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Nonprofits Fail – Here’s Seven Reasons Why – Tracy Ebarb

Tracy Ebarb Nonprofit Fail

Why Do Nonprofits Fail? Does it seem a bit crowded in here?

A few years ago, during his presidential campaign, Dr. Ben Carson made the statement that 90% of nonprofits fail within a few years.  While Dr. Carson’s statement was largely hyperbole, it did call to attention the alarming rate of both nonprofit failure and ineffectiveness. The real data from National Center on Charitable Statistics reveals that approximately 30% of nonprofits fail to exist after 10 years, and according to Forbes, over half of all nonprofits that are chartered are destined to fail or stall within a few years due to leadership issues and the lack of a strategic plan, among other things.

There are currently over 1.5 million tax exempt non profits in the US.

In Texas alone, there are about 106,000 non profits, about 1 for every 4000 people.

In recent years the “overhead problem” has begun to be addressed. The irony is that we did this to ourselves in the first place. Instead of clearly communicating WHY an organization needed money to be invested in overhead, virtually all nonprofits educated donors that money spent on overhead was bad!  We created that story by showcasing that operating on a shoe string budget was a badge of honor.  However, when we do that we are actually perpetuating and encouraging a ‘race to the bottom’ mentality where success is measured by how little we spend, not by the impact we have.

Time and time again, we see research that shows the organizations that invest in technology, talent, and professional development end up making greater gains.  The old adage from the for-profit world, “You have to spend money to make money”, is widely accepted— but not so, in the nonprofit world.  In The Rise and Fail of Charities in the 21st Century, Elsey points out that “Nonprofits should not be having a conversation with donors about how little they are spending.  They should instead be speaking to them about how much impact they are having relative to their budget….It should not be a badge of honor to be proud of operating on a shoestring budget.”

Remember, when you stick with the “Tin Cup” mentality and fear asking for an investment —you’re missing an excellent opportunity to articulate to donors the reason you need them and their funding and how they are helping to increase impact.

Also, don’t forget – 501c3 is a tax status, not a business model.


  1.  Empty Optimism – or Pie in the Sky Dreams (without the proper ingredients to bake a pie)

I’ve seen some of the best, most needed (in my view), and earnest efforts falter and fail because the leaders simply did not accurately calculate the amount of support that would be available and the alliances and partnerships that they would need to support their humble beginnings.  In other words – they lacked a sound business plan upon which to build a platform for success.  The old saying ‘to fail to plan is to plan to fail’ is so very, very true.

  1. Values Vacuum – or Poor Organizational Development

Healthy organizations establish core values that guide the way leaders and staff do business, and how they deal with each other and with outside people and groups at every point of contact. It is far too common for autocratic and self-focused founders to establish one core value: “do as I say.”  These nonprofit heads find it very difficult to transfer authority or to share the limelight and leadership with an empowered team.  There is little internal trust, and insufficient values to guard against abuses of power, privilege, and people.  It is also an environment in which many unethical and even illegal practices can flourish, and often do. These organizations frequently fail in the first generation, and almost never thrive when the leader with all of the chips finally cashes them in.

  1. Competitive Blinders – or ‘we’re unique, there’s no one like us in the market’

Nonprofit leaders and ministry executives are frequently insular and blind to the external changes and “market” forces that will be their undoing. Often it’s because they are so focused on the needs and crises around them.  Or they cannot imagine anyone or anything that would deter them from their righteous ends. And charities are often unfamiliar with, or even repelled by, the notion of “competitors,” so they don’t recognize true rivals or adjust to compete. There is no ability to adjust programs to match changing situations, culture, or competition and to compete for donations, volunteers, media coverage, or program space.  This blindness also manifests itself in the lack of research done to determine if there are other Organizations doing the same thing, with basically the same goals.  This along with a self-righteous notion that “we” can do it better, or the right way, when cooperation, even merging with another Org would be so much more efficient.

  1. Iced Innovation – or the notion that ‘our website is good enough for now’…

Nonprofits must Embrace Technology

Mobile access, mobile devices and the experience on the internet has changed user expectations and has also provided nonprofits with a more level playing field.

Take a look at the businesses that have grown quickly over the past years, innovative companies which are “disruptive” or at least are very different from doing “business as usual.” Apple, Amazon, Netflix, Zappos.  Or nonprofit organizations which leverage technology to deliver on mission, like and

Today’s donors are also today’s online shoppers. So your “competition” isn’t the other charity with a similar mission–it’s Zappos. Today (and tomorrow’s) donors are accustomed to finding and buying what they want, when they want it.

Ask yourself this question: Is your organization set up to allow donors to find and give you what they want to give, when they want to give it? Now pick up your smartphone and see how easily and quickly (or not) you can find your site and make a donation–  because they will not go to a desktop to make a donation or share their affinity for your cause, when the ability to do so is right at their fingertips. It’s what they’re used to.

The good news is that this technology also makes the playing field for causes, more level. Just a handful of years ago, DRTV might have been the most effective way to reach a mass audience—but, due to expense, was only available to organizations with the largest budgets. Today’s technology allows any sized organization the ability to communicate, educate, and engage on a greater scale than ever before—at little cost.

The emergence of the Internet and subsequent online innovations that have changed the world in many ways has made strikingly obvious a business truth that is actually timeless.  If you do not innovate, you will disappear.  If there is no adjustment of creative content, communications, or methods for new times and trends you will miss opportunities, and be judged as antiquated (and perhaps irrelevant). Creative presentation and original thinking buy you another look, enable you to capture attention in a crowded field, and present new ways for people to engage with your mission.

  1. Mission Creep or ‘yeah, we should do that too!’

When a corporation goes beyond its initial product line and area of service, it’s called brand extension.  In nonprofits, we call it mission creep, and because charities are in the business of changing the world, their leaders often cannot seem to stop themselves from seeing every need as a call.  The result is too many directions, no mission clarity, diffused expertise, and donor confusion.

  1. Misplacing Priority #1 – or forgetting who the ‘real boss’ is

At the end of the day, for nonprofit organizations – Money is more important than Mission.  Nonprofits exist to serve and to meet needs on a global scale, and we care deeply for the causes we embrace, often to the detriment of our funders.  A successful nonprofit knows that their #1 Customer is their donors, period.  Without the donors, there would be no impact, no people served, no mouths fed, no backs clothed.  Those we serve are important, but if we really want to have an impact, we must take care of our donors first, we must make sure that our programs are designed to give our donors an opportunity to fulfill the goals they have for their philanthropy, and then constantly communicate to them the impact their dollars are having. And when it comes to taking care of donors, relationships, personal relationships are KING!  No fancy CRM or automated gift response mechanism will ever trump a personal relationship.

  1. The Data Conundrum – or the fear of information

Although many organizations have begun measuring every possible statistic related to fundraising efforts, few have enough data to guide planning, analyze management systems, or redirect underperforming programs or communications. This may be because of the pressure to reduce overhead, or because the entrepreneurial spirit of charity leaders causes them to fly by the seat of their pants, to trust their own (often flawed) instincts.  Also factor in the age-old truism – “there’s paralysis in analysis” – there’s a real and present danger for Organizations who dive too deeply into the studying the data on their donors at the expense of personal relationships.

Common mistakes  of failing nonprofits fit into the categories below.

  • Not Having a Qualified Leader.
    A leader of a nonprofit needs the following traits: A head for business, Desire to do good, Sincerity, Confidence, Goal Setting, Organization Skills
  • No Website Or Poorly Designed Website.
    Make a user-friendly website, avoid bulky language, make sure the contact information is accessible & accurate. Have strong compelling content.  A rule of thumb is make sure nothing is further than “two clicks deep”. Display your mission in a clear area. Have a clear button to donate on every page.
  • Poor Planning and Record Keeping
    No plan of action. A nonprofit is much like a business. There has to be a clear plan to get funding to stay afloat.
  • Poor Accounting and Money Management
    Building a solid capital structure is a key, Keep Strict Money Records, File all Documents & Forms Correctly and on time, Set Aside Seed Money, Spend wisely Evaluate Wants Versus Needs
  • Marketing Only to Large Donors and Not Thinking Smaller Donors are Just As Important
    Small donors are just as important as large donors. Don’t expect donors to maintain or increase the size of their contribution each time they give. Thank every donor in every circumstance they donate no matter how much they give
  • Nonprofit Doesn’t Mean Tax Exempt.
    Know your tax laws and file your taxes.

Ultimately, the real reason nonprofits fail is because they shouldn’t have existed in the first place.

7 Reasons Why Nonprofits Fail was written by Tracy Ebarb, Veteran Fundraiser and the National Association of Nonprofit Organizations & Executives’ International Director. Tracy’s journey in the nonprofit world began in the early 80’s through his service on Church Staff as Youth Minister, Associate Pastor, Church Administrator, Director of Development and Stewardship and Senior Pastor. Tracy joined the renowned consulting firm of Cargill & Associates in 1998, designing and conducting over 60 Capital Stewardship Campaigns raising over $50 million dollars. As an independent Consultant, Tracy has traveled extensively overseas raising funds and working to develop humanitarian projects in the African nations of Sierra Leone, Malawi and Zambia, and the Central American nations of Nicaragua, Haiti and Honduras. As well as consulting and developing Capital Fundraising Campaigns in over 75 churches and nonprofits across the US. Until recently, Tracy has guided the International Bowling Museum and Hall of Fame as the Director of Business Development. He has recently accepted the position of Senior Counselor at Development Systems International.

You can also read Tracy Ebarb’s Donor Recognition – And A Child Shall Lead Them published here at NANOE News.


  1. Roy G says:

    Thanks, Tracy! Good information for a startup! Roy

  2. Brad Rose says:

    This is a very helpful article. I’m going to share it with my mailing list of non-profit organizations.

  3. Gideon A says:

    Thanks Tracy,
    These are profound markers to guide against a downward spiral.

  4. Empty Optimism is really one of the most reasonable reasons why a nonprofit fails. It’s very important to optimistic all the time. Thanks for sharing these.

  5. […] shows that 30% of all nonprofit organizations fail within 10 years. Cash flow is a common problem. As of 2018, approximately half of all charities in the United […]

  6. Royetta Perry says:

    Excellent insight!

  7. Michael R. Lestico says:

    I’m retired now, but I considered doing a non-prof. Glad I didn’t. I would have gone down like the Titanic. Nice job.

  8. […] Tracy Ebarb, National Director of the National Association of Nonprofit Organizations and Executives, believes that nonprofits would be wise to take notes from the corporate sector. Businesses who have innovated and chartered new territory have grown quickly. In the same way, nonprofits who have adopted new strategies and leveraged technology to further their mission have found success. Ebarb goes so far as to warn that “if you do not innovate, you will disappear.” […]

  9. […] actual knowledge from the National Center on Charitable Statistics as soon as revealed that roughly 30% of social and neighborhood well being care organizations fail […]

  10. […] I don’t believe AOs believe/respect most non-profits for the same reason I don’t run a non-profit. Non-profits are hard. They are essentially businesses, and, as such, it is typically CEO types with MBAs who tend to run them. Even with real-ass adults in charge, non-profits fail all the time. […]

  11. […] I don’t believe AOs believe/respect most non-profits for the same reason I don’t run a non-profit. Non-profits are hard. They are essentially businesses, and, as such, it is typically CEO types with MBAs who tend to run them. Even with real-ass adults in charge, non-profits fail all the time. […]

  12. It makes sense when you mentioned that having an unqualified leader can only direct the organization to fail since he or she does not have the right traits to become a good one. It is very disappointing to see some non-profit organizations decide to shut down due to this issue where they have an incompetent leader in the company. Therefore, I would like to think if a non-profit association is thinking of dissolution, it should consider hiring a reliable law firm that can help out with the situation.

  13. […] to failure.  NCCS estimates that 30% of nonprofits fail to exist after 10 years.  Theories abound as to why that is, from leadership and organizational development problems, to mission creep, to […]

  14. […] study stated that around 30% of nonprofits failed after 10 years. With such a high risk of failure, it’s important for nonprofits to […]

  15. Steve says:

    Is there a company out there catering to the technological and/or organizational needs for charities? It would be awesome if there were a service that could take care of the tech and other non-mission-specific functions for these charities so they can focus on their mission. It sounds like they fail because they don’t know how to run a business. Perhaps a vendor that specializes in these admin functions could be of great value.

  16. Curtis Schmitt says:

    I’m curious about your source for this stat: National Center on Charitable Statistics reveals that approximately 30% of nonprofits fail to exist after 10 years.

    Can you provide a link or explain how you calculated that from the data? Thanks in advance.

  17. Elizabeth says:

    Yes, indeed. One needs a clearly defined path…a marketing plan. You can’t just set up a go fund me and expect it all to fall into place and somehow flourish.

  18. […] thirty percent of nonprofits fail to survive after ten […]

  19. […] to data from the National Center on Charitable Statistics, approximately 30% of nonprofits fail to exist after 10 […]

  20. […] Ebarb, T. S. (2019). Nonprofits Fail – Here's Seven Reasons Why. Retrieved from […]

  21. […] Reference: Tracy Ebarb: National Director of the National Association of Nonprofit Organizations & Executives (NANOE)  […]

  22. […] you know that 30% of nonprofits fail to exist within 10 years? It’s a staggering amount, and some suggest it might be even higher than that. While there are a […]

  23. […] power of money.Celebrate where you are now. Resist the urge to paint your vision too large. Over half of all non-profits fail after a few years. It’s not from a lack of ideas or good intentions. The audience base and funding pool are […]

  24. […] proper support and backing, nonprofit corporations often fail. They succumb to power uncertainties, insufficient capital, poor organizational […]

  25. […] 10 years is significant in the life of nonprofits. According to the National Center on Charitable Statistics, “approximately 30% of nonprofits fail to exist after 10 years, and according to Forbes, over […]

  26. […] needs a station to keep its affairs in order. The best way to do that is, of course, an office. This article points out that a non-profit is nothing without its donors. “Without the donors, there would […]

  27. […] are unsustainable. As a sector, our crappy, antiquated hiring practices (#showthesalary) and workplace conditions came under a harsh and unforgiving light this past […]

  28. […] was attacked by a mob of dirty nonprofit tactics without warning. Furthermore, she is attacking us with hate and vitriol. Who would have […]

  29. […] The real data from National Center on Charitable Statistics reveals that approximately 30% of nonprofits fail to exist after 10 years, and according to Forbes, over half of all nonprofits that are chartered are destined to fail or stall within a few years due to leadership issues and the lack of a strategic plan, among via […]

  30. […] The real data from National Center on Charitable Statistics reveals that approximately 30% of nonprofits fail to exist after 10 years, and according to Forbes, over half of all nonprofits that are chartered are destined to fail or stall within a few years due to leadership issues and the lack of a strategic plan, among via […]

  31. To the naive optimist in me, #6 (Misplacing Priority #1) was jarring and disturbing to read. I’m not going to say it’s wrong but I want to try to preserve my innocence by hopefully provoking a little elaboration and conversation on the topic. When I read the following – “we must make sure that our programs are designed to give our donors an opportunity to fulfill the goals they have for their philanthropy” here is my question: When communicating with donors, is the job more about aligning your programs to their philanthropic goals or talking about your programs in a way that convinces them that they fulfill their philanthropic goals? Does that make sense? Full disclosure, I come at this as a musician (I work for a non-profit in music education and mentorship). In the music industry there is a constant fear of “selling” out and good marketing that doesn’t require selling out is about getting people to buy into your music rather than producing music that you think people will like. Is there an analogy here?

    • Pashupati Timsina says:

      Right. Convincing the donors should have been the strategy instead of changing the mission priority. No excuse but, I guess, sometimes NPOs are so down the hole financially that they are forced to accept even when the mission deviates.

  32. […] strong outreach plan is the backbone of a successful nonprofit. Poor planning is one of the reasons nonprofits fail. Outreach makes up a large part of nonprofit campaigns – but how do you create an outreach […]

  33. Dave Zuniga says:

    I was going to make a donation 12-24-21 to this group called the Mexican Cultural Institute of Los Angeles and they never filed any tax returns but solicit donations adn sponsors for years. There are no board meetings, no minutes of meeting and no financial statements when I asked for a copy from the acting director Jose Aguirre. He uses this nonprofit for his wife and their personal gain. I now realize it’s a scam and how do they get away with this? no one has an answer. how do they get away with this?

  34. […] Did you know that 30% of nonprofits fail to exist after 10 years according to the National Center on Charitable Statistics?  […]

  35. […] fail to exist after 10 years, in accordance with the National Center on Charitable Statistics. The National Association of Nonprofit Organizations & Executives (NANOE) declared there are seven explanation why nonprofits fail, together with empty optimism with out the […]

  36. […] some healthy skepticism. After all, one study from the National Center on Charitable Statistics found that 30 percent of all nonprofits cease to exist after ten years, while other data from Forbes […]

  37. […] How many nonprofits fail each year?Approximately 30% of nonprofits fail to exist after 10 years, and over half of all nonprofits that are chartered are destined to fail or stall within a few years due to leadership issues and the lack of experience, among other things(Source: Nanoe 2019) […]

  38. […] the risk of failure is ever-present. The National Center on Charitable Statistics says about 30% of nonprofits dissipate after 10 years. Several years ago, Guidestar reported that about half of all U.S. […]

  39. Rachel Gobingca says:

    In details of your explanation are relevant . It was not easy for me to understand the situation , not getting support for the organisation operations.
    We are having skilled participants with innovative ideas on Arts Culture & Recreation services. Our intention is to showcase our products world wide.

  40. Rachel Gobingca says:

    Our failure is through lack of connection for the supporters who can make us manage to host the activities.
    We have done various creations.

  41. Free consulting and training for worthy non-profits: I am a retired management consultant. I specialized in developing empowered teams for resolving critical tasks. Most of my clients were Fortune 500 companies. I recently lost my life partner after 35 years. My grief is beyond description. I am going back to work as the core essence of recovery. Due to the length of my retirement (20 years) and my age (a robust 87), it is too late for me to rebuild my career in the for-profit arena. I plan to offer leadership and process-improvement teambuilding to nonprofit organizations pro bono. I am not after money. I need to make a difference for organizations that truly serve a worthy cause. I welcome feedback and would especially appreciate a few referrals. Thank you.
    Frank Koehler

  42. […] over a decade ago has now evolved into one of the top promotional brands in Memphis, TN. National Center on Charitable Statistics, 30% of nonprofits fail to exist after ten years. Given that this nonprofit was bootstrapped and now operates at a 2 million dollar annual budget, I […]

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