Economic Lookout: Entrepreneur in a recession

MinnEcon note: JP Rennquist gave us a great look recently at the challenges of being jobless in Duluth and the hope for better days. Today, he gives us a view on trying to start a nonprofit in a lousy economy.

As we’ve written, there’s nothing like a recession to get you thinking about being your own boss. Rennquist shows us why it might not be that easy.

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JP Rennquist | Duluth

I am looking for work. But as someone with an entrepreneurial spirit, I’m also looking to create my own job.

I had worked for many years as a parent educator for dads and I have a wealth of experience, training and connections in that field. So I decided to explore creating a nonprofit called Father Fire, an education program for dads in NE Minnesota and NW Wisconsin.

I assembled an advisory board, we applied for a grant and got it. Father Fire received a demonstration grant from the Lake Superior Initiative.

I think our organization can grow and develop into an actual job for me that pays a living income and allows me to use my skills to help strengthen families in our region.

But we’re definitely not there yet.

Unfortunately, the grant has no funds for actual programming, or even to pay me a small honorarium for my work. So as I have been looking for work, applying for jobs, networking and all of the traditional and not-so-traditional job search activity, I have also been volunteering about 20 hours a week to help build up this new organization.

Survival is a real problem for nonprofits right now. Changes to tax exempt laws, government funding shortfalls and other financial pressures along with a greatly increased need for services could force many nonprofits completely out of business.

The nonprofits most likely to survive are the nimble organizations, that are able to target services accurately and make changes in strategy quickly and smoothly in response to the needs of constituents and demonstrate effectiveness to donors, foundations and other financial contributors those are the groups most likely to survive.

In the “new normal” for nonprofits, small, single purpose organizations like the one I am creating are going to be eclipsed by larger more stable organizations.

My organization is being urged to consider working with a partner, or becoming part of another organization. We aren’t able to access any funds from our demonstration grant until we either incorporate as our own 501c3 organization, or enter into a contract with an existing non-profit as our fiscal agent.

The Catch-22 for a start up is deciding if we want to find a solid, stable nonprofit organization to sponsor our organization or stay small and focused.

On our own we are independent, nimble and adaptable, as part of another organization we can be strong, stable, and more secure in rough waters. This is a tough choice.

At a recent workshop, Reid Zimmerman, a nonprofit trainer, got to the heart of the dilemma. “Nonprofit,” he said, “is an IRS Tax Status, NOT, a management technique!”

JP Rennquist describes himself as “pretty broke” but with a million-dollar view of Lake Superior from his modest home in Duluth’s Central Hillside neighborhood.

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