How to Start a Nonprofit Organization With No Money
Have you found a cause that you feel passionate about and want to start a nonprofit?
That’s great, but if you don’t have the funding to get it off the ground, you may feel disheartened and unsure of where to begin. The good news is, it is possible to start a nonprofit organization without any capital, and in this article, we’re going to show you how.
We’ll cover tangible tips to start a nonprofit organization and what to avoid, starting with the basics. Before long, you’ll be ready to start fundraising and making a difference, putting your passion to work.
What is a Nonprofit Organization?
Nonprofit organizations are organizations that exist not to turn a profit but instead to help advance the greater good. Typically, they are founded around a higher purpose, and that could include community issues, social causes, human, animal, or environmental rights, and so much more.
Nonprofits can be charities, associations, clubs, membership organizations, and advocacy groups. According to the IRS, there are actually 27 different types of nonprofits, but only five offer tax deductions for donations, which can make a huge difference for your donor base.
501c1, which are corporations that were organized under a formal Act of Congress.
501c3, which are organizations that support education, religious, scientific, public safety, literary, sports, human and animal rights, and additional charitable causes. (This is what most people think of when they think about nonprofits.)
501c8, which are fraternal societies and associations that benefit the greater good.
501c10, which are domestic fraternal societies and associations.
501c13, which are cemetery companies.
There are some nonprofit organizations that could potentially qualify for tax deductions, depending on the circumstances of the donations. These include civic leagues, social welfare organizations, local employee associations, and organizations for past and present members of the armed forces.
As a nonprofit owner, you can receive a salary; however, the majority of your revenue is pumped back into your operations, helping to fund new activities to continue to make a difference in the community in ways that only you can.
Why Should You Start a Nonprofit Organization?
Starting a nonprofit is not for the faint of heart!
You begin with an idea, driven by passion and a dream to make a difference, but then you’re faced with a lot of harsh realities. There are a lot of obstacles you need to overcome, but once you do, it’s all worth it.
That’s why starting a nonprofit organization is so important. You can make a difference in the lives of so many, inspiring brighter futures for those around you and leaving a positive impact for the next generation.
The most important reason you should start a nonprofit organization is because you have identified a gap in the field.
For example, there are dozens of organizations that help connect job seekers with opportunities. When Dress for Success first started operating in 1997, they realized that women not only needed help getting interviews, but they also needed assistance looking the part.
To help close the gap, they started to organize clothing drives, teach hair and makeup tips, offer interview prep, and more. They offered a full suite of services to help economically empower women, and that’s what has kept them going for over two decades.
So as you’re looking to start a nonprofit organization, you have to not only find a cause you’re passionate about but also identify ways that you can do something better or different than what’s out there currently.
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7 Steps to Start a Nonprofit Organization With No Money
Now that you have an idea, it’s time to put it all to paper and get your nonprofit off the ground. Here are seven things to look out for when starting a nonprofit organization.
1. Create a Business Plan
Creating a business plan and organizing a strategy will give you a clear focus as you look to start operations. Your plan should be clear and concise, and here are some quick tips to get started.
Pick a name and set mission, vision, and values statements. These will act as your guiding light, and all your organization’s actions will uphold these statements. Don’t be afraid to dream big, but also make them actionable and attainable.
Create a style guide. Mock up a sample logo or color palette. Establish a clear idea of your brand’s identity. This will be your brand’s first impression.
Identify what programs and services you want to offer. Conduct a market analysis to identify industry standards and where you’ll fit in.
Mock up a sample budget, and don’t forget to include your salary.
Once you have a clear idea of your nonprofit's overall structure and operations, create an executive summary.
All of this should be organized into a clear business plan that you can present, so make sure that it’s polished and ready to go. You’ve only got one shot to make a good impression, so put your best foot forward.
2. Raise your Startup Capital
While you can learn how to start a nonprofit organization with little money, you do eventually need money to start operations. Once your business plan is in place, you’re ready to start raising capital.
If you plan on creating a board of directors, you can solicit donations from them to help cover your expenses, as well as partner with a fiscal sponsor to help guide you through the funding process.
Many people in your personal and professional network may also write checks to help get you off the ground, so don’t forget to think creatively about your funding. Just because you don’t have the capital to fund a full year’s operations out of the gate doesn’t mean that you can’t start somewhere.
3. Establish a Board of Directors
A board of directors helps guide your organization. They provide strategic oversight, ensuring all you do furthers your organization’s mission. Your board helps keep you accountable and is essential to your organization’s overall health and well-being, both from a financial and operational perspective.
Additionally, as we mentioned earlier, a board of directors can help you with your initial funding. This funding can go toward operational expenses, including your salary, so it’s a great way to leverage your financial support from the start.
However, many smaller nonprofits won’t start with a board of directors that has deep pockets, but skills and connections can be just as valuable. Pick people you can learn from or who can help you, either pro-bono or at a reduced fee.
Make sure to draft job descriptions about who would be ideal candidates for your board.
Be clear that these positions are volunteer and that while financial contributions are welcome, they’re not expected. This helps take the pressure off, especially as you’re just getting started.
4. Register your Nonprofit
Now that you’ve got a solid plan in place, initial financial support secured, and a board of directors to help guide your actions, it’s time to register your nonprofit!
Remember those different types of nonprofits? Well, it’s time to dust them off and identify which category yours fits into!
Tax-deductible donations play a huge role in financial contributions, so one of the best tips to start a nonprofit organization is to try to file for a nonprofit status that allows for them.
You need to file your status with the IRS, and it may take anywhere between 3 to 12 months to hear back. It may cost between $250 to $1,000 to file with your state and federal government because there are many steps to take. You must incorporate, register to collect donations, file for an Employer Identification Number, file for tax-exemption status (if applicable), and register your nonprofit with your state.
5. Create a Website
A strong online presence is critical to launching your nonprofit. It’s the first place that many people will look to learn more about your organization, so make sure you have a website and social media presence, even if they’re a work in progress.
Encourage your network to leave reviews, share photos, and more. You can then showcase these on your website or incorporate them into other communication channels as a proof of your work. Potential donors might be scared away if you have nothing to verify you can do what you say you’d do.
6. Build a Marketing Plan
Once you have your website and social channels built, it’s time to create a marketing plan! It doesn’t have to be over the top, but you must do things to get your name out there.
Social media is a great way to share stories from people who are impacted by your organization or statistics that can inspire people to donate, just like how the American Cancer Society has done below.
Perhaps you have an active fundraiser you want people to participate in or are looking for volunteers. You can even share media coverage or recent research that shows why your organization is relevant.
Think about what will be most impactful for your organization, and create a monthly schedule of posts. Ideally, you’ll want to start with posting 1-2 times a week to start, and you can increase frequency as you develop more content.
Do some research on popular hashtags to help drive traffic to your page. Start engaging with other pages. Social media can be reciprocal, so look for potential partners. Additionally, for a small fee, you can boost your posts across platforms to gain even more views. Experiment with what works well for you and your brand.
7. Stay Compliant and Keep Fundraising
Once you’ve filed and received your official nonprofit status, make sure that you stay compliant with rules and regulations. For example, depending on the type of nonprofit organization you are, you could be prohibited from endorsing any political candidates or from lobbying for core issues.
Once you’re registered, you can boost your fundraising efforts by applying for grants. Tools like Instrumentl can help you identify grants that you qualify for and organize deadlines, making it easy for you to apply and get grants to help kickstart your funding.
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3 Things to Avoid When Starting a Nonprofit Organization
Just as there are things to look out for when starting a nonprofit organization, you also want to avoid making some of the following common mistakes.
1. Doing the Same Thing as Other Nonprofits
You are special, and so is your nonprofit organization, so don’t fall into the trap of comparing yourself to your peers and trying to emulate them. It never ends well. Instead, highlight what is unique about what you do. Tell your story in your own words. Leverage resources that only you can.
For example, maybe you have an animal rescue, but once a week, you have kids read to the dogs. This not only provides socialization for your animals but also helps children who struggle with reading. Don’t forget to layer it into your marketing opportunities. Maybe launch a dog-themed book drive during National Literacy Month in September.
You have a lot of options, just don’t lose sight of your overall mission. Remember, you started your nonprofit for a reason, so it’s time to let that shine through in all you do!
2. Not Leveraging Free Online Resources
Most nonprofits just starting out don’t have a lot of discretionary income, so don’t be afraid to leverage free online resources. Instrumentl is a great place to start. Our blog helps walk you through all you need to know about getting your nonprofit off the ground.
You can also Google your questions. Chances are if you’ve had the question, so have others, so there will be plenty of free resources at your fingertips.
3. Doing it Alone
Just as you’re not an island, you’re not the first person who started a nonprofit—and you won’t be the last! There are a lot of best practices to be learned, so don’t be afraid to seek them out.
Reach out to a peer for coffee or a five-minute phone call. Most will be flattered and all too willing to share their knowledge. The nonprofit community is small, and you’re all in it together!
Wrapping Up: How to Start a Nonprofit Organization With No Money
Starting a nonprofit organization with no money is possible—you just have to get creative! The most important thing you can do is to put a plan in place before you try to execute it.
Take a step back and challenge yourself to identify what you can do better than anyone else, and build your plans around that. Raise start-up capital, establish a board of directors, register your nonprofit, and start creating your online and marketing presence. Maintain your status throughout the year by staying compliant—and don’t forget to keep fundraising.
Once you follow these steps, you’ll be well on your way to starting your first nonprofit successfully!
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