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How To Start a Nonprofit Organization With No Money

You have a well-researched idea for a nonprofit and are eager for its initiatives to strengthen your community. You're ready to file for your 501(c)(3) tax-exempt nonprofit organization status and get your nonprofit off the ground.

But you don't have any money to get it started. While nonprofit organizations differ from for-profit organizations in their structures and financial approaches, they still require significant startup costs, just like for-profit businesses.

FindLaw is here to help you kick off your nonprofit without any (or at least not very much) of your own money.

You can also learn more at our Nonprofit Organizations section. This comprehensive section contains articles on:

  • How to obtain tax-exempt status
  • The steps to start a nonprofit
  • Strategic planning and fundraising
  • FAQ and more
  • If you prefer to form your business yourself, consider using our trusted DIY business formation tool.

Read on for a brief overview of how to start your nonprofit with little to none of your own money. You must accomplish several things before fundraising as a 501(c)(3), and this page will give you a good idea of where to start.

Note: Each topic below is best explored in-depth with your business attorney and advisers.

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Have a Vision, Have a Business Plan

Put together a plan that will attract helpers and donors. You will only be able to use the following ideas if you have a business plan that thoroughly explains the vision and purpose of your organization. This will help in creating your tax exemption.

You will at least need both a vision statement and a mission statement. A vision statement lays out why you are starting the organization. An organization's mission statement outlines how you will make that vision a reality.

Your nonprofit business plan's statements should speak compellingly about your organization's initiatives to empower and uplift your community. Talk about who or what will benefit from your organization. Be clear about how you plan to address the specific needs and challenges they are facing.

Research How Much Money You Will Need

You can engage in actual fundraising as a tax-exempt organization once you have a business presence and nonprofit status. There is no way around paying a few small fees to the government and no way to speed up the process.

Your attorney can walk you through all the necessary actions to accomplish this — but generally expect to pay around $1,000 to the state and federal government. The process will take several months. You may also have attorney fees.

The good news is you can raise this money from your organization's stakeholders. Just remember to keep thorough records.

Make a List of Potential Donors

List the individuals and organizations you know may want to donate to your cause with tax-deductible contributions. Your solicitation can go to:

  • Family members and friends
  • Small local civic clubs (like Elks Lodges, Lions, women's groups, and faith groups)
  • Local banks — they often have a few dollars to give to local charities
  • Advocacy and community groups, like the National Urban League or Sierra Club
  • Professional associations and alumni groups
  • Local businesses — especially if they're in the neighborhood impacted by your organization

These groups may allow you to make a presentation to promote your cause.

While asking around town about possibilities, talk up your nonprofit to everyone you can. You never know who is looking for the right philanthropic opportunity — or knows someone who is.

Create a Nonprofit Board of Directors

At the top of your organizational structure is an executive director and a board of directors. A board of directors can do at least four positive things for a nonprofit startup with no money:

  • Act as an advisory board during board meetings
  • Give the organization credibility in the community
  • Create contacts for fundraising and finding funders
  • Act as a fundraising vehicle to raise funds itself

To the last point, you can develop a "board giving plan," where each board member contributes a monthly or annual amount to the organization through bylaws. With suitable board membership, this can be the source of the startup capital you will need to pay regulatory fees.

Business Structure

You should consult your attorney about the best way to form your basic business structure. The decision to incorporate may also hinge on whether you obtain a fiscal sponsor (see below).

Becoming a nonprofit corporation is often the safest way to proceed. Your lawyer is the best equipped to handle the incorporation process. They can write your articles of incorporation and file the proper paperwork with your state. Some states require you to form a corporation, while others allow a nonprofit to be an LLC.

This will also allow you to open a bank account. Your first expense should be your business filing fees.

Register With State and Federal Governments

  • For State: Whatever your business structure, most states require a new nonprofit organization to register with the state's secretary of state. This will include the designation of someone as the nonprofit's agent.
  • For Federal: Before you file for your 501(c)(3), you must file an IRS Form 1023 or Form 1023-EZ with the Internal Revenue Service (IRS). This registers your organization with the IRS as a nonprofit. It is required of all charitable organizations. You will also need to apply for an Employer Identification Number (EIN) through the IRS.

Create a Public Presence

You will need to have a distinctive public face to attract donors, associates, and helpers and locate the people you wish to serve. This will direct potential donors and other interested parties to your nonprofit. People need to know that your organization exists and their donations will be tax-exempt before you can begin any programming.

Consider hosting in-person events and virtual information sessions to introduce the greater community to your cause.

Suppose you are on your own. At the very least, you must have a few hundred dollars at your disposal to do the following:

  • Register your nonprofit business name
  • Incorporate with your secretary of state
  • Apply for your tax-exempt status with the IRS
  • Create a website
  • Establish a social media presence
  • Find a physical location or meeting space (if necessary)

Some of these activities will involve various fees. If you want to avoid paying those fees out of your pocket, you will need to raise some money to get off the ground.

Fiscal Sponsorships

One way to start a nonprofit with no money is through fiscal sponsorship. A fiscal sponsor is an already existing 501(c)(3) corporation that takes a new organization under its wing while the new company starts up.

In most states, the sponsored organization (you) does not need to be a formal corporation. This varies from state to state, so make sure to check your state page and speak with a nonprofit attorney first. It can be in any state of organization. Still, this relationship is primarily for startups with little to no financial resources at the beginning.

The sponsored organization is basically borrowing the fiscal sponsor's tax-exempt status. The agreement, which attorneys should put in writing, can provide back-office functions, meeting space, advice, and any budgetary functions, including fundraising and loans.

The sponsored organization can be of any size and be in business for any length of time. Fiscal sponsorship is perfect for short-term projects.

Because fiscal sponsorship utilizes tax-exempt status in the place of the sponsored organization, and because the sponsor handles all the money, the sponsor is taking some risk. You need a good business plan and concrete steps to reach your goals before approaching a potential sponsor. If successful, this can be a great way to get a nonprofit started with little or no money.

Your fiscal sponsor should be a local organization with the structure, skill, and history to accomplish this. An excellent place to look for a fiscal sponsor is the National Network of Fiscal Sponsors.

Even with a fiscal sponsor, you will still need to have a plan, an administration, a mission, and other parts of a nonprofit startup.

Community Grants

Obtaining large grants is a complex process that requires real professional help. However, smaller community-based grants may be easier to apply for and receive. Many major chain stores have small community grants available (like the Walmart Foundation). Ask every big box store if it has a community grant program.

Local small businesses may also give money to the community. Start with nearby businesses with a history of community support or similar missions.

A complete list of federal grants is available at Grants.gov. A comprehensive list of private grants is available at Candid.

Fundraising

Once you have an actual presence, you can engage in online fundraising.

Crowdfunding is an effective and low-cost way to raise money for your nonprofit. Crowdfunding refers to a fundraising method where many people donate money to fund a project, venture, or cause. It is typically conducted through online platforms that facilitate donations from a wide audience, or "crowd."

Many people use GoFundMe for charity startups. Reviewing their requirements will help you better understand the ins and outs of online fundraising. GoFundMe Charity (a separate organization) can also help get your nonprofit off the ground.

Other online nonprofit fundraising platforms include:

PayPal and Venmo now have a nonprofit designation option for you to collect donations online. Even Facebook and Instagram allow you to host fundraisers on their platforms.

You can also organize an event like a charity ball or a fundraising concert. Charge attendees or ask for donations.

Connect With Other Nonprofits

Organizations of nonprofits often give great advice. Connecting with other nonprofits in your area also creates opportunities for collaboration in the future. Start with the nonprofits in your community that align with your mission or have similar goals.

Make these connections by attending community events and online discussions. Consider volunteering at other nonprofits you wish to partner with. This allows you to get insight into their operations and build relationships organically and authentically.

Most states have associations with nonprofit organizations. The National Council of Nonprofits offers a great resource to find nonprofit associations in your area.

Raise Enough Money To Pay Yourself

You'll need to raise enough capital to fund your mission and pay your personnel — yourself included so long as you serve as an executive director and are not on the board of directors.

Include the salaries of all staff in your business plan and fundraising goals. Transparency is key — potential donors should know some of the funds raised will go toward staffing costs, including your compensation.

Sustainable nonprofit organizations need dedicated employees and leadership to grow and secure funding for future initiatives.

Get the Right Legal Help

No matter how you go forward with these ideas for starting a nonprofit, you may need help forming your business. Legal advice from a local attorney familiar with the complex laws you will be dealing with can be beneficial.

Leaving the hard work (like navigating federal and state tax laws) to an experienced business attorney frees up time and energy for you to focus on the mission of your nonprofit.

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