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How to Start a Nonprofit Organization with No Money

How to Start a Nonprofit Organization with No Money

Recently, I had a friend ask me how to start a nonprofit organization with no money. She found an idea she’s passionate about and even someone to help her start it, but she didn’t have any funding to get her idea going. What could she do?

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It turns out, there are ways that you can start a nonprofit organization with no money upfront. It takes some work but it’s easier than you might think!

The Backstory

Brianna met someone who wanted to create a supportive space for people with autism. It’s a topic they’re both passionate about and they even identified an old, abandoned commercial building in their area that would be perfect for their needs.

The goal is to create a safe space where families affected by autism can meet, hang out, spend time, and connect with community resources that can help. Brianna described it like a teen center or rec center.

The problem? There’s no money to get started.

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The Problem

Most nonprofits start as passion projects, when people see a need that needs to be filled and decide to take action. It’s a beautiful thing to be able to create change in your community.

However, that passion comes at a price.

There are a lot of expenses associated with creating a nonprofit organization. These expenses include things like renting office space, paying staff, marketing, legal fees and so much more. It can be overwhelming, especially when you’re starting with no money at all.

The Solution

Fortunately, today’s technological advances make it possible to start an incredible nonprofit without any cash upfront… but there is a catch. What you lack in dollars you’ll have to make up for in time, dedication and creativity. It is possible but it takes a lot of hard work and dedication to start a nonprofit organization with no money out-of-pocket.

Before you begin setting up your nonprofit, you will probably have to begin with some fundraising. You may not have any money right now, but you will need at least a few hundred dollars to get through the first few rounds of establishing your new nonprofit.

There are many ways that you can go about getting that money.

Crowdfunding

Platforms like GoFundMe and Kickstarter can be a great place to start! You’ll need to make sure that you tell your story in a compelling way and clearly explain how the funds will be used. People love to donate to causes that make a difference.

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If you decide that you want to try crowdfunding, don’t forget to check out our GoFundMe guide for tips on how to get more donations with your fundraiser!

Grants

There are so many grants for startups! Whether you’re a business owner or a nonprofit, you may be able to get assistance from the incredible grant programs offered by our sponsor Skip.

I always report on the latest Skip grants during our weekly news segments, but I have personally seen grants for people who haven’t established their business or nonprofit yet. Sometimes, you just need to have a great idea!

As long as you can convey your story in a compelling way, then you may be able to get some cash to help you start a nonprofit organization with no money out-of-pocket. Try Skip today!

Host a Fundraiser

Fundraisers are a great way to get the extra cash you need to get started! Bake sales, car washes and garage sales are great ways to get enough extra cash to file your paperwork and launch your nonprofit.

Once you receive 501(c)(3) status, it’s even better because the people who donate to you can get a tax deduction for donating to your cause.

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Find Donors

Depending on the type of nonprofit that you want to start, you can cut down on the startup costs significantly by finding donors. Donors can be individuals or businesses. It’s much easier to find donors after you’ve received 501(c)(3) status, because then they have an incentive to donate to you.

For example, someone who wants to start a food bank or community kitchen can reduce a lot of their costs if they find a grocery store or other retailer that will donate to them. Nonprofits of all types can benefit from in-kind donations of office supplies, software or professional services.

Be creative when soliciting donors. Try to find interesting ways that you can partner with different organizations. For example, I’ve seen a lot of free community resource fairs lately that have on-site food trucks. The food trucks donate free meals to the first 25-100 attendees. By donating to the event, the food truck owner stands to make some money throughout the day while also serving the community.

How to Get Started

Now that you’ve acquired at least a little bit of money to support your great idea, it’s time to get the ball rolling. These next steps will outline your journey to establishing a successful nonprofit organization.

Lay the Foundation

Before you begin filing paperwork, you need to have a clear idea of what you’re going to do and how you’re going to do it. It’s time to fully flesh out your next great idea with market research and a detailed business plan.

Think It Through

It’s hard to start a nonprofit organization with no money, so you need a clear idea of what you’re going to accomplish to help you push through the difficult times ahead. A clear and well thought-out idea will make it easier to fundraise, build a team, and be successful in the later steps.

The first thing you need to do is deeply analyze what you want to accomplish. Starting with a clear vision and end goal in mind will help you avoid many of the pitfalls that people fall into when they start this process.

Some questions that you need to consider include:

  • What specific problem am I trying to solve?
  • Who will benefit from this organization?
  • What are the needs of the people who will benefit?
  • Are there existing organizations doing similar work?
  • What do I want my nonprofit to accomplish in the next 5-10 years?

The more you think through all of these things, the better equipped you will be to get started.

Conduct Market Research

Once you have a clear vision and goal, it’s time to do some market research. This will require you to do online research as well as conduct in-person interviews with people who fit the demographic you’re trying to help.

Some important questions you need to answer are:

  • What organizations are already doing similar work?
  • What gaps or unmet needs are their clients currently experiencing?
  • What do you typically hear about those organizations or services?
  • What are the biggest challenges those organizations face? Will you be able to solve them?
  • What are those organizations doing well?

The more you understand the needs of your target customers and what your competitors are already doing, the better prepared you will be to succeed.

Create a Business Plan

Armed with the knowledge that you gathered during your market research, you should be prepared to create a business plan. The plan should include your mission statement, vision, and a description of your target demographic. It should also include a roadmap that outlines your marketing strategy, services offered, fundraising activities and financial projections.

There are many templates and online guides that can walk you through this process, but my favorite resource is your local Small Business Development Council. This organization can offer free assistance and counseling as you set up your small business or startup. They can help you learn how to make a business plan, improve your strategy, learn the skills that you need to succeed and can sometimes even help you connect with grant programs to give you additional funding.

I have personally received coaching at several SBDC locations around the country and I cannot recommend it enough. I have always been partnered with skilled business owners who have decades of experience succeeding in various fields. Some of the people that have mentored me have served in leadership capacities at renowned global nonprofits. Their experience has always been priceless in helping me establish, learn, and improve my own businesses.

There are SBDC locations all across America that can help you. You can find the one nearest you by entering your zip code on America’s SBDC website.

Establish Your Organization

Before you start assembling a team and finding a space to operate, you need to make sure that you set up your nonprofit organization so that it can operate legally. The laws governing nonprofits vary from state to state, so we can only provide a generalized overview.

Incorporation

First, you’ll need to incorporate. Incorporating establishes your nonprofit as its own legal entity, which provides protection for you and anyone else who runs it. In order to do this, you’ll need to submit Articles of Incorporation to your Secretary of State. This sounds more complicated than it is. Most states have a handy step-by-step guide that will walk you through the process if you register your nonprofit through their website.

However, this does typically cost money. The fees often range from around $30 to several hundred dollars, depending on your state.

There is good news, though.

Many areas offer fee waivers for people who are starting their first business or who are having a financial hardship. Sometimes these programs are permanent and sometimes they are temporary. For example, the California Secretary of State waived filing fees for new corporations and organizations through June 30, 2023.

File for 501(c)(3) Status

After you create your organization, you will need to file for 501(c)(3) status as a nonprofit organization. This requires you till out Form 1023, which can be difficult to navigate. In order to file this form, you will need to pay another fee.

There are some ways that you can keep costs down. You can rely on pro bono legal services from law schools or legal aid societies to help you fill out the paperwork, instead of asking a costly attorney. If you have questions that require expert responses, you can also contact professional lawyers in your area on JustAnswer for a fraction of the cost of a typical legal retainer.

Once you receive 501(c)(3) status, you’ll be able to save a lot of money. You’ll become eligible for federal grants and tax-deductible donations. You’ll also be able to access other resources, like exclusive discounts that are only available to nonprofit organizations.

State Requirements

States and sometimes even smaller local governments have additional rules about business registration and nonprofit establishment. The amount of paperwork required can be overwhelming and confusing.

It helps to have a trustworthy lawyer or accountant that can help guide you through this process. Once again, legal aid and JustAnswer can be valuable tools to help you navigate this initial phase. Once you’re better established and have money coming in, I highly recommend finding a professional in your community to work with.

Do What You Can

This is the hardest part when you’re trying to start a nonprofit with no money. Without any capital, you can’t pay a team or rent an office space. You have to find a way to get started when it’s just you, working with what you already have available.

This will obviously look very different based on what kind of nonprofit you are trying to start.

For example, someone who wanted to start a diaper bank could begin by soliciting donations of diapers or money, storing those items in their home, and distributing them throughout the community by posting on social media. Once I had built up a client base, I would look for food banks, businesses and other nonprofits to partner with.

On the other hand, it’s a bigger challenge to start something that requires a physical location or an extensive team because those things often require a significant amount of cash. You’ll have to find a way to simplify your big picture and break it down into the smallest possible steps.

If I wanted to start a safe space for families living with autism, like Brianna and her friend, I would start by hosting a community support gathering once per month. My local community building is just $15 per hour for a rental, so I would rent it for two hours. I would find participants by posting on local community groups across various social media platforms, inviting them to bring their favorite toys or activities to share at the meet-and-greet. I would provide some light refreshments, like cookies, and place a QR code with a donation link on the refreshments table. Once I had a reasonable turnout, I would start looking for businesses to sponsor our organization.

Like I said before, if you’re going to try to start a nonprofit organization with no money, it is possible. However, you’ll need to work extra hard and be creative to make up for your lack of funds. You’ll probably grow slowly but you can make it happen.

Grow & Succeed

Once you’re bringing in some money or you’ve established a client base, you can start looking for opportunities to grow. As the money comes in, you’ll be able to build a team, find a permanent space, and see your dreams become a reality.

Of course, there’s a lot of complex accounting and legal considerations that you need to know about. It helps to have an accountant and a lawyer that you can consult with, so make sure to make those connections as soon as you can.

Relying on the guidance of your free SBDC coach can also help you navigate a lot of these issues. If you follow their guidance, they can help you strategize and grow your organization effectively.

As you grow, it’s also important to take advantage of networking opportunities. Building solid relationships with other nonprofits and businesses in your area can help solidify your success.

Summary

It is entirely possible to start a nonprofit organization with no money out-of-pocket but you will need to work extra hard. The steps outlined in this article can help you fundraise and get started. If you contact your local SBDC, you can also get free guidance to help you establish a plan and grow your nonprofit into something truly incredible.