) are extraordinary in their field, there are good reasons to believe this incredibly high potential for impact can generalize to future (highly effective) charities. A summary of analyses using multiple methodologies estimates that charity entrepreneurship can be among the most high-impact career paths one could choose, despite the low success rate.
- Potential for truly enormous impact– Not many paths offer such enormous impact as nonprofit entrepreneurship can at its best. Nonprofits have the potential to address critical global problems that are not served well by existing institutions or incentives, and founding the right charity can truly make the difference between whether a project gets off the ground or doesn’t – leading to estimates of enormous direct impact, alongside many paths for indirect impact.
- Good and flexible skills and career capital– Founding your own charity (or any other organization, for that matter) strengthens a wide range of skills – people skills, organizational skills, finances, independence and more. Those skills are also incredibly flexible – nonprofit entrepreneurship itself is relevant to a wide range of cause areas, but even if you decide nonprofit entrepreneurship ends up not being for you – many of these skills are valued in many organizations (for example, other charities).
- Relevant across a wide range of cause areas and moral views- nonprofits are a fairly general tool for advancing causes, and can support operational work, academic research, advocacy, the provision of services and more. As a result, they can be potentially relevant to an extremely wide range of cause areas – and founding one means you can choose the goal you’re advancing. As a result, we expect this path to be relevant to an exceptionally wide range of views on what is important – though they will obviously differ on which charities are most valuable to found.
- Low probability of success– As discussed above, the probabilities of success are lower than most career paths. In addition, there is a genuine risk of doing counterfactual harm – taking lots of resources and spending them on the wrong thing, or in some cases even on actively harmful interventions. Though we believe the expected value of a new charity (focused on effectiveness and transparency) is high, it is far from certain.
- Risk of burnout– Being a founder is an intense role, and this can be exacerbated by the fact that nonprofit founders have to do so for little compensation, and often with the sense that their decisions have life or death consequences. As a result, founding a nonprofit can end up leading to burnout, reducing your impact in the future.
Is it a good fit for you?
Nonprofit entrepreneurship isn’t for everyone. In this section we discuss what you need to succeed as a nonprofit founder, what types of people would be satisfied in this role, and what are some cost-effective ways to practically test whether you’d be a good fit.
What is needed to be successful
Founders are expected to do whatever is needed to make their organization succeed, especially in the early stages. As such, they need to be a bit of a jack-of-all-trades. That being said, the following are skills that are particularly useful for this role:
- Independence and grit– as a founder, there’s no one else to turn to when things get tough. You need to drive your own goals, plan your own processes, and persist when things don’t work time and time again.
- Strong interpersonal skills– a large portion of starting a nonprofit is fundraising, building partnerships, working well with co-founders, and onboarding others. Social skills are a valuable asset in this context, especially being able to motivate others to support your cause in various ways.
- Willingness to work hard– the nonprofit world is a tough space to succeed in, and as a founder it’s much harder to check out for the day. You’ll probably need to work harder than in most other career paths.
- Proactive– you have an action-oriented attitude, are willing to pull a prototype together and test it out even if it’s not perfect (sometimes called an “80/20 attitude”), and are really good at getting stuff done.
Sadly, in the nonprofit space, charities can often succeed organizationally (receive funding, grow, implement their plans) indefinitely, without actually making a big impact. Without good feedback loops, the charity may not even realize this is happening.
As a result, there are a few other characteristics and behaviors that are not necessarily important for the organization receiving superficial success, but absolutely critical for organizational success being translated into real impact:
- Measurement and evaluation– you should be willing to invest a significant amount of resources and attention to measuring yourself to find out what actually works and what doesn’t. You should also make sure your measurements are informative (and not built in a way that would support your current directions no matter what), and listen to the results of those processes.
- Focus on the goal, not the process– charities should be founded to address the problem they seek to solve. Most problems might be better solved within existing institutions like governments, businesses, or existing charities. The additional overhead of a nonprofit is usually justified only if these other options don’t work out. As a result, if you’re starting a charity just to start a charity – you’re not off to a great start. If additionally you find yourself thinking a lot about how to grow your organization for the sake of growth, making sure your nonprofit/intervention looks good regardless of the situation on the ground, or empowering your reputation / social status / career capital, this may lead you astray.
Note that you can use your co-founders to complement your skillset. We discuss this a bit more in Strategies and next steps.
Who would be satisfied in this role
There’s a wide range of backgrounds and personality types that can be a good fit for nonprofit entrepreneurship, but the role does carry some pretty strong constraints on people’s interests and circumstances.
The following are good indications that you might be satisfied founding your own nonprofit:
- You enjoy autonomy, challenging yourself, tackling tough problems, managing your own team, building things from scratch, and the adrenaline of not knowing whether you’ll succeed.
- You enjoy doing many different things (including things that are not your forte) over doing deep focused work in a single professional domain. You have a generalist mindset.
- You are ambitious and want to make a shot at having truly immense impact (over having more confidence in achieving a more modest amount of impact).
- Interested in the messy, hands-on, practical problems of the real world. There’s never enough data, you have to make decisions in real time, and you’re all about implementation.
- You enjoy your work as a major source of fulfillment and joy in your life, even at the expense of other aspects (e.g. moving to a different country, less time for other things, etc.)
The following may be indications that you would not be satisfied doing nonprofit entrepreneurship:
- You are not passionate about your organization’s goals. All entrepreneurs we’ve spoken to agreed the entrepreneurial process can be rough, and you need to be passionate (if not slightly obsessed) to persevere when things are challenging.
- You prefer more focused, professional, or deep work. You’re more excited about research than implementation.
- You are either not good at or strongly dislike interacting with others.
- Uncertainty or failure take an especially large toll on you.
- Having a reliable, steady or large income is important to you for any reason. At least at the beginning, you have to make do with very low incomes. Later on, if you are successful, your salary can get much closer to the market nonprofit rate (which is still significantly lower than for-profit analogues).
- You have other constraints that make you either unable or unwilling to be very flexible in your career – e.g. in terms of working hours or relocation.
- You’re impatient. Despite some common misconceptions, founding a nonprofit and achieving meaningful impact with it takes many years. Though a sense of urgency can be a great trait driving your organization forward, if you’re imagining an impactful two-year venture – you’re likely to be sorely disappointed.
How to test personal fit
Personal fit is really hard to estimate in advance, but gaining practical experience can help. In this section we recommend several cost-effective steps for testing your personal fit for nonprofit entrepreneurship:
- Start a project on your own, without any framework to guide you. This can be a fun personal project, an altruistic venture, self-learning an online course, founding a student organization, starting a local community around an idea you believe in, or other possibilities that are a particularly good fit for you. If you can convince a few friends to join you, even better. You’ll be able to test whether you work well in an unstructured environment, if you’re motivated to stick to it, and whether you enjoy the role of planner / leader / doer-of-whatever-needs-being-done. If your project requires persuading others to help out (by volunteering, donating or in some other way), you’ll also get an opportunity to test a few additional key relevant skills.
- Volunteering or working at a charity will help you understand what the day-to-day really looks like. It is especially useful if you join a fairly small charity, so you can see what the founders are actually doing. It is also especially useful if the charity you joined is in a similar field to the one you want to start. Though we recommend focusing on top charities that you know are effective and well-run, if you want to cast a wide net, many charities recruit employees and volunteers through Idealist.
- Charity Entrepreneurship has an incubation program aimed at generating new highly-effective charities. Applying to the program can help you identify the questions you should be asking yourself, your acceptance result may be an (imperfect) indication of whether you’re a good fit, and even the incubation program itself is a fairly cost-effective way to check if you’re interested – as you can still choose whether to pursue this path at the end of this two-month program.
Priorities within nonprofit entrepreneurship
As mentioned above, nonprofit entrepreneurship can be relevant to an incredibly wide range of problems, fields and cause areas. As such, a good baseline for choosing a priority area within nonprofit entrepreneurship should start within choosing a priority area in general, which we’ve described in this article.
Within that incredibly wide scope though, there are a few considerations that make nonprofit entrepreneurship more or less relevant to the specific problem. You’d usually want to find an area with some market failure (or a government failure) in the problem you’re trying to solve – otherwise for-profit solutions might solve the problem at larger scale and with better feedback loops. You might also want to ask yourself whether there is a systematic reason why this can’t be solved through governmental mechanisms – if it can be, you might want to advocate for those mechanisms, leading to a more sustainable solution with more accountability.
The good folks at Charity Entrepreneurship publish an annual list of top charity ideas based on thousands of hours on research. Each year they choose a few new domains to look into. They try to address some of these with the charities going through their incubation program, but many others remain completely neglected.
Within each cause area, organizations like GiveWell and Animal Charity Evaluators sometimes publish charity ideas they’d like to see implemented. There are also some other lists that don’t fit the bill perfectly, but are still useful for people looking for charity ideas, including YCombinator’s top carbon removal ideas and directions for nonprofits (including program areas they’re excited about), Will MacAskill’s list of Projects I’d like to see, and this extensive list of possible EA meta-charities and projects.
In general, nonprofit entrepreneurship has enough implementation and execution challenges. It is highly recommended to choose an intervention that has been justified by existing cost-effectiveness analyses (whether that’s a randomized controlled trial in domains where that’s possible, or more speculative analytical research where it isn’t).
Finally, in nonprofit entrepreneurship even more so than other paths, we believe some of the best ideas will come from founders’ individual perspectives and expertise. Ask yourself what problems you have a unique understanding of, and what tools can you uniquely bring. Your answer will still need to be thoroughly vetted and tested, but it might still be a better initial guess as to where you can do an overwhelming amount of good.
Strategies and next steps
Among the experts we’ve talked to, there’s some disagreement on how critical it is to gain other types of experience prior to starting your own nonprofit. Everyone agrees additional relevant experience is valuable, though there are conflicting opinions on whether these years of experience are better preparation than founding previous charities (in which case you should do them before diving in), or not as valuable as gaining experience in founding charities (in which case you should dive straight into nonprofit entrepreneurship). That being said, the most useful and relevant experience for this role includes:
- Significant experience within the domain you want to work in. This can include academic experience, public service, or other charities. Note that this is not only valuable for understanding the field, but equally important for building your network.
- Volunteering, interning or working in impact evaluation organizations (such as J-PAL, CEGA, or IPA in the global development space), charity evaluators (such as GiveWell or ACE) or impact-oriented grantmakers (such as the Gates Foundation or Open Philanthropy).
- Volunteering or working in existing charities, to learn how they’re run. It is preferable to join a nonprofit in the domain you’re interested in (for increased relevance), is still fairly small (so you’ll see what the founders’ work looks like), and is effectively run (for obvious reasons). A good signal for the last criterion is if they’re recommended by the top charity evaluators in their domain (e.g. recommended by GiveWell or ACE, or the organizations most supported by Open Philanthropy) – though of course, there are many great charities that don’t fit this criterion.
Preparing to found a nonprofit
A nonprofit is an intense commitment that will be the focus of your life over the next few years – and if things work out, much more than that. So it’s worth doing your homework. This includes:
- Choose the problem you’re working on wisely. A slightly more promising cause area, or one you’re better suited to address, can be more important than hundreds of hours of hard work.
- Reach out and consult with organizations that evaluate charities, and with existing top charities. They’re usually more amenable than you’d expect to providing guidance, and can give you feedback it may take you years to discover yourself.
- The two most important decisions you’ll make any time soon are your intervention and your co-founder(s). Don’t compromise or rush these decisions.
- Understand the domain you’re working in. Get to know existing research, organizations, major funding sources, and interventions.
- Get to know the recipients you’re trying to help (if you’re working in a cause where that’s possible). Live with them, speak to them, try to understand the root problem, and what they’d be interested in.
- Get in touch with relevant experts, and consult with them on how you should tackle the problem. Make sure you’re open to their criticism and advice, and not just trying to defend your pre-chosen path.
- Ask whether a new nonprofit is truly needed, or is this intervention better served by advocating for a governmental solution, a project within a well-established nonprofit or some other alternative. Where is your comparative advantage?
- Finding mentors and advisors you trust is especially important in this role, as being a founder can be a challenging and sometimes lonely role. It’s important to have someone to consult with and get feedback from.
Actually founding a nonprofit
Eventually you’ll have to dive in head-first. Regardless of how much you prepare in advance, when you found your own nonprofit for the first time, you’ll feel unprepared.
We recommend the Charity Entrepreneurships Incubation Program as a good way to get into nonprofit entrepreneurship. They do a great job of going through all of the basics, put you in touch with the heads of some of the world’s most effective charities, and might give you some seed money to get started. Perhaps their most distinguishing feature is their strong emphasis on Effective Altruism principles in their training and methodology. They’re especially a good option if you don’t have much relevant experience in the domain you want to work in, or if you want to learn much more about applying Effective Altruism in nonprofit entrepreneurship.
Other well-known organizations that can support new charities or founders include incubators/accelerators for nonprofits (usually in the tech space) such as YCombinator, Fast Forward, and TechStars, or fellowships such as Echoing Green, Ashoka, Rainer Arnhold, and Insight Fellows.
If you’re committed to maximizing impact and transparency, you can seek funding from sources in Effective Altruism. This could include GiveWell’s Incubation Grants, Open Philanthropy’s Grants, Survival and Flourishing, and the Effective Altruism Funds – depending on your cause area.
A common mistake among inexperienced entrepreneurs is to fundraise smaller amounts than they need. You should aim to fundraise an amount that provides you with enough “runway” to achieve some of your goals or some evidence for promise in your approach before you need to start focusing on fundraising again – which will often mean at least a small number of years.
We’ve also heard warnings against fundraising from personal friends and family. Not only can this complicate your relationships, this prevents you from “failing fast” – i.e. identifying problems with your approach before you invest too much in it.
Excelling in the field
There’s a lot to say on this topic (see our Additional resources section), but here are a few key pieces of advice from the experts we talked to:
- Define clear metrics, measure them, and pivot according to the results. When measuring what you truly care about is hard, invest in identifying and setting up reliable feedback loops as best you can. Relatedly, set up feedback mechanisms (from recipients, advisors and others) that encourage people to give honest feedback.
- Prepare plans with redundancy and flexibility so you’re never dependent on a single person. This applies to a single donor, employee, or collaboration. Plan for the worst and have mechanisms in place to cope with things going wrong.
- In the happy scenario that your nonprofit succeeds, you might find your organization growing (though this is not a requirement or a metric for success). If this is the case – recognize that a good manager of a large team/organization is very different from a good early-stage founder, and you’ll have a lot of adjusting and learning to do. Take the time to learn, practice and adjust accordingly.
- Prepare an endgame strategy – truly large scale impact will often require larger and better-resourced institutions than the nonprofit you’d run. Identify ways in which governments, international organizations, larger NGOs or businesses can adopt your model once you’ve proven it, so your impact can scale beyond your direct influence (and potentially freeing you to seed additional future change).
- Charity Entrepreneurship’s handbook and resources page have some of the best content on impact-oriented evidence-based charity entrepreneurship we’re aware of.
- 80,000 Hours’ interviews with top non-profit leaders has a range of valuable perspectives.
- YCombinator’s online Startup School (or their Stanford course How To Start A Startup) is one of the best resources for entrepreneurs. Not all of it is relevant for nonprofit entrepreneurship, but the parts that are are worth it.
- The Lean Startup is one of the most well-regarded books on how to start a startup (much of which is relevant to entrepreneurship more broadly).
- Epic Measures is a highly recommended book that provides a glimpse into what the process of founding an effective charity looks and feels like.
- The New One Minute Manager. We don’t often recommend learning how to become a manager from a book, but if we did, it’d be this one.
- Masters of Scale is a well-regarded podcast about entrepreneurship.
- Ashoka’s Systems Change Podcast focuses specifically on the systems change approach to social entrepreneurship – a popular approach for creating scalable and sustainable change.
- Changemaking.net has additional resources with an emphasis on the systems change approach.
Resources that are especially useful in global health and development
- GiveWell’s conversation notes are a great in-depth view into what charity founders deal with, and what really matters for evaluating (and therefore achieving) impact.
- Poor Economics provides a good overview of what works and what doesn’t in developing countries, and much more importantly – the methodology for telling them apart.
- The Additional content section of our Development Economics career profile has many additional resources that are relevant to the intersection between nonprofit entrepreneurship and global health and development.