Deciding to take the leap from organization to nonprofit is exciting, but it’s also costly. Transitioning from a grassroots organization to a 501(c)(3) Certified Charity requires a good deal of paperwork and money, but the payoff is well worth the effort. If you’re ready to take the plunge into the nonprofit world, don’t let costs or red tape stand in your way. These five steps will guide you on how to start a nonprofit organization with no money, including how to become a nonprofit if you’re an informal charitable or social organization.
How much does it cost to start a nonprofit organization?
To get your nonprofit up and running, there are some standard fees you’ll need and want to pay right off the bat. While the costs vary greatly from state to state, these are the general costs associated with starting a nonprofit:
Tax-exempt status fee
Charitable registration fee
The IRS lists all possible nonprofit fees for services on their website, as there are different paths an organization can follow when going through this process. One other major cost to consider is hiring an attorney to help file the paperwork. Filing the nonprofit paperwork on your own can be quite a complex job, and any errors can cause a delay in receiving your nonprofit status so make sure you are fully aware or seek guidance.
Some other potential costs to consider in your business plan as you scale your nonprofit:
- Purchasing a website domain
- Property and auto insurance
- General liability insurance
- Marketing and advertising costs
- Salaries for employees
- Monthly building rent or mortgage
How to start a nonprofit organization: five steps for success
Even though there are quite a few financial costs associated with starting a nonprofit business or organization, you don’t have to go broke trying to make the world a better place. Many organizations start their new nonprofits this same way. When trying to navigate how to start a 501(c)(3), these five steps form a critical resource that can put you on the right path.
1. Create your core values
When researching how to start an organization like a nonprofit, clearly stating your core values is always at the top of your to-do list. Your core values will be the foundation of your nonprofit organization and will inform every decision you make from marketing to membership. So make sure you choose them with care and they reinforce your organization’s purpose. If your passion has driven you to create a nonprofit, then you probably already have a general idea of what your organization stands for.
If you haven’t explicitly defined your core values yet, take some time to question what’s important to your organization, what you admire in other organizations, and what mission you hope to accomplish in the future. For inspiration, search for other similar nonprofit organizations to see how they’ve defined their core values, then see if you can apply some of them to your own nonprofit. You can make some of your values similar to those of other new nonprofits or larger established nonprofits, but your new nonprofit should also have something to make you stand out.
2. Research costs and create a budget
Next up on how to start a nonprofit is to prepare for the necessary costs involved. Because nonprofit registration fees vary so widely from state to state, you’ll have to do some research to find out what costs you can expect for your specific situation. There are countless resources that explain how to start a foundation and what fees that go along with that process. Here are just a few things to add to your list for planning:
3. Start fundraising for startup costs
One of the main reasons a nonprofit organization may delay getting their 501(c)(3) status is because of the costs associated with the process. Thankfully, crowdfunding for nonprofit costs is one of the fastest ways to raise money for nonprofit startup fees. With an online fundraiser, you can reach your network of friends, family members, and volunteers to rally support for funding. You may also be surprised how much support you can get from peer-to-peer fundraisers.
Once you’ve researched how much money you’ll need to get off the ground, create a fundraiser with that goal in mind, and begin sharing it far and wide to get charity donations. While you’re waiting on your 501(c)(3) status, get started with brainstorming charity event ideas to bolster fundraising efforts, and take advantage of in-kind donations to help save on start-up costs. Make sure to read up on fundraising tips and nonprofit fundraising questions you should be asking so you can make the most of your fundraising efforts.
4. Incorporate your new nonprofit
When reading advice on how to set up a nonprofit, you’ll often encounter the need to incorporate your organization. While entirely optional, it’s definitely something you should consider for extra legal protection. Being incorporated may also open the door to larger grants and it makes it easier to apply for tax-exempt status.
Unsure of how to incorporate your nonprofit? You’ll need to first gather board members and form a board of directors, create bylaws, fill out the appropriate paperwork, and pay a fee, among other steps. USA.gov lists five steps to follow when going through the process to receive your articles of incorporation documents.
5. File for a tax-exempt status
The final step in becoming a charitable organization comes down to filing Form 1023 with the IRS. This form essentially requests that the federal government recognize your organization as tax-exempt. The process of filing this form can be tedious and requires that you know your assets and liabilities as well as your revenue and expenses, which is why it’s often helpful to solicit the help of the best attorney you can find. The IRS offers a rundown on the entire process on their website.
How to start a nonprofit with GoFundMe Charity
Starting a 501(c)(3) nonprofit from the ground up is hard work and there are many requirements to meet, but the payoff is immense. If you’re passionate about taking your organization to the next level, sign up for GoFundMe Charity, where you can access advanced nonprofit software with no subscription or platform fees. Powerful customization, robust data management tools, and a solid peer-to-peer platform are just a few of our tools that can help grow your nonprofit and make a larger impact.