You’ve always had big plans to make the world a better place. You might be passionate about causes like the environment, animals, veterans or LGBTQ+. Perhaps you want to start small and implement changes in your local community. However, it takes work to start a non-profit. You are starting a business, which can be a daunting task if you are not familiar with the process. You will have to work through the legalities, filings, and obtaining the funding. How much does it cost to start a nonprofit? What is the nonprofit cost of operation? The answer is: it depends. This guide will give you an estimate of startup costs for your nonprofit.
This world needs nonprofit organizations more than ever. The truth is, it’s not feasible for the government to keep up with every group in need or pressing matter. However, there are several considerations that new nonprofits must consider.
The most fundamental question you should ask yourself is “why”. Why are you starting this nonprofit? Every startup founder needs to be able to answer this critical question. Before you take the next step forward, you must know why you are starting your non-profit.
Be honest and ask yourself, “Does the world need my nonprofit”? Your organization might already exist, or your target demographic is already being served.
Starting a nonprofit is not easy, and it can come with many roadblocks. It is a challenge to establish a new organization and grow it. When done right, this organization will be sustainable and financially stable.
Short answer: it depends. There are several variables that will be able to answer that question. Your business plan should include the funds that you need to create and sustain a nonprofit. There will also be startup costs, including fees, documentation and legalities.
Nonprofits are essentially a business. Much like a business, you will need more revenue than expenses. A nonprofit business plan also includes your budget. This will include reviewing all of the nonprofit’s revenue streams. If you already have current funds, will they continue to be there in the future? How many revenue streams do you already have access to? Any donations or gifts? This is pertinent information that needs to be included in your business plan.
One of the costs that must be factored into nonprofit startups are applying for tax exception status. It typically takes approximately 27 months to go from incorporate to tax-except status. The IRS has a full guide of resources for the tax-exception application process.
Tax exception costs vary depending on your nonprofit. For Nonprofits that raise less than $50,000, it is recommended that you fill out a 1023 EZ form. This form costs about $275. If you need Form 1023, it costs approximately $600.
In order to file as a charitable status, a nonprofit must be an incorporated business. Every state has different laws and costs associated with incorporation. There may even be extra feeds to create a registry or expedite the process. Some states may only charge $30 while other states might cost you hundreds. Many states also charge a fee for being listed on a local registry.
Every business and nonprofit needs insurance. The type of insurance that you need will vary greatly depending on the structure of your non-profit. We recommend general liability insurance. This can cost anywhere from several hundred dollars to several thousand dollars. Every nonprofit needs a board of directors. So, you will also need a board of director’s insurance.
As a new nonprofit, you need to reach a target market. In order to reach the right audience, nonprofits have to create a good marketing plan. It is recommended that new nonprofits set aside about 20% of your budget to marketing. Every nonprofit needs a domain name and a website. It costs around $10-$50 to register a domain name. However, business websites can vary in price, especially if you need add-ons like email marketing integration. If you plan on keeping your nonprofit around for a few decades, you should invest in a quality website. As a rough estimate, you should expect to pay anywhere from $2,000-$10,000 for a professional website.
Every nonprofit 501(c)(3) organization needs funding to survive. Not only will you need funding for starting a nonprofit but you will also need funding to keep it afloat. You will need non-profit funding to do things like run programs, pay salaries, overhead costs or get marketing. In order to attract potential donors, you need to answer the following questions about your nonprofit:
The goal is to convince your donor that your non-profit has the potential to change the world for the better. Some nonprofits have a heartwarming backstory to them, which makes it easier to bring donors in.
There are multiple ways for non-profits to obtain funding. Getting funding involves more than simply asking for donations. This is not the only way raise funding. Ideally, nonprofits should have multiple sources of money. Some of the most common types of nonprofit funding include:
It takes dedication and funding to start a non-profit organization. It is recommended that you work with experienced professionals. They understand the ins and outs of starting and running a 501(c)(3) nonprofit. Protégé Nonprofit Solutions has helped launch over 100 nonprofits. None of our clients have been denied tax except status. Additionally, we offer essential services for both new and existing nonprofits. Some of our services include nonprofit business formation, quarterly consulting, success orientation workshop, and Nonprofit NOW! (New Organization Workshop).
Protégé Nonprofit Solutions, Inc. was founded to help power non-profits. After more than two decades of frontline nonprofit experience, we witnessed nonexistent services offered to start-up nonprofits. This inspired us to offer solutions to non-profits who need assistance growing and getting funding. Get the nonprofit growth strategies you are looking for. We give our clients a unique blend of premium turn-key nonprofit business formation services and couple them with mentorship, education, and direction for your first year.