How Much Money Do You Need to Start a Nonprofit?

It’s a good thing that social activists start nonprofits with a passion, a purpose and—hopefully—enough bankroll to finance their budding organization. Starting a nonprofit is hard work. Few can cut it, though we’re confident you can. Begin with an inspiring task, like writing your nonprofit mission statement. Knowing why you’re going through the difficult planning and budgeting process may propel you through dreary days.

But after crafting your mission statement, it’s time to settle into the difficult but immensely important financial planning process. Planning for the funds you need to start—and sustain—your nonprofit will save you trouble in the long run (it might even save your nonprofit). Read on to review our list of the fees and finance-related tasks associated with starting a nonprofit.

Plan Like a Business

Nonprofit executives will rightly tell you that a nonprofit is another form of a business. And like a business, you need more revenue than expenses. Create a business plan for your nonprofit so you know where the money’s coming from and where it’s going.

As you budget through your business plan, take a good look at your nonprofit’s revenue streams. Where did your current funds come from, and can you count on them to continue after the nonprofit startup process? The health and longevity of these revenue streams (individuals, the government, grants) need to be on your radar for a stronger nonprofit.

Go Corporate

Before applying to the IRS for tax-exempt status, your new nonprofit needs to incorporate. Becoming a corporation typically involves choosing a legal business name, filing necessary documents with your state’s corporate filing office and creating bylaws to dictate how your organization will be run. The cost of incorporation depends on your state. We recommend comparing costs by state at BizFiliings.

You’ll also need to hold at least one meeting with your nonprofit board of directors and file for any applicable permits your corporation will need to operate legally. It is only after receiving your articles of incorporation (for a fee) that your nonprofit can apply for 501(c)(3) status.

Spend Quality Time with the IRS

Once your nonprofit is a corporation, you can apply for nonprofit status. It’s best to do so within 27 months of incorporating. You’ll receive a letter approving your application, rejecting it or requesting more information. Good news for your nonprofit’s finances—if your income is $57,000 or less you can use tax prep software for free e-filing.Your nonprofit will also need to file Form 1023. The standard filing fee for Form 1023 will cost you $750, but your fee will be reduced by $400 if you don’t expect revenue to exceed $40,000.

The financial considerations involved in starting a nonprofit require a lot of legwork and more than a little paperwork, but you will be rewarded with financial security.

To find exactly how much it’ll cost your organization to get started, as well as five ways to cut your costs (and the three things not to skimp on), check out our Ultimate Budget Guide.

  • We are starting our organization on a shoe string with hopes of having some fundraisers. Our mission is to take in donated vehicles and place vehicles in to the families of the needy or handicapped / needy. We will use the vehicles as is / repair and use or sell. Some we will sell at auction and others as junk. It is obvious we won’t give away more vehicles than we have. We believe we will be making a contribution to our community by supplying some vehicles to the needy and cleaning up junk cars in the community. We are hoping some of the car dealers will make contribution as they could get a tax deduction. We live in a rural area with no public transportation. Now, tell me what chance so you think we have of surviving as a nonprofit.

    • mike280z

      How did this work?? I have a similar idea.

  • Jill Havlat

    Thanks for your comment, Gen. Fundraising will be increasingly important to your nonprofit as you work to provide cars to those who need them. Be sure to check out more of our articles on starting a nonprofit and fundraising to sustain your organization.

  • vincent macias

    we are a basketball team trying to get a non profit tax id number so that we can open a bank acct . we need to know how to go about it and how much it cost

  • Marilyn Daves

    We are a non profit trying to secure a grant for at risk children. we want to build a community center but do not know where to get the funding. Do you know where we canget funding in Memphis, Tn.

  • I am hoping to start a non-profit to help people fight against unfair and illegal debt collection practices. It has become an epidemic and most people don’t even know they have rights against being harassed and/or not even paying the alleged debt. Please join us, like our page and look forward to seeing our website coming soon.

  • FM
  • Slavka Slavik

    Maybe I missed something. But you didn’t answer your own question?

    • State Cost: It depends on the state. California is $100 for C, and $0 for S. Jill recommended going to BizFilings.

      Federal Cost: Depends on your Gross Receipts. This article says “The standard filing fee for Form 1023 will cost you $750, but your fee will be reduced by $400 if you don’t expect revenue to exceed $40,000.” That is inaccurate though.
      From form 1023: The cost is either
      1. $400 for organizations whose gross receipts do not exceed $10,000 or less [sic] annually over a 4-year period.
      2. $850 for organizations whose gross receipts exceed $10,000 annually over a 4-year period.
      For the current user fee amounts, go to IRS.gov and in the “Search” box at the top right of the page, enter “Exempt Organizations User Fees.” You can also call 1-877-829-5500.

      Add State and Federal costs together, and you have the answer to the question.

      • Judith Salyer

        And…arent all filing fees tax deductable??

  • sunflowertumbleweed

    I noticed the same thing. Disappointing!

  • Kerrrrr

    Is the money used to start & maintain the NFP tax deductibe?

    • Randy Hawthorne

      I am not a tax advisor, but in my research on this issue, it’s best to wait to receive donations until you obtain your official 501c3 status to avoid in legal and tax complications. However, you could find a fiscal sponsor (another 501c3) willing to handle the donations on your behalf.

      • Harold Massner

        can you get an existing 501-c for a friend of mine–willing to pay–reply at—Harold.massner@gmail.com

        • Teydam Khunt

          I can help with that Teydaminc@gmail.com

          • Harold Massner

            actually we would like a bullet program—where 5 million stay in u.s bank with administrative hold and generate funds this way

      • Chanel

        what if you already have a 501c3 # but just need to do the rest of the work? Would it still be beneficial in your non-Tax advisor but other position to have a fiscal sponsor during those beginning months to avoid those complications. Let’s say a tribe perhaps which is already exempt 7871 and we are a Native operated nonprofit.

  • Best_Reviews

    So if you think you will be less then 10,000$ and pay $400 , does that mean you must reject anything above that ceiling or just pay another fee later?

    • j7apple

      The standard filing fee for Form 1023 will cost you $750, “but your fee will be reduced by $400 if you don’t expect revenue to exceed $40,000.”

      If you do exceed, great, not much the IRS will do other than “Maybe” say you really should have owed $400 more…but very doubtful.

  • Inna Kostenko

    I Apply for help in to the simple people as I.So folded that for me not when the house was not, I live in a removable accommodation and from 12 I work and everything I try to earn to itself on the not large accommodation.And I live in Ukraine, where not as keeps indoors in general a way to get the accommodation.I have a little desire from little up to know that is house where I will be happy .And I every day come to work in a hope to earn something, that it was enough to pay for an accommodation and on a feed, I do not have a weekend I am ill and now, but on work I go out everything I try to survive in this difficult world.I am awkward to ask you to help me, I understand that is people at that more difficult life, than for me.But if you will want to send to me 10 copecks on an account, then in a quite difficult minute for me due to you it will be on bread and meal. PrivatBank is a number of account 5168 7423 4472 1463,

  • Pete Rock

    i just started couple months ago my business and i spend $40.000 on my equipment but i havent earned anything do i get anything from the irs back ?

    • Stumps More

      This is an old post, but maybe someone will read it. If you have your own business, and a large purchase of equipment, consider deducting over time. Also understand that the IRS has limits on capital investments. This is not tax advice. Just advice I wish I had 7 years ago.

  • Jeremiah Ibrahim sanga

    I am a Nigerian citizen from the northern part of the country ,as a group of four (4) friends we feel and decided to start an organization that will help our youth to stand and start something of there own to be creative and hard work toward achieving there goals and also help the needy,weak and sick once that can not help themselves, starting from our local community to everyone we reach. We hope when we reach the right time to seek for your help you will hear us. Tanks

  • Thanks 🙂

  • I love those people who have a great heart for others. Starting a nonprofit is a kind decision and if you are also thinking of to run a non-profit organization then, just get started here:

  • Jen

    We have a small animal shelter on Roatan, an island off the coast of Honduras. We live on a vacation island, and people are always interested in donating to our cause. We want to become an official nonprofit so that we can receive donations, which we desperately need in order to survive and continue our work. My official residence is in NJ, so we would be registered there.

    Reading all this info is daunting, but I know it is the best and only way for us to continue to help the animals on the island!

  • Minouche N Fenelus

    I desperately want to start a nonprofit organization to help children and families fighting against proverty, hunger, and provide shelter for them.

  • TAXMEDIC

    I HELP START NON-PROFITS. CONTACT ME
    TAXMEDIC911@GMAIL.COM

  • I help NPO’s with grant writing and starting up NPO’s. Email me if you have any questions.
    joneswritingservices@gmail.com

  • Candis

    how much is the general start up to start and form a 501(c)(3) – Youth Football league? I have someone telling the coach that it is $4000 to start one up and I just do not see where that amount is coming from?

    • Bec Collman

      I’ve been doing the research for two years now and its about right.. Its $2000 to file the paperwork and some companies or other non profit organizations coudld help you with it. BUT the costs would have to come out of pocket.. the total is about right.

  • Susan Pierce

    I want to start a nonprofit with horse reçue and teaching disabled children to learn to ride. When they come to visit I want them to be able to spend a weekend on the property, so I want to have like 10 manufactured homes for them and their families to stay. Do I need to be two nonprofit groups or just 1.

    • Chanel

      Just one but develop this idea into an entire program. Give your Program a name like-work with me here, “Horses & Homes are Healers”, for one idea. They stay, they ride, you have volunteers, you request donations, you need to request a board made of dedicated people that are willing to give generously of their time to fundraise with you, run programs and help you in the beginning. You also need to be willing to give uo things and delegate real well, be a good teacher and learn in fact by doing. It’s all a process! But again only one 501 c3, even if you want to use them for kids that come to serve your disabled youth and you’d like to help with trainings, same thing!!!! best of luck.

  • don m

    I retire in three years and would love to start a non-profit. Right now I am starting the business as a for profit business. I did try buying and selling things to donate but found out that I lack real business experience. Im gaining knowledge and have increased my sales and my knowledge of what products have better margins. Not quite to where I want the gross yet but I am much better prepared now. Doing this only part time I cant fully commit yet and I do want to be 100 percent available. So Ive given myself three years to really learn all I can. Im looking forward to the day when I turn this over to a board and turn to them for help in scaling and growing. Im not sure though if it should be kept as a buy and sell for charity or go only for donations of items.

  • Chris Christchild Smith

    Well, I need to start a non profit not
    for my own purpose, but because the Lord came to me on my first visit in Uganda, African this pass January 2017 and told me he wants me to build a Christian village in a part of Uganda called Mubende… Mind you, I don’t have the means or funds it’s going to take to fund this nor so I have to because it’s the Lord’s plan so he will do it himself… After doi g some reaching and putting together the vision/plan the holy spirit gave me, I’ve come to notice that this project is almost 10.million dollars 😲🤤🤦‍♂️…. So a f riwnd of mines told me about the 501ce thing and that maybe we could get a grant to fund this project… I the only thing is that I’m new to all of this and don’t know where to start… If anyone can help in anyway or have any helpful information that I can use that would be very appreciating… Feel free to contact me by email at Chrischristchild@gmail.com
    Thanks in advance and be bless in Jesus name.