We all know that money doesn’t grow on trees. If it did, starting a nonprofit would be as easy as planting a money tree. In a world where money doesn’t come quite so easily, starting a nonprofit with no cash can be a challenge. Luckily the task isn’t impossible. These steps will help you determine the needs of your nonprofit and solutions to finding the money necessary to achieve your mission.
Starting a nonprofit: what you need
It’s always good to know what you’re up against before diving into a challenge. Before you file for 501(c)3 status and tax exemption, you’ll need to pay a fee that is dependent on the size of your budget. Since your nonprofit is starting out, the fee shouldn’t be outrageous. If your operating budget is $10,000 or less, the fee will be around $400.
Your organization will have approximately 15 months to file a form 1023, which is a form that assesses your nonprofit’s structure and programs. The form is necessary for 501(c)3 status. The standard fee for most nonprofits starting out will be $850. Additionally, to gain 501 (c)3 status you must be incorporated, and most states charge a fee when you file for incorporation. Once you have filled out the necessary paperwork, it is important to know what you’ll need to file at tax time each year. You might want to review this list of IRS forms for exempt nonprofits.
Trust your mission
Gaining trust and supporters is often put on the back burner until organizations can raise the initial funds to start their nonprofit. Don’t make this mistake or you will end up elongating the process of becoming an official nonprofit.
Trust that your mission can help you earn money by connecting on a personal level with possible contributors. If they know and understand your goal, they will be more likely to help you achieve it. With more volunteers and donors by your side, the process of becoming a nonprofit will seem like less of a burden and more like you already have nonprofit status.
Use the Buddy System
Everything is better with a friend by your side – or in this case another nonprofit. Grant money seems like an easy and obvious option for a nonprofit that is still new. But grant money is not as easily attainable as you might think; especially if you have yet to build up a reputation. Look for a similar organization that can help you get started with finding grants. They will have a list of organizations that gave them grant money that would likely be willing to give to your nonprofit since your missions are similar. The government can also be a great source for nonprofits that need financial assistance. Websites like grants.gov and usa.gov offer places to search for nonprofit grants and funding. From these websites, you can specify which state you’ll be starting your nonprofit in, and find specific funding at the state and local level for your organization.
Finding another organization with a similar mission can be helpful in a variety of other ways besides finding grants, with tips and insight into everything you’re about to be doing. They’ve been through everything already and should be able to guide you. The common interest in your goals will be an instant connection among organizations, meaning you’ll be on the same page.
Don’t focus so much on finding money and then starting your nonprofit. Instead, build your nonprofit as you try to gain 501(c)3 status. If you’re passionate about your cause and people know it, they will, in turn, be excited to help you. But like we said, money doesn’t grow on trees. So, how did your nonprofit handle financial problems when you were starting out? Don’t forget to check out Cause Camp to really dig into starting and maintaining nonprofits in a whole new way.
So how much does it really cost to start a nonprofit? Download the Ultimate Budget Guide and find out.