Nonprofits are vital to the communities they serve, no matter how large or small. However, when starting your own nonprofit, you will need to decide whether your organization will be local or national. Read Chisholm Law firm’s blog to learn more.
The Differences Between Local and National Nonprofits
Americans have started over one million nonprofits in the United States to serve their communities. However, not every nonprofit organization is made the same. Some organizations are hyperlocal, while others operate on a national scale.
Local nonprofits serve a much smaller demographic, but they tend to be more involved with their communities. Because they’re much smaller, they provide more opportunities to build positive relationships in the community and within the organization.
They also have smaller budgets, with 88% of organizations spending less than $500,000 a year. Additionally, 92% of all reporting public charities made less than $1 million. Having a much smaller budget enables nonprofits to be more careful with their spending.
Since local nonprofits are focused more on their direct communities, few are well-known. However, you may have encountered them without even realizing it! Here are a few examples of what local nonprofits can be:
- Zoos, museums, and aquariums
- Soup kitchens
- Historical societies
- Wildlife sanctuaries
On the opposite side of the spectrum, national nonprofits serve the entire country. They may have multiple chapters operating in different states and highly professional employees. National organizations can help more communities.
As for scale, about 5% of public charities reported spending $10 million or more. With a larger budget, national nonprofits can better serve an extensive range of people and provide more services for those in need.
National nonprofits are more well-known, so you’re more likely to recognize them based on their names or logos. Here are ten examples of America’s top charities from 2021:
- United Way Worldwide
- Feeding America
- Salvation Army
- St. Jude Children’s Research Hospital
- Direct Relief
- Habitat for Humanity International
- YMCA of the USA
- Boys & Girls Clubs of America
- Compassion International
Now that we’ve established the main differences between local and national nonprofits, let’s look at the benefits and drawbacks of starting a local nonprofit.
One of the core benefits of starting a local nonprofit is connecting the organization and the community. Smaller organizations rely more on volunteers, donors, and other partners, leading to a stronger relationship between a nonprofit and its community.
Small nonprofits also attract people who are more passionate about what they do. Because they’re not driven by funding, there are often higher stakes in accomplishing their missions. Local nonprofits have to be creative and flexible, which creates more resilience.
Local nonprofits also tend to be more efficient. Because smaller organizations require fewer levels of approval, planning takes less time. Faster speed and increased efficiency mean that a local nonprofit can get more done.
Even though local nonprofits have many benefits, they also have several disadvantages. Because smaller organizations primarily rely on their community, they may lack necessary resources. Small nonprofits may not have enough funding or volunteers.
Because small organizations lack access to necessary resources, they may be less likely to succeed than their wealthier counterparts. While it is difficult to pinpoint the exact failure rate of nonprofits, Forbes estimates that 50% of nonprofits are set up to fail.
Another drawback is that starting an organization requires time, effort, and money, especially when factoring in fees for incorporation, tax exemption, and trademarks. Then there is an additional cost of hiring an attorney to help you start your nonprofit.
Now that we’ve discussed the pros and cons of starting a local nonprofit, it’s time to shift our focus to national nonprofits. Let’s discuss some advantages and disadvantages.
Big, national nonprofits are better able to solicit and receive more funding. Because large nonprofits have more name recognition, donors believe that national organizations are more effective – leading to more contributions.
When nonprofits have bigger budgets, they can better invest in themselves to further their mission. They can afford better software, more locations, improved tools, and other necessary expenses. Investing money back into a nonprofit leads to more positive change in the world.
Since national nonprofits tend to have larger budgets and better resources, they can offer their communities a broader range of services. A wide range of resources means that nonprofits can serve more people and ensure that they’re fulfilling their mission.
Starting a national nonprofit does come with a few disadvantages. For one, donors don’t have the opportunity to see how their contribution is being used. They may fail to see how their donation affects others, leading to a lower rate of repeat donors.
A large nonprofit also has more processes and procedures to follow. Because national organizations have increased moving pieces, formal communication is critical to their success. National nonprofits may also have more hoops to jump through for approval.
In addition to lower donor retention and increased bureaucracy, national nonprofits may fall victim to public scandals. More attention is often placed on well-known organizations, which leads to more public scrutiny.
Speak to an Expert
The differences between local and national nonprofits include budget size, measurable impact, and community connection. While we can’t tell you whether or not you should start a local or national nonprofit, we can help you make the best decision for you.
Chisholm Law Firm has helped thousands of people start and grow nonprofits that impact the world. If you want the best for your nonprofit, look no further than Chisholm Law Firm. Our clients have a 100% success rate for nonprofit and trademark filings*.
You can rest assured that your nonprofit is in the best hands and that we’ll get everything done right the first time. Call us today to schedule your free consultation.
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*Past results do not determine future outcomes.