The Bumpy Road of Nonprofit Creation: An Examination of Start-Up Problems Encountered by Nonprofit Entrepreneurs

Abstract

New nonprofit organizations are formed through a multifaceted process, and along the way, founding nonprofit entrepreneurs are likely to encounter various problems. This research note examines the extent to which 77 nascent nonprofit entrepreneurs encountered start-up problems during the earliest phase of the formation process, what types of problems they encountered, and how these problems impacted their attempt to start up a new nonprofit. The results indicate successful and unsuccessful nascent nonprofit entrepreneurs do not differ in terms of how many start-up problems they encountered. However, the type of the problems encountered had an effect on start-up success; two had negative effects (financial and information problems), and one had positive effects (regulatory problems). Ultimately, many attempts to found a new nonprofit are unsuccessful, indicating a need for researchers and those advising nascent nonprofit entrepreneurs to learn more about start-up problems and how to handle them.