Although entrepreneurially minded donors would benefit from expert guidance on how to spot the outfits most likely to succeed, there’s been virtually no research on this question. As a scholar focusing on how new nonprofits are founded and develop, I believe two shortcomings in how research regarding nonprofit startups gets done create this gap. And I believe that this problem stands in the way of figuring out why some new nonprofits thrive while others do not.
An obsession with success
Plenty of people like the notion of nonprofit entrepreneurship. This is not surprising, as much of what is said and written about this subjectcelebrates and spotlights success stories, and it’s human nature to revere achievement.
Success stories can certainly boost interest and excitement among nonprofit donors and other stakeholders. But what leads some nonprofit entrepreneurs to succeed and others to fail or just muddle along?
This is what academics call “selection bias” – paying attention to only one of many subsets rather than taking stock of them all. The Swedish entrepreneurship researcher Per Davidsson has eloquently illustrated why selection bias is a big deal with this paraphrased example:
Imagine that researchers want to investigate and isolate the factors that make gamblers successful. If they study only the gamblers who win all the time, they would reach the obviously false conclusion that gambling is always profitable…
A second shortcoming is the inclination to rely on research methods that investigate new nonprofits and the donors who fund them at a single point in time. One way that happens is that researchers rely on surveys that capture a nonprofit’s activities and accomplishments at a single juncture rather than over the course of months, years or decades.
But new nonprofits don’t just emerge out of nowhere. Creating and developing a thriving new nonprofit is a process, as I have explained in Nonprofit Management & Leadership, an academic journal.
Thus, distilling what makes new ventures prosper requires studying how they – and other nonprofits – evolve. Inevitably by their very nature, snapshot studies fail to explain how and why such changes take place.
Further, nonprofit studies seldom capture the earliest phases of new nonprofit activity, even though entrepreneurship and organizationalresearchers have argued what happens during these nascent stages shape organizations and have a long-lasting influence on them.
Consequently, those few scholars who actually try to look into startup dynamics rely on fleeting snapshots resort to asking founders or other key staff, board members and additional stakeholders about earlier events and actions long after they took place. But that approach is prone to another kind of error, memory distortion….(More)”.