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Starting a nonprofit is an exciting way to follow your passions and take steps to help others. Whether you are creating a charity to feed families or offering pro-bono social services, your nonprofit can change lives and make your community stronger.
However, nonprofit founders are also entrepreneurs, which means they need business acumen to get their organizations off the ground. That means one of the biggest questions on their minds is "How much does it cost to start a nonprofit and how do I raise the funds?"
Your good work is for the betterment of the world, but the dollars need to make sense to be successful. Here's everything you need to know about the financial side of starting your first nonprofit organization.
A nonprofit is just like any company: money flows in and resources flow out. The only difference is that money comes from sources that don't expect products or services in return. Instead, these donors or grant providers expect you to use the money to achieve your goals.
Start by drafting a business plan. There are plenty of templates online, including one-pagers for free that can help you answer questions about what your nonprofit does and how it operates. Catchfire is also a good resource for business development support. Spend some time reflecting on your vision so you can iron out the details of turning your dream into a reality.
Make sure your business plan answers questions like:
These reflections can also help you develop an elevator pitch that will be essential for lobbying for funds, meeting with donors, and applying for grants.
You probably have a good idea of what you want to do every day, but how much does it cost? To start a nonprofit, you'll need to affix a dollar sign to every process to keep expectations realistic. At the bare minimum, you will need around $100 to apply for a business license in your state. However, even that number varies from one region to the next.
Some nonprofits operate on shoestring budgets and only need a few hundred dollars to get off the ground. However, other organizations raise tens of thousands of dollars before they ever open their doors.
Evaluate the services you want to provide and what it will cost to offer them. Include initial operating costs like business licenses and the purchase of equipment, and then add ongoing costs like rent for your offices and payments on fleet vehicles. Consider what funds are necessary and which ones would provide added support.
When budgeting, search for resources like GeekPack® Match and TechSoup that connect nonprofit founders to free and affordable resources. A few smart and modest investments in the right tools and services can pay huge dividends as the organization gets underway.
Finally, remember that your budgeting needs will change over time. Your operating costs may increase as you scale your efforts, which means your fundraising efforts also need to grow. This is all a natural part of running a business.
Consider how you will fundraise for your nonprofit to reach your initial launch goals and to continue operating in the future. Your fundraising plans will reflect your business model and relationship with the community. Here are a few ways to raise money.
Many nonprofit founders use a variety of these techniques, and depending on the space you're entering, you will probably have some great options that make sense for your business model.
If applying for grants is part of your fundraising vision, you need to develop a separate plan for applying and receiving money. You may decide to hire a grant writer who has experience finding grants and writing applications. They can identify grants you are more likely to receive and focus their efforts on getting money for your business.
Hiring a grant writer will make your operations more expensive, but this person also has a measurable return on investment. The salary you pay can bring money into your organization and free up your time for other developmental work.
Founders are always setting goals, whether this means planning for the next month or the next 10 years. Learn how to set SMART goals for the coming quarter and develop a strong vision for the coming years. You can also use the MOCHA method to clarify roles within your organization.
Consider setting aside at least a day each year for long-term strategic planning. You can follow this with quarterly check-ins to align everyone with your goals. This way your team is always growing, even if you get caught in the weeds on occasion.
Creating a nonprofit is a great way to start a project or begin a career you are passionate about. However, you have to develop a detailed business plan with clear financial goals if you want to succeed. Answering "How much does it cost to start a nonprofit?" is an excellent first step because you can create a launch plan, but you also need a long-term vision. Developing plans to apply for grants and scale your efforts over the years can keep you motivated and optimistic about the future.
I'm Lauren Burke, the founder and CEO of both Notehouse and The Poss Lab. I understand exactly how tough it can be getting your project off the ground because I've been involved in nonprofits for most of my career. If you are interested in launching a nonprofit, I'm here to offer you all the resources you need to be successful, including affordable, functional notetaking software that will help you prioritize your people in every aspect of your career.
Learn more about my passion for streamlining the workday, and start making your nonprofit dream a reality!
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