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Organizational Management

How To Start a Nonprofit Organization With No Money

Author: Sayana Izmailova
March 9, 2022
🕑 9 min read

You have an amazing idea for a new nonprofit organization that could really make a difference in your community. Only problem is, you have no startup capital. Is it even possible to 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.

Keep in mind that this will be a high-level overview of how to start a nonprofit organization. For a more comprehensive guide, check out the article How to Start a Nonprofit in 12 Steps.

Now, without further ado, let’s dive in.

What Is a Nonprofit Organization?

As the name implies, a nonprofit is an organization that doesn’t distribute its profits to its stakeholders. For example, you, as the founder, wouldn’t get a bonus every time you have an increase in profits. Instead, all revenue would be cycled back into your nonprofit to improve your programs, fund operations and help advance your mission.

Nonprofits typically exist to serve a community or advance a social cause. Some examples include charities, advocacy groups, membership organizations, associations and clubs.

Click through to claim your 60-day trial of WildApricot to create effective QR codes that will speed up event check-in.

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.

The other thing is, even if you start out 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.

How Much Money Do You Need To Start a Nonprofit?

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

How To Start a Nonprofit Organization With No Money: 10 Steps

The tricky part about starting a nonprofit with no money is that you can’t fundraise to build up your startup capital — you actually can’t collect donations until you’ve been granted your tax-exempt status and 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

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 number two, starting a nonprofit may not the best use of your efforts 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 of this, 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 be as prepared as possible.

Step 2: Create a Strategy

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

Start by giving your nonprofit a name and crafting your mission statement, vision and values. These will act as your North Star and guide all of your subsequent activities. Now is also a good time to think of your nonprofit’s identity and start drafting branding assets like your logo, slogan, colors, etc.

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. Like we already mentioned, you won’t be able to collect donations to cover your first expenses, but there are three 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 able to apply for larger grants until you have an established presence and proven impact. However, there are plenty of smaller community grants 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.

3. Find 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 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.

Step 4: Recruit Your Board

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 through resources like Board Match, Board Net USA, and The Bridgespan Group.

Read More: The Complete Guide to Building a Nonprofit Board

Step 5: Build Your Team of Supporters

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 eventually attract donors and members. 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

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

This involves:

  • Incorporating your nonprofit
  • Registering to collect donations
  • Getting an Employer Identification Number (EIN)
  • Filing for tax-exemption 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. This article has more details and a number of useful links.

Step 7: Choose Your Software and Tools

One area where you shouldn’t be afraid to spend money is 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 software (CRM), events platform, accounting software, website builder, and email marketing platform.

    Read More:
    How to Pick the Best CRM for Nonprofit Organizations

  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 ends up being cheaper in the long run and is much easier to manage, since all the features integrate with each other 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.

Read More: 200+ Free or Cheap Nonprofit Software Tools You Need to Know About

Step 8: Get Online

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 actively fundraising, recruiting new members and growing your community.

Read More: 6 Ways to Communicate Your Nonprofit Membership Benefits

Step 9: Create a Publicity 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 is what’s going to 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 in the media (newspapers, radio, TV, etc.)

Read More: Peer-to-Peer Fundraising: A Guide For Nonprofits

Step 10: Stay Compliant

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.

Best of Luck With Your New Nonprofit

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 better idea of what you need to do and how you can raise your startup capital.

For a more comprehensive guide, don’t forget to check out How to Start a Nonprofit in 12 Steps.

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

Best of luck with your new nonprofit!

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