How to Start a Nonprofit Organization With No Money
Let’s get right to it: You can’t. You shouldn’t.
That’s probably not the answer you were looking for, but I believe in telling the truth.
It's a slippery slope because it's not easy. It's very difficult to do this and be successful. People want easy, and there is no easy.
That being said, you can start a nonprofit with a little bit of money. But, starting with a little money puts nonprofits in poverty mode, and I'm not a big fan. 🤷🏽♀️
I say, start powerfully; otherwise, you are no good to your community. You spend years struggling instead of working towards why you even started your organization—to help, make a difference. You cannot do that if you're struggling.
A nonprofit organization is a business and, just like any business, you need money to start one.
How Much Money Do You Need to Start a Nonprofit Organization?
The reason I say you can’t start a nonprofit without any money is that you will first need to form an entity, and this means you have to pay filing fees. At the very minimum, this is how much money you need to start a nonprofit:
Filing fees: $400 (for budgets $50k or less); $800 (for budgets over $50k)
Preparer fees: $0 if you prepare the forms yourself; However, I don't recommend this because the answers you give to the questions in the IRS papers are what the IRS uses to determine eligibility and how the organization will be formed. The cheapest I've seen out there is $300 (but typically, a preparer will charge $900 - $1,200 (the going rate for reputable companies). I do not recommend Legal Zoom, but it's very popular (they tend to run about $1,200 after all the bait-and-switch promotions—and their documents are all boilerplate, which I don't recommend).
$20 for filing the name
$20 for filing the Articles
You need anywhere from $440 - $2,040.
But there’s a crucial point to raise here: What constitutes "Starting a Nonprofit"? Is it just securing the 501(c)(3) tax-exempt status? If that's it, then the least amount is about $440.
But, that's not really "Starting a Nonprofit"—that's forming an entity, right?
Starting a nonprofit—as in being able to deliver programs—is what you should be thinking of.
And that is essentially starting a business.
Enter business expenses. Having basic business elements that say to a funder, "I'm a real nonprofit":
A website
A business email
A business line
A professional logo
A location (a public charity should be accessible to the public and not run from a home)
Materials and supplies
An accounting system (to process/track donations)
A business banking account
There are more, but the point is this: Are you just forming the entity, or are you actually starting a business where you can serve your community?
I say it's the latter, and realistically, you should start with capital. The same amount that is recommended for a for-profit— a minimum of $25,000 (though I'd recommend $50,000).
With that out of the way, instead of focusing on how to start a nonprofit with no money, let’s look at ways you can start a nonprofit with a little money.
How to Start a Nonprofit Even If You Don't Have a Lot of Money
Let me make sure we are on the same page—you need a bit of money to form your nonprofit entity, as we discussed above. Now, we are going to look at what I believe is actually starting a nonprofit, which translates to starting a business.
Validate your nonprofit idea
Before you even file to form your entity (and spend what little money you may have), I highly recommend validating your nonprofit idea first.
What does this mean?
Starting a nonprofit can be an overwhelming and challenging process. It is crucial to clarify your motivations before diving into this time-consuming and expensive endeavor.
To gain clarity, take a moment to reflect on why you want to start a nonprofit. As someone with over 30 years of experience in the nonprofit sector, I have seen many individuals embark on this journey without fully understanding the realities of nonprofit work. Often, people are driven by personal experiences or a desire to make a difference. However, some may see it as an opportunity to escape their current jobs or as a means to obtain easy funding.
It is essential to examine your motivations carefully. For example, believing that free money is readily available can lead to disappointment.
Next, consider the personal benefits you hope to derive from starting a nonprofit, as well as the benefits your target audience will receive.
Last, and perhaps most important, assess what is missing in your community and how your organization can address that need. It is also essential to evaluate if there are existing organizations serving the same purpose and explore opportunities to collaborate or contribute as a volunteer or board member.
Answering these questions will provide insights into your underlying motivations and help you make informed decisions about starting a nonprofit.
Read my guide and dive deeper into how to validate your nonprofit idea.
Build your infrastructure
Once you’ve validated your idea and you know there is a need, it’s time to build your infrastructure.
What does this entail? Create a solid foundation for your nonprofit by crafting the Organization Profile.
You have to identify and write:
Your mission
Goals and objectives
Program descriptions
When writing these, you need to have a clear description of who you are, what you do, who you serve, and what impact you make. You can’t be vague or generic because, later down the line, when funders consider your organization for funding, they will want specifics.
For example, your mission should be succinct. It should be something that the funder would remember once you walk away. If you have a six-sentence mission, then you need to go back to the drawing board. A great example is Girls Inc.'s mission: To inspire all girls to be strong, smart, and bold.
The same thing goes for your program descriptions. What do you do? Who do you serve?
Understand that funders have specific target populations they support. Simply claiming to serve everyone in your community won't resonate with funders because their focus varies. Some funders exclusively support children, while others prioritize seniors or youth.
To increase your chances of securing funding, you need to clearly define and communicate the specific group you serve. Perhaps your organization focuses on empowering young girls between the ages of five and 17. This level of specificity shows funders that you have a well-defined target audience and a clear mission. Trying to cater to everyone dilutes your impact and undermines your chances of receiving support.
Being specific about the population you serve doesn't exclude other valuable community members. It simply helps you align with funders who have a particular interest in your target group. By honing in on your target audience, you can establish a strong connection with funders who share your mission and have a passion for making a difference in the lives of those you serve.
I talk about this in-depth in Episode 7 of my podcast, so give it a listen!
Develop a budget
Creating a detailed budget is crucial to understanding your financial needs and limitations. Identify the necessary expenses for your nonprofit's operations, such as marketing, supplies, and administrative costs.
Here’s a vital thing to understand: Your budget is not how much you raised last year or how much you have in your bank account. The organizational budget tells funders how much it costs to run the organization.
So, make sure you know your programs and how you plan to carry them out, taking into consideration the costs involved. This is what will go into your budget creation.
Recruit a powerhouse board
So you know how much you will need to run your nonprofit. What next?
Start building a powerhouse board.
This is one of the most important things you have to do as a nonprofit founder. Your Board of Directors plays a crucial role in the governance and strategic direction of a nonprofit organization. Their primary responsibility is to provide leadership, guidance, and oversight to ensure the organization fulfills its mission effectively and operates in the best interests of its stakeholders.
Here are some key functions of a board of directors in a nonprofit.
Strategic planning: Collaborate with the executive director and senior staff to establish the organization's long-term strategic goals, objectives, and plans. They contribute their expertise and insights to shape the organization's direction and ensure alignment with its mission.
Governance and oversight: Ensure that the organization operates in compliance with legal and ethical standards. They establish and enforce policies and procedures, monitor organizational performance, and assess risks. The board is responsible for hiring and evaluating the executive director and, in some cases, other key staff members.
Financial management: Oversee the organization's financial affairs, including approving budgets, reviewing financial statements, and ensuring appropriate financial controls are in place. They are responsible for fundraising; they are expected to contribute personally and provide guidance on financial sustainability and resource allocation.
Fundraising and resource development: Besides the leadership and oversight, they are responsible for funding the organization's annual budget by leveraging their networks, making personal contributions, and actively participating in donor cultivation. They help identify funding opportunities, support grant applications, and engage in strategic partnerships or collaborations.
Stakeholder engagement: Act as ambassadors for the organization, representing its interests to stakeholders such as donors, volunteers, government entities, and the community at large. They may attend events, participate in public speaking engagements, and cultivate relationships with key stakeholders.
Legal and ethical compliance: Ensure that the organization operates within the legal framework and follows ethical practices. They are responsible for maintaining the organization's tax-exempt status, ensuring proper reporting and transparency, and safeguarding the organization's reputation.
Evaluation and accountability: Regularly assess the organization's progress toward its goals and evaluate its impact. They monitor program outcomes, assess the effectiveness of organizational strategies, and hold the executive director accountable for performance.
As you can see, board members need to have experience, expertise, and connections to successfully steer your nonprofit to success. Aunt Em, Uncle John, and Cousin Moe (bless their heart) may have your back no matter what, but they probably are not the best people to be on your board.
To build a powerhouse board, read my blog post, “Why You Should Stack Your Board With Powerhouse Business People (And How To Do It).“
Build a track record
Next, build a track record. Funders want to fund programs they know work.
“But I don’t have any money! How do I run my programs and build a track record?”
So, here's the deal: funders like to see results. They want to support programs that have a record of success. But what if you don't have any money to run your programs and show that they actually work?
Well, one smart move is to team up with a well-established organization that's already doing similar work. You can partner with them for around 6 to 12 months to run your program. This way, you can gather evidence and proof that what you're asking money for actually gets results. And trust me, funders are much more likely to open their wallets when they see real outcomes instead of just ideas on paper.
Let's say you're passionate about starting a youth mentoring program, but you don't have the cash to make it happen. Approach an existing nonprofit organization that's already rocking successful mentoring programs. Pitch them the idea of partnering up, where they take the lead and run your program with their resources and expertise.
Identify the gap(s) in their program (i.e., the program you are providing) and pitch them the idea of partnering up, where they:
Take the lead and recruit the participants,
House the program
(Potentially) provide some of the program materials and supplies
During this partnership period, you are able to:
Deliver your program
Gather concrete data on how your program impacts the lives of young people
Quantify the positive outcomes it achieves.
The other benefit is that the established organization gets to see how effective your contributions are. You never know; this temporary benefit may lead to a subcontract or sub-award!
Armed with this solid proof, you can confidently approach funders and show them the results you've achieved during your partnership. By demonstrating that your program works and has made a difference, you'll have a much better shot at getting the financial support you need to expand and run your program independently.
AFTER you can prove you know what you’re doing, then you can expand, which brings us to our next step.
Recruit volunteers
As much as you want to have a paid staff, you might have to rely on volunteers for a while. Take note, I say a while. The goal is to eventually pay your people to run the organization. This way, you have accountability and reliability.
But, with limited funds, you have to accept the reality that volunteer recruitment is essential at the beginning.
Here are some things to keep in mind when creating a volunteer recruitment program.
Articulate your mission: Clearly communicate your nonprofit's mission and objectives. Craft a compelling message that resonates with potential volunteers.
Leverage personal connections: Start by tapping into your personal and professional networks. Share information about your nonprofit and its volunteer opportunities with friends, family, colleagues, and acquaintances. Ask for their support in spreading the word and connecting you with individuals who may be interested in volunteering.
Take advantage of online platforms: Utilize online platforms dedicated to volunteer recruitment, such as VolunteerMatch, Idealist, and LinkedIn's Volunteer Marketplace. These platforms provide a platform for you to promote your organization and attract volunteers who are actively seeking opportunities.
Establish partnerships: Collaborate with local community organizations, educational institutions, and religious groups. Attend community events, job fairs, or volunteer fairs to connect with individuals who are passionate about community engagement. Building partnerships with like-minded organizations can expand your volunteer network.
Develop a Volunteer Program: Funders are skeptical about the consistency of volunteers. They are, after all, volunteering. That means they can come and go as they please. But having a Volunteer Program with standardized policies, procedures, training, and customized volunteer roles (to accommodate different skill sets, interests, and contracts to lock in their time commitments) shows accountability. By offering a range of opportunities, you can attract volunteers with various backgrounds and availability. Clearly outline the responsibilities and expectations for each role to ensure alignment with your organization's needs.
Provide a meaningful experience: Make volunteering a rewarding and fulfilling experience for your volunteers. Offer comprehensive orientation sessions, ongoing training, and support. Recognize and appreciate their contributions regularly. Engage volunteers in the mission and impact of your organization to enhance their sense of purpose.
Go on social media: Utilize social media platforms to showcase your nonprofit's work, share success stories, and highlight the impact of volunteers. Encourage volunteers to share their experiences on social media as well. Engaging with volunteers through social media can help attract others who are interested in making a difference.
Recruiting volunteers requires a strategic and proactive approach. By effectively communicating your mission, providing meaningful experiences, and leveraging various recruitment channels, you can attract dedicated volunteers who will contribute significantly to your startup nonprofit's success.
Identify and create funding streams
You might be thinking, “Isn’t this what grants are for?”
I say to you, “Before you start applying for grants, identify unrestricted funding.”
Before you dive headfirst into grant applications, look into gaining unrestricted funding. While grants should be a part of your funding strategy, they come with specific restrictions and fierce competition. Instead, diversifying your funding streams can provide more stability and flexibility for your organization.
Here are some alternative sources to consider:
Corporate sponsors: Forge partnerships with businesses that share a connection or interest in your nonprofit's mission. They can provide financial support in exchange for visibility, recognition, or other mutually beneficial arrangements.
Events: Organize fundraising events that engage your community and generate revenue. From galas and auctions to charity walks and creative initiatives, events can rally support and encourage donations.
Online marketing: Leverage the power of digital platforms to raise funds. Utilize social media, email campaigns, and crowdfunding platforms to reach a wider audience and inspire online donations.
Advertising dollars: Explore opportunities to generate income through advertising partnerships. This can involve placing advertisements on your website, newsletters, or event materials. Seek local businesses or organizations interested in reaching your target audience.
Merchandise sales: Consider selling merchandise that represents your nonprofit's brand. This could include t-shirts, mugs, or other items featuring your logo or cause-related designs. Online platforms or physical pop-up shops can help you sell merchandise and generate additional income.
By diversifying your funding streams, you reduce the reliance on a single source, such as grants. It's important to note that individual donors contribute the majority (67%) of all support received by nonprofits. Therefore, focusing on securing individual and major donors should be a priority. This can involve activities such as creating newsletters, prospecting potential donors, leveraging social media and your website, and enhancing visibility through networking opportunities.
Also read: “The Best Online Donation Platforms for Nonprofits”
Apply for grants
Now we come to what has long been associated with nonprofits: grants.
You’ll notice I mention this last, not because grants are not important, but because nonprofits can’t rely on grants for funding. Typically, a nonprofit won’t qualify for grants for the first two years of its operation. That’s because funders look for specific parameters when giving out funds.
You’ve heard me say it before—you may be eligible for grants as a 501(c)(3) entity, but that does not mean you qualify for them!
Still, there is grant money out there, and once you’ve set up your infrastructure and can prove that you are making a difference, you go get it!
A couple of things on applying for grants…before you hire a grant writer, listen to my podcast episode on things you need to know.
Plus, make sure you don’t get scammed by a grant writer! Unfortunately, there are some unscrupulous individuals out there who just want to make a quick buck.
Start Your Nonprofit the Right Way
Starting a nonprofit organization with no money is not feasible or advisable. While you can technically start with minimal funds, it puts you in poverty mode and hinders your ability to make a real impact.
Remember: A nonprofit is still a business, and money is necessary to get it off the ground.
Instead, focus on a strategic approach.
Validate your nonprofit idea
Build a solid organization profile
Create a detailed budget to demonstrate financial understanding
Recruit a strong board of directors with experience and connections
Establish a volunteer recruitment program
Identify and diversify funding streams
Apply for grants
Starting a nonprofit is challenging, but with careful planning, infrastructure-building, and strategic steps, it can be done. Remember, it's about starting a business that serves your community and makes a difference. Be resourceful, decisive, and make your nonprofit dreams a reality.
You got this! 💪🏾
