Why I Think More Mission-Driven Founders Should Start Businesses Instead of Nonprofits
When I set out to start my own venture, I knew I wanted to dedicate myself to something where I could have real impact. I’d spent the years leading up to this point as a corporate attorney, a career I enjoyed, but I was itching to work on my own idea.
I also had a vision for an organization aimed at improving diversity and representation in the outdoor adventure space. See, I got into the outdoors later in life: I didn’t go backpacking until my late 20s or climbing until my early 30s. While getting into these hobbies changed my life for the better, it was also an isolating journey. As a woman, as a person of color, and as a beginner adult, there weren’t a lot of communities to welcome me or support to help me learn new skills. I wanted to change that, and when I’d tell people this, they’d immediately say, “Oh, so you’re starting a nonprofit.”
Working at or starting a nonprofit might be the most obvious path for someone like me who wants to make a difference. I did consider going that route, but instead decided to start a for-profit business: Headlamp, a platform for female, non-binary, and gender queer adventurers to find their path outdoors through content, community, and guides.
We make money by taking a transaction fee on bookings made through the site while ultimately supporting instructors in getting more business and individuals in finding community and learning new outdoor skills. Our goal is to start building out features that will help outdoor instructors grow their businesses. We are especially interested in supporting emerging and underrepresented outdoor instructors, who often face the biggest challenges in growing their businesses.
To me, I’ve learned that building a business is a powerful way to serve the community I want to help. Here’s why I think more mission-driven founders should consider starting a business:
I Could Get Started More Quickly
Don’t get me wrong, starting a business is very hard. But, in some ways, there’s a lower barrier to entry when starting a business than there is when starting a nonprofit.
Getting a nonprofit off the ground and continuing to run one involves a lot of administrative hurdles. Registering as a 501(c)(3) is fairly complicated, involving setting up a board of directors and approving bylaws and usually taking many months; registering as an LLC took me a couple of days. When running a nonprofit, there’s a lot of regulation of how you spend your money; as a business owner, I have more control over the day-to-day decisions I make, giving me more flexibility to experiment quickly and pivot based on what I learn.
There’s a good reason for all this: nonprofits serve the public and receive tax breaks, so what they’re doing with their time and money should be scrutinized. But, it’s also easy for nonprofit founders to get bogged down by the paperwork and feel like they never really make the impact they envisioned.
For instance, I’m currently in a fellowship for rising leaders in the outdoors industry where I am the only for-profit business owner—the other fellows often discuss how frustrating it is to spend their days compiling reports and materials for donors instead of directly working with the communities they wish to serve. Meanwhile, I participated in an accelerator earlier this year that was targeted at founders of color who were launching outdoor brands. These profit-seeking businesses are trying to serve the same community as some of the nonprofits, but they’re able to start working toward their mission much faster because they’re not limited by the same regulations.
I Have Access to a Lot More Resources
There’s no beating around the bush here: We live in a capitalist society, and there are simply more resources for businesses.
I experienced this first hand in my early career before becoming a founder: I started in the nonprofit space and then shifted to a more corporate career. I was amazed by the budgets and connections that I suddenly had access to—resources that would have helped immensely in achieving our mission when I was working at nonprofits.
When I was considering whether to start a nonprofit or a business to tackle my vision, I saw the same sorts of limitations for founders. While there are some accelerators and incubators specifically for nonprofits—and some traditional incubators, like Y Combinator, have started to include nonprofits as part of their cohorts—it’s less common to find that kind of support. The fundraising options for businesses are immense, from grants to angel investors to VC money to crowdfunding, whereas nonprofits have to rely on more traditional donors or highly-competitive grants. To help give me the best chance of achieving my mission, I wanted as many resources behind me as possible.
I Have an Opportunity for Self-Sustainability
One of the most exciting things about building a business is the opportunity for self-sustainability based on something we make. Instead of having to go back to donors year after year like nonprofits do, my goal for Headlamp is for the company to create enough revenue to support the business and further the mission.
It’s worth noting that, in some cases, nonprofits are also allowed to sell products or services instead of relying completely on donations. However, the difference in how nonprofits are expected to spend their time and money makes it harder for them to take the time needed to experiment, iterate, and ultimately reach product-market fit. With a mission-driven business, it’s expected that it will take years to perfect the product and truly demonstrate the impact we’re having.
When I do become profitable, I hope to not only support my mission through my business, but also by redirecting some of our profits to related nonprofits. I also hope to reach the point where I can pay myself in my team well, which isn’t typical in the nonprofit space because of tight restrictions about how they spend their money.
I believe that if you’re spending a lot of time on a cause, you deserve to be paid well for it. While it’s just me working on the business right now, when I make my first key hires, I’ll be excited to be able to offer competitive salaries to help attract the best talent to help me achieve my mission, and make sure they feel valued for their hard work.
I Can Still Have a Huge Impact
The best part is, I can have just as much impact as a mission-driven business as I’d be able to as a nonprofit. When I talk to customers who are booking outdoor experiences on my marketplace, they aren’t taken aback by having to pay for this service—they feel seen and excited to have access to something that doesn’t exist for them elsewhere. When I talk to the outdoor guides who can list their services through my business, they connect with me deeply because we’re both small business owners with the same goal in mind: to get more under-served people outdoors.
I’m not trying to say that all nonprofits should be replaced by businesses. For one, some services should be provided for free, and those are probably best served by nonprofits. But more than that, I think there’s room for both types of organizations: Nonprofits who can offer free services, and mission-driven businesses that can move faster and deliver more innovative solutions with the resources behind them.
My hope is that more future founders with a big vision for change they want to make in the world won’t just default to the nonprofit route. Maybe a nonprofit is the right way for you to achieve your mission, but starting a profit-seeking business can be just as powerful of a way to make an impact—if not more so.