Monday, July 9, 2012

How Do You Pay for Nonprofit Start-up Costs?

You have a mission. You’ve identified a need, and you want to help. You know that receiving grant funds or offering tax-deductible status for donations requires you to be a 501(c)(3) nonprofit. You’ve done some preliminary cost investigation and discovered that like most things in life, it costs money to begin. Now what?
Depending on your state of residence, just filing with your state as a corporation and paying the fee to the Federal government can cost well in excess of $1,000. Adding attorney or consulting fees to set up your bylaws and educate you on the legal requirements for nonprofits, can cost from several hundred to several thousand dollars.
What many people do is contact someone such as CloudLancer Writing Services, and want to apply for grant funding. Unfortunately, there is little to no “grant” (that is, “free”) money available to start any business and that includes nonprofits. Fortunately, fundraising is about a lot more than grants. Here are some strategies that have helped our clients get started.
1.  Start at home. No, I mean really, start at home. Canvass your relatives and friends for small donations. You probably have candidates in mind for your board of directors, and they should be willing to help. The support might be in cash, or in the form of some donated item or items that you can sell.
2.  Stage fundraising events such as yard sales, or ask local businesses to sponsor fundraising events. These could range from car washes or  BBQ’s, to selling craft items.  Approach your local craft clubs, and offer to give them a showcase for their member’s products for a cut of the sales. Perhaps local businesses will have excess stock that they would be willing to donate to a silent auction.  In addition to raising funds, you will get the benefit of exposure to other prospective donors and you can let people know that you will be offering a solution to a problem. You may attract help you didn’t even think to include in your fundraising strategy.
3.  Build a following on one of the social media sites, like Facebook. (Be sure you let all your “friends” know about your page). Let people know through the page that you are raising funds. Even if they can’t help, they may tell someone who can. Set a specific goal of X dollars, and post a progress report to let folks know that you are achieving your goal. 
4.  Network with other nonprofits in your area. There’s nothing like benefiting from someone else’s experience.
By the way - keep good records on who gives what. First, you’ll need the records to track uses for the money you raise, and some of the people who help now, may be willing to continue their support later.
Also, be aware that until you receive your nonprofit status, donors may not be able to deduct contributions on their tax returns. Normally, the amounts you will receive will be small enough that this won’t be a big drawback at first.
The other benefit to this fundraising approach is that you will become much more comfortable with asking for money. Believe it or not, many nonprofit managers/founders/board members don’t like this facet of being a nonprofit, but learning to do an effective “ask” is part of the nonprofit world.  You will learn to refine your message and present it to different funders with diverse motives for helping you, and that is experience you can’t get from a book or the internet. If you would like further information on fundraising strategies, you can contact us through our Facebook page or the website at

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