I have started several nonprofits over the years and this article accurately examines the moment birthing begins and the process, from Nonprofit Quarterly.
There is a classic philosophical problem called the “sorites paradox,” or “paradox of the heap”—a version of which goes something like this: A single grain of wheat does not comprise a heap; as a single grain is not a heap, if you add one more grain, you still don’t have a heap; as two grains are not a heap, add a third grain, and you still don’t have a heap; and so on. Following this logic, no amount of wheat added to that first grain can make a heap. While the line reasoning is plausible, it arrives at what appears to be a false conclusion—thus the paradox.
I highlight this philosophical riddle in an article about organizational emergence because it illuminates the difficulty of identifying exactly when enough of something accumulates to allow one to assert that a heap has come into existence. The same applies to new organizations: Is thinking about starting a new nonprofit organization enough to say that a new nonprofit has been created? Is gathering information or talking to people about starting a new nonprofit verification of its existence? How about amassing resources? One could, of course, argue that a nonprofit is born the minute it has been officially registered by the IRS and thus attains formal status—but I would argue that the emergence of a new nonprofit organization is better understood as a process rather than a discrete event or state. Specifically, reducing nonprofit birth to the act of registration is to simplify and ignore critical aspects of the organizing process.
This is not to say that formally registering a new nonprofit is a minor event. Quite the opposite: registration is an important act that establishes boundaries—that is to say, a “barrier condition between the organization and its environment.” As these boundaries coalesce, it is possible for the founder(s) of the new organizations to (among other things) establish routines and procedures, and develop capacities within the nonprofit that allows it to take coordinated action. Still, nonprofit founders do not instantaneously register new nonprofits but rather create them through various actions—many of which take place before formal registration of the new agency occurs. And, in the entrepreneurship literature, the portion of the development process transpiring before any formal entity has been established is often referred to as the gestation or nascent stage of organizational development.
Despite its intuitive appeal, however, the gestation of nonprofit organizations remains a relatively underresearched area—in part because it is hard to identify a nascent nonprofit organization. While there appears to be growing scholarly interest in trying to better understand the earliest phases of nonprofit life, to date the only thing we know is that we don’t know much. This article is organized around a number of observations of the nascent stage, based on my own research and work with nonprofit start-ups as well as on findings from the entrepreneurship and social entrepreneurship literature. My hope is that these observations will serve as an entry point for discussion and debate, and stimulate further research focusing on nonprofit emergence.
Observation #1: The patterns of emergence are exceptionally heterogeneous.
When examining the nascent stage of organizational development, we find that it is not a linear process. We also find that it is exceptionally heterogeneous. In one of the first empirical studies of firm gestation, Paul Reynolds and Brenda Miller examined the conception-to-birth process of over three thousand ventures. They found that many of the ventures did not engage in all of the presumed key events of gestation; in addition, they were not able to detect any particular sequencing of the various actions the ventures took. They also found significant variance in the types of actions taken. In other words, these ventures differed in terms of what they were doing as well as in what order.
But while organizational creation is not a linear process, it remains depicted as one. Recently, I visited the “how to start a new business/nonprofit” section in my local bookstore, and the vast majority of books were organized as manuals, providing road maps or step-by-step instructions on what to do and how and when to do it. And perhaps the most common instruction given to would-be-entrepreneurs that comes out of this literature is to begin by generating a business plan.
Given that there are many unknowns when attempting to initiate a new organization, writing a business plan before moving forward seems reasonable and useful. I have nothing against nonprofit business plans, and planning is indeed a powerful and important process for any organization—but nonprofit emergence is so much more than a plan, and creating a business plan, as we know, is not a necessary condition for starting up a new nonprofit (after all, nonprofits came into being as far back as 1793, as de Tocqueville observed in his account of his visit to the United States in 1831—long before the idea that every start-up needs a business plan became a founding principle). Nor is creating a business plan a necessary condition for start-up success. Plenty of research in the for-profit field has examined the link between business plans and organizational performance, but the evidence to date is inconclusive. In addition, it is often noted how highly successful entrepreneurs, including Steve Jobs, Bill Gates, and Michael Dell, did not write formal business plans before starting their ventures, and many entrepreneurs consider producing a business plan a waste of scarce resources and time that ought to be devoted to more-productive activities. Finally, an underlying assumption of the business plan is that the entrepreneur can figure out most of the unknowns of a new organization in advance—but in today’s dynamic and often uncertain nonprofit environment, making plans can be inherently difficult, and relying on a plan can be unwise if the conditions change. Or, as Mike Tyson put it, “Everyone has a plan—until they get punched in the face.”
The point here is that a business plan is just one of many possible actions a nascent nonprofit entrepreneur may or may not undertake. And taken together, the range, timing, and choices of actions to consider and account for illustrate the difficulties and complexities facing scholars, start-up funders, and policy-makers trying to fully comprehend the birth stage of nonprofit organizations. Clearly, there is more than one way to get through the nascent stage and end up with a new nonprofit organization—and, in order to understand such equifinality, we need to view nonprofit organizational birth as the result of an experimentally oriented rather than linear process.