How to Start a Nonprofit With No Money

You have an amazing idea for a new nonprofit organization that could really make a difference in your community. The only problem is that you have no startup capital. Is it even possible to start a nonprofit with no money?

Can You Really Start a Nonprofit With No Money?

The short answer is yes! The long answer is… well, that’s what this article is all about.

Keep reading to find out how much money you need to start a nonprofit and what to do if your current budget is $0. We’ll go over 10 steps you can take to raise your startup capital, register with the government, tackle early operations, and spread the word about your new nonprofit.

Now, without further ado, let’s dive into starting a nonprofit from scratch…with no money.

How Much Does It Cost to Start a Nonprofit?

The exact amount of money you’ll need to start a nonprofit will depend on where you’re located, but expect to spend at least a few thousand dollars. You’ll need about $1,000 for government fees alone. Additionally, you may need to purchase software tools, set up a website, and spend money on your beginning promotional efforts. If your nonprofit will have a physical office, that will, of course, cost even more.

The Unavoidable Costs (IRS and State Fees)

To start a nonprofit, you’ll need to file foundational documents with your state as well as obtain tax-exempt status from the IRS. You must incorporate your nonprofit at the state level before you can apply for a federal tax exemption. 

Tip: Many state and federal filing fees and licenses must be renewed annually and should be included in your operating budget. 

How Form 1023-EZ Lowers Your Startup Cost

The 1023-EZ form from the IRS allows smaller nonprofits to apply for tax-exempt status at a lower cost and with minimal paperwork. All you need to apply is your EIN, your articles of incorporation, your completed eligibility worksheet, and around $300 for the filing fee.  

Can You Start a Nonprofit Alone?

Technically speaking, yes, you can start a nonprofit alone. However, it takes a lot of time and effort, so if you can’t work on it full-time, we strongly recommend doing it with a partner or a team.

Even if you start completely on your own, you will very quickly need to involve other people. For starters, you’ll need to recruit a board of directors, which we’ll cover in a later section. You’ll also need to build a network of supporters, advocates, potential future donors, and volunteers. Starting a nonprofit alone can be very challenging, especially if you’ve never started a nonprofit before.

As your nonprofit grows, it will likely become impossible to manage it all without any help from volunteers or even paid staff. So if you do start one on your own, be prepared to grow or scale it later on.

Before You Start: Consider the Simpler, Less Expensive Alternatives

Starting a nonprofit takes a significant amount of time, money, legal setup, and administrative work. Before committing to all of that, consider alternatives that are less hassle, less headache, and less expensive. 

There are several alternative options, including fiscal sponsorship, an unincorporated nonprofit association, partnership with existing nonprofits, and donor-advised funds. Let’s explore a couple of these options: partnering with an existing nonprofit and fiscal sponsorship.

Partner With or Volunteer for an Existing Nonprofit

Starting a nonprofit is a tremendous undertaking, and it’s critical to understand everything that goes into building and sustaining an organization before taking that step. While the idea of creating a nonprofit to address a need in your community can be exciting, running one involves much more than having a great mission. You’ll be responsible for fundraising, managing finances, recruiting board members, complying with legal requirements, building programs, and earning the trust of donors and the people you serve.

Before launching a new nonprofit, consider volunteering for or partnering with an existing nonprofit that shares your mission. This experience will give you insight into daily operations, nonprofit event planning, fundraising, volunteer management, and scheduling.  

Involvement with an established nonprofit also introduces you to valuable relationships within the nonprofit community. You’ll connect with skilled leaders, volunteers and donors, and community partners who can offer guidance and mentorship. These connections and firsthand experiences will provide a stronger foundation should you still choose to start your own nonprofit.

Launch Under a Fiscal Sponsor

A fiscal sponsor is an already established nonprofit organization that can help you get yours off the ground. It can help you with fundraising, offer a loan, lend its office space, and address any administrative needs you may have.

When selecting a fiscal sponsor, look for an organization whose values align with yours. Enter the partnership with a robust nonprofit business plan and give the sponsor confidence that you’ll use their resources wisely.

If you’re interested in finding a fiscal sponsor, the National Network of Fiscal Sponsors is a great place to start.

How to Start a Nonprofit With No Money: 10 Steps

The tricky part about starting a nonprofit with no money is that you can’t fundraise or utilize crowdfunding to build up your startup capital — you actually can’t collect donations until you’ve been granted your tax-exempt status and been given permission to fundraise. So how are you supposed to cover those government fees and pay for other expenses?

Let’s go over exactly how to do this in 10 steps.

Step 1. Do Your Research and Needs Assessment

Before you get to work, do some research and answer the following questions:

1. Is there a need for the kind of work your nonprofit will be doing? Will people actually benefit from your programs and services?
2. Are there any other nonprofits in your community that already fulfill this need?

If you answered yes to question 2, starting a nonprofit may not be the best use of your time and resources. Consider helping the existing nonprofit instead, so you don’t create unnecessary competition for donors’ attention and gifts.

If you do still decide to start a nonprofit, do lots of research into the feasibility, as well as exactly what startup costs you’ll need to cover. The best thing you can do for your nonprofit and your community is to be as prepared as possible.

Step 2. Define Your Mission, Vision, and Strategy

Having a robust strategy in place will not only help your nonprofit achieve its goals but also prove useful when applying for tax-exempt status, recruiting your board, and garnering support.

Start by giving your nonprofit a name and crafting your mission statement, vision, nonprofit bylaws, and values. These will serve as your North Star and guide your subsequent activities. Now is also a good time to consider your nonprofit’s identity and start drafting branding assets such as your logo, slogan, and color palette.

With all of these details figured out, it’s time to create a business plan that will outline how all aspects of your nonprofit will operate. Include sections like:

• Executive summary
• Programs and services
• Market analysis
• Marketing plan
• Operational plan
• Impact plan
• Financial plan

Step 3. Raise Your Startup Capital

If you have $0 to spend on your new nonprofit, don’t worry. As we’ve already mentioned, you won’t be able to collect donations to cover your first expenses, but there are other avenues you could take:

1. Create a board giving plan. Each of your board members will be expected to make a regular financial contribution to help cover your nonprofit’s expenses. When recruiting your board (which we’ll go over in just a minute), make sure they understand this expectation and are willing to help.
2. Community grants. You may not be eligible for larger grants until you have an established presence and proven impact. However, there are plenty of smaller community grants for new nonprofits that you could benefit from. Even just a few hundred dollars could help cover some of the fees associated with incorporation and getting your tax-exempt status. Be sure to do some research and apply to every grant you’re eligible for.

Step 4. Recruit Your Board of Directors

Recruiting your board is one of the most important steps in starting a nonprofit. Not only will your board members help you come up with startup capital, but you also can’t incorporate your nonprofit without them.

To recruit your board members, start by drafting job descriptions and preparing an overview of your future nonprofit. Make sure you state somewhere in your package that these are volunteer positions and that board members are expected to contribute financially.

Look for candidates within your own circle of personal connections. You can also ask your friends and family to recommend someone they know. The key is to find people who are just as passionate about your cause as you are. If you need help, consider searching for resources such as Board Match, Board Net USA, and The Bridgespan Group.

Step 5. Build Your Team of Supporters and Volunteers

Your first supporters won’t necessarily contribute to your nonprofit financially, but they’ll help spread the word about your work. This is the first step to attract donors and members eventually. In fact, those who first hear about your nonprofit may also be your first volunteers — people who are so committed to your cause that they don’t mind offering their time and talents to help your nonprofit succeed.

Here are a few things you can try to find supporters and volunteers:

• Tell your friends and family about your nonprofit and encourage them to talk about it within their own networks
• Reach out to other nonprofits and organizations in your community
• Reach out to local businesses about volunteer opportunities
• Attend networking events and talk about your nonprofit with everyone you meet

Step 6. Register Your Nonprofit: Incorporate, EIN, and 501(c)(3)

At this point, you’re ready to make your nonprofit official.

This involves:

• Incorporating your nonprofit
• Registering to collect monetary and in-kind donations
• Getting an Employer Identification Number (EIN)
• Filing for tax exemption and 501(c)(3) status with the IRS
• Registering your nonprofit with your state

Keep in mind that there are fees associated with some of these steps. It can also be a lengthy process — hearing back from the IRS about your tax-exempt status can take 3-12 months.

Lastly, your individual state requirements may differ, so be sure to check your local guidelines.

Step 7. Set Up Free and Low-Cost Tools

One area where you shouldn’t be afraid to spend money is on your software. The right tools can help automate most of your administrative work and scale your operations as your organization grows.

You have a couple of options when it comes to choosing software tools:

1. You can purchase separate tools, such as fundraising software, customer relationship management (CRM) software, event platforms, accounting software, website builders, and email marketing platforms.
2. You can invest in an all-in-one tool, called membership management software, that includes all of the above capabilities and more. This option is cheaper in the long run and much easier to manage, since all the features integrate seamlessly.

Here at WildApricot, we’re proud to be the number-one-rated membership management software on the market. We regularly help new nonprofits attract, engage, and retain members and donors.

If you’re interested in learning more, start a free 60-day trial to see for yourself how WildApricot can help get your nonprofit off to a great start. Once the trial is up, you can continue to use your free account until you’re ready for your new nonprofit to grow.

Step 8. Build Your Website and Online Presence

When new potential members and donors hear about your nonprofit, the first place they’ll go to learn more information is your website. To make a great first impression, make sure your website is user-friendly, informative and inspiring.

If you haven’t already, now is also a great time to establish a presence on social media and develop a social media marketing strategy.

With these two assets in hand, you can start fundraising actively, recruiting new members and growing your community.

Step 9. Create a Publicity and Fundraising Plan

A great publicity plan is important for any nonprofit, but especially if you’re starting it on a shoestring budget. Getting your name and mission out there will help you garner support and raise enough revenue to reach your goals.

Here are a few things you can do to help spread the word about your nonprofit:

• Email everyone you know about your new nonprofit
• Get your board members to spread the word among their own personal networks
• Provide potential members and donors with valuable educational resources
• Partner with other organizations and local businesses
• Host a free event and find a corporate sponsor
• Craft a press release and try to get media coverage (newspapers, radio, TV, etc.).

Step 10. Stay Compliant With Form 990 and Annual Filings

Filing paperwork to get your nonprofit off the ground was a lot of work, but unfortunately, that’s not the end of it. You also need to maintain your tax-exempt status by filing Form 990 on an annual basis.

There are also a few other things you must do to stay compliant — check out this checklist to make sure you don’t miss anything.

Start Your Nonprofit Off on the Right Foot

Starting a nonprofit with no money is not an easy feat, but it’s certainly not impossible. We hope this article has given you a clearer idea of what you need to do and how to raise your nonprofit startup costs.

And if you’re considering using all-in-one membership management software to run your nonprofit, be sure to try WildApricot. Click here to start your free 60-day trial.

Best of luck with your new nonprofit!

Frequently Asked Questions