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How Much Money Do You Need to Start a Nonprofit?
by Jill Havlat
It’s a good thing that social activists start nonprofits with a passion, a purpose and—hopefully—enough bankroll to finance their budding organization. Starting a nonprofit is hard work. Few can cut it, though we’re confident you can. Begin with an inspiring task, like writing your nonprofit mission statement . Knowing why you’re going through the difficult planning and budgeting process may propel you through dreary days.
But after crafting your mission statement, it’s time to settle into the difficult but immensely important financial planning process. Planning for the funds you need to start—and sustain—your nonprofit will save you trouble in the long run (it might even save your nonprofit). Read on to review our list of the fees and finance-related tasks associated with starting a nonprofit.
Plan Like a Business
Nonprofit executives will rightly tell you that a nonprofit is another form of a business. And like a business, you need more revenue than expenses. Create a business plan for your nonprofit so you know where the money’s coming from and where it’s going.
As you budget through your business plan, take a good look at your nonprofit’s revenue streams. Where did your current funds come from, and can you count on them to continue after the nonprofit startup process? The health and longevity of these revenue streams (individuals, the government, grants) need to be on your radar for a stronger nonprofit.
Before applying to the IRS for tax-exempt status, your new nonprofit needs to incorporate. Becoming a corporation typically involves choosing a legal business name, filing necessary documents with your state’s corporate filing office and creating bylaws to dictate how your organization will be run. The cost of incorporation depends on your state. We recommend comparing costs by state at BizFiliings .
You’ll also need to hold at least one meeting with your nonprofit board of directors and file for any applicable permits your corporation will need to operate legally. It is only after receiving your articles of incorporation (for a fee) that your nonprofit can apply for 501(c)(3) status.
Spend Quality Time with the IRS
Once your nonprofit is a corporation, you can apply for nonprofit status . It’s best to do so within 27 months of incorporating. You’ll receive a letter approving your application, rejecting it or requesting more information. Good news for your nonprofit’s finances—if your income is $57,000 or less you can use tax prep software for free e-filing .Your nonprofit will also need to file Form 1023. The standard filing fee for Form 1023 will cost you $750, but your fee will be reduced by $400 if you don’t expect revenue to exceed $40,000.
The financial considerations involved in starting a nonprofit require a lot of legwork and more than a little paperwork, but you will be rewarded with financial security.
To find exactly how much it’ll cost your organization to get started, as well as five ways to cut your costs (and the three things not to skimp on), check out our Ultimate Budget Guide .
We are starting our organization on a shoe string with hopes of having some fundraisers. Our mission is to take in donated vehicles and place vehicles in to the families of the needy or handicapped / needy. We will use the vehicles as is / repair and use or sell. Some we will sell at auction and others as junk. It is obvious we won’t give away more vehicles than we have. We believe we will be making a contribution to our community by supplying some vehicles to the needy and cleaning up junk cars in the community. We are hoping some of the car dealers will make contribution as they could get a tax deduction. We live in a rural area with no public transportation. Now, tell me what chance so you think we have of surviving as a nonprofit.
How did this work?? I have a similar idea.
Thanks for your comment, Gen. Fundraising will be increasingly important to your nonprofit as you work to provide cars to those who need them. Be sure to check out more of our articles on starting a nonprofit and fundraising to sustain your organization.
we are a basketball team trying to get a non profit tax id number so that we can open a bank acct . we need to know how to go about it and how much it cost
We are a non profit trying to secure a grant for at risk children. we want to build a community center but do not know where to get the funding. Do you know where we canget funding in Memphis, Tn.
HOD Natasha David-Walker
Go to [email protected] – 100% turn around on 501C3 paperwork
Debt Defense Network
I am hoping to start a non-profit to help people fight against unfair and illegal debt collection practices. It has become an epidemic and most people don’t even know they have rights against being harassed and/or not even paying the alleged debt. Please join us, like our page and look forward to seeing our website coming soon.
Maybe I missed something. But you didn’t answer your own question?
David Gordon Goshorn Cpc
State Cost: It depends on the state. California is $100 for C, and $0 for S. Jill recommended going to BizFilings.
Federal Cost: Depends on your Gross Receipts. This article says “The standard filing fee for Form 1023 will cost you $750, but your fee will be reduced by $400 if you don’t expect revenue to exceed $40,000.” That is inaccurate though.
From form 1023: The cost is either
1. $400 for organizations whose gross receipts do not exceed $10,000 or less [sic] annually over a 4-year period.
2. $850 for organizations whose gross receipts exceed $10,000 annually over a 4-year period.
For the current user fee amounts, go to IRS.gov and in the “Search” box at the top right of the page, enter “Exempt Organizations User Fees.” You can also call 1-877-829-5500.
Add State and Federal costs together, and you have the answer to the question.
And…arent all filing fees tax deductable??
I noticed the same thing. Disappointing!
Is the money used to start & maintain the NFP tax deductibe?
I am not a tax advisor, but in my research on this issue, it’s best to wait to receive donations until you obtain your official 501c3 status to avoid in legal and tax complications. However, you could find a fiscal sponsor (another 501c3) willing to handle the donations on your behalf.
can you get an existing 501-c for a friend of mine–willing to pay–reply at—[email protected]
I can help with that [email protected]
actually we would like a bullet program—where 5 million stay in u.s bank with administrative hold and generate funds this way
what if you already have a 501c3 # but just need to do the rest of the work? Would it still be beneficial in your non-Tax advisor but other position to have a fiscal sponsor during those beginning months to avoid those complications. Let’s say a tribe perhaps which is already exempt 7871 and we are a Native operated nonprofit.
So if you think you will be less then 10,000$ and pay $400 , does that mean you must reject anything above that ceiling or just pay another fee later?
The standard filing fee for Form 1023 will cost you $750, “but your fee will be reduced by $400 if you don’t expect revenue to exceed $40,000.”
If you do exceed, great, not much the IRS will do other than “Maybe” say you really should have owed $400 more…but very doubtful.
I Apply for help in to the simple people as I.So folded that for me not when the house was not, I live in a removable accommodation and from 12 I work and everything I try to earn to itself on the not large accommodation.And I live in Ukraine, where not as keeps indoors in general a way to get the accommodation.I have a little desire from little up to know that is house where I will be happy .And I every day come to work in a hope to earn something, that it was enough to pay for an accommodation and on a feed, I do not have a weekend I am ill and now, but on work I go out everything I try to survive in this difficult world.I am awkward to ask you to help me, I understand that is people at that more difficult life, than for me.But if you will want to send to me 10 copecks on an account, then in a quite difficult minute for me due to you it will be on bread and meal. PrivatBank is a number of account 5168 7423 4472 1463,
i just started couple months ago my business and i spend $40.000 on my equipment but i havent earned anything do i get anything from the irs back ?
This is an old post, but maybe someone will read it. If you have your own business, and a large purchase of equipment, consider deducting over time. Also understand that the IRS has limits on capital investments. This is not tax advice. Just advice I wish I had 7 years ago.
Jeremiah Ibrahim sanga
I am a Nigerian citizen from the northern part of the country ,as a group of four (4) friends we feel and decided to start an organization that will help our youth to stand and start something of there own to be creative and hard work toward achieving there goals and also help the needy,weak and sick once that can not help themselves, starting from our local community to everyone we reach. We hope when we reach the right time to seek for your help you will hear us. Tanks
Hi, I am Indian from South. My aim is to open a trust – non profit organisation, which provides food and clothes to the needy , especially for “differently abled” person, so Please give me an idea. So that i can Help the people.
I love those people who have a great heart for others. Starting a nonprofit is a kind decision and if you are also thinking of to run a non-profit organization then, just get started here:
Hi I also would like to start a Non profit to educate the Dominican people about the value of animals specially dogs. There is a over population of stray dogs through out the communities who are starving and being treated as less worthy and even taunted and abused by people in general who look at dogs as a loss not a value. Here in USA we have animal protection and we value our companion as our own family member. In Dominican republic is not the case. i just came back from Dominican Republic and i am determine to make a difference.
We have a small animal shelter on Roatan, an island off the coast of Honduras. We live on a vacation island, and people are always interested in donating to our cause. We want to become an official nonprofit so that we can receive donations, which we desperately need in order to survive and continue our work. My official residence is in NJ, so we would be registered there.
Reading all this info is daunting, but I know it is the best and only way for us to continue to help the animals on the island!
Minouche N Fenelus
I desperately want to start a nonprofit organization to help children and families fighting against proverty, hunger, and provide shelter for them.
Aloha keep your dream ALIVE do not give up! This spark will ignite a fire so deep within the people you are looking to Help and we need more people Dreaming like you! 🙂 I’m also looking to start a non profit here in Hawai’i but not limited to here I want to expand from my community and on wards! Meaning global! Nations! Every INDIVIDUAL! ITS IMPORTANT TO DREAM BIG NO MATTER HOW LITTLE WE MAY KNOW AT THIS POINT AND TIME BUT ITS THE FIRE WE HAVE WITHIN US TODAY THAT WILL ELEVATE THOSE UP FROM THE HARDSHIPS THEY FACE! KEEP MOVING FORWARDS DEAR AND THANK YOU FOR SHINING BRIGHT 🙂 MAY YOUR JOURNEY BE FILLED WITH LOVE & STRENGTH 🙂 ALOHA GOD BLESS 🙂
Thank you for the kind words. I wish you luck also.
are you still interested in that vision?
Yes I do.
I HELP START NON-PROFITS. CONTACT ME
I am wanting to start up a nonprofit foundation for families with children that has health problems such as cancer.
Are you still available?
I help NPO’s with grant writing and starting up NPO’s. Email me if you have any questions.
Are you still available to assist me with information to start?
how much is the general start up to start and form a 501(c)(3) – Youth Football league? I have someone telling the coach that it is $4000 to start one up and I just do not see where that amount is coming from?
I’ve been doing the research for two years now and its about right.. Its $2000 to file the paperwork and some companies or other non profit organizations coudld help you with it. BUT the costs would have to come out of pocket.. the total is about right.
I want to start a nonprofit with horse reçue and teaching disabled children to learn to ride. When they come to visit I want them to be able to spend a weekend on the property, so I want to have like 10 manufactured homes for them and their families to stay. Do I need to be two nonprofit groups or just 1.
Just one but develop this idea into an entire program. Give your Program a name like-work with me here, “Horses & Homes are Healers”, for one idea. They stay, they ride, you have volunteers, you request donations, you need to request a board made of dedicated people that are willing to give generously of their time to fundraise with you, run programs and help you in the beginning. You also need to be willing to give uo things and delegate real well, be a good teacher and learn in fact by doing. It’s all a process! But again only one 501 c3, even if you want to use them for kids that come to serve your disabled youth and you’d like to help with trainings, same thing!!!! best of luck.
I retire in three years and would love to start a non-profit. Right now I am starting the business as a for profit business. I did try buying and selling things to donate but found out that I lack real business experience. Im gaining knowledge and have increased my sales and my knowledge of what products have better margins. Not quite to where I want the gross yet but I am much better prepared now. Doing this only part time I cant fully commit yet and I do want to be 100 percent available. So Ive given myself three years to really learn all I can. Im looking forward to the day when I turn this over to a board and turn to them for help in scaling and growing. Im not sure though if it should be kept as a buy and sell for charity or go only for donations of items.
Chris Christchild Smith
Well, I need to start a non profit not
for my own purpose, but because the Lord came to me on my first visit in Uganda, African this pass January 2017 and told me he wants me to build a Christian village in a part of Uganda called Mubende… Mind you, I don’t have the means or funds it’s going to take to fund this nor so I have to because it’s the Lord’s plan so he will do it himself… After doi g some reaching and putting together the vision/plan the holy spirit gave me, I’ve come to notice that this project is almost 10.million dollars ???♂️…. So a f riwnd of mines told me about the 501ce thing and that maybe we could get a grant to fund this project… I the only thing is that I’m new to all of this and don’t know where to start… If anyone can help in anyway or have any helpful information that I can use that would be very appreciating… Feel free to contact me by email at [email protected]
Thanks in advance and be bless in Jesus name.
In May of 2014 I was helping take care of a 4 year old girl that was diagnosed with cancer in her stomach, bone marrow, and lungs. We beat the cancer in er bone marrow but a few days after her 5th birthday in 2015 she passed away from the cancer in her lungs. I found out the hardship on families that have to deal with this situation. Since then I have volunteered my time for events with different organizations to help raise money to bring awareness and funding for the research of a cure for childhood cancer.
I want to start a nonprofit organization in honor of Amber Mason to help ease the burdens to families that are going through the same situation. The money I receive would go towards helping with transportation needs to and from hospital visits and other needs for the families.
Hi I want to start a nonprofit organization. My heart is for people. I have learned a lot from reading your discussion. I wanted know if any of you have heard of The Rock Church?
I’ve been interested in starting a nonprofit organization to assist the destitute in the Republic of Congo. I would like to find a way of channeling some of the wealth and abundance we have in the USA toward the destitute in Congo particularly and in other countries across the world generally. I don’t intend on collecting funds. Rather, I want to collect whatever possessions people here no longer need to donate them to those who need them in poor countries. I’m still trying to figure out how piece this nonprofit organization idea together and make it a reality. Any suggestions would be much appreciated. Thanks ?
1. I am not a US resident, can I open a non profit organisation in the USA and run it from aboard? I have a multi entry visa.
2. I don’t plan to receive any charity nor do I need any tax exemptions.
3. The idea is organising support for open-source and free software. Each interested person will fund their own activity hence I do not need to collect any money.
Is that possible?
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Table of contents
Managing the books
Not-for-profit corporations are organizations that provide products or services to improve or benefit a community. These organizations are usually concerned with generating enough revenue to provide support to their chosen community. Any money made by a not-for-profit is not for the personal gain of its directors, members or officers, but goes back into the organization to further its aims and projects. For example, a social club may hold an art sale or craft fair in order to generate revenue for the services it provides to the community.
There are several kinds of not-for-profit organizations such as:
- Professional or community organizations
- Sport or athletic
- Social clubs
- Service clubs (for example Kiwanis or Lions)
This guide provides information on not-for-profit corporations. To set up an informal not-for-profit, you may wish to speak with a lawyer. The Law Society of Ontario’s lawyer referral service may be able to assist you in finding a lawyer, based on your needs.
Law Society of Ontario’s lawyer referral service
If you are interested in information on setting up a cooperative, please refer to our cooperatives guide .
You can structure your not-for-profit organization as a federal or provincial corporation. The process and requirements for setting up your corporation will vary based on the option you choose. Federal incorporation may be a good option if you need nation-wide business name protection or if you will be operating internationally. If you plan to be located in only one province, you may wish to incorporate provincially. You may wish to consult a lawyer when choosing the best option for your organization.
For information on creating a federal not-for-profit corporation, you can contact Corporations Canada or refer to their website.
Creating a not-for-profit corporation
To set up a federal not-for-profit corporation, you can file online or submit the following documents to Corporations Canada.
- Articles of Incorporation- Form 4001
- Initial Registered Office Address and First Board of Directors – Form 4002
- A Canada-wide NUANS name search report that is not older than 90 days
- The filing fee
Contact Corporations Canada:
You can also learn more about the specific rules for operating a federal not-for-profit corporation on the Corporations Canada website.
Operating a federal not-for-profit corporation
If you would like more information about the requirements for setting up and operating a provincial not-for-profit corporation in Ontario, refer to the not-for-profit incorporator’s handbook.
Not-for-profit incorporator’s handbook
To set up a provincial not-for-profit corporation, you will need to submit the following documents (hard copy) to the Ministry of Government and Consumer Services:
- Application for Incorporation of a Corporation without Share Capital – Form 2 completed in duplicate with original signatures on both copies
- Ontario-biased NUANS Name Search Report
- Fee of $155 (standard service – processing time 6-8 weeks) or a fee of $255 (expedited service – processing time 7 business days)
- Supporting documents, if required
- Covering letter giving a contact name, return address and telephone number
Contact the Ministry of Government and Consumer Services:
There are specific rules for incorporating and operating Ontario not-for-profits. Find out how your not-for-profit corporation may be affected by these laws.
Modernizing the not-for-profit sector
Managing the books
Once you’ve incorporated your not-for-profit, you will have ongoing responsibilities that are specific to not-for-profit corporations, including:
- Maintaining records and making them available to directors
- Proper filing and income reporting
- Making sure that any changes to the structure of the corporation conform to the articles of incorporation
You can find out more about the financial record-keeping and reporting obligations of a federal not-for-profit from Corporations Canada.
Contact Corporations Canada:
Financial Statements and review
You can find out more about the financial record-keeping and reporting obligations of a provincial not-for-profit from the Ministry of the Attorney General website.
Corporate maintenance and filing requirements
You may want charitable status for your not-for-profit corporation in order to issue tax receipts or be eligible for specific tax incentives. Although many not-for-profit corporations are registered as charities, charitable status is not automatically obtained when you set up a not-for-profit. Refer to our document on charitable status for more information.
If you sell goods and services in Ontario and make $50 000 or more within any 12-month period, you must register for a business number to charge, collect and remit the Harmonized Sales Tax (HST).
HST for businesses, charities, and public service bodies
As a not-for-profit organization, you are generally exempt from paying income tax but may be required to file a T1044 – Non-Profit Organization (NPO) Information Return with the Canada Revenue Agency (CRA). The information return is filed annually and, depending on your organization’s activities, you may also need to file additional forms. Speak with CRA for more information.
Government departments and agencies provide financing such as grants, contributions, subsidies and loan guarantees. Find out what type of government financing may be available for your business. Use the program search tool or browse by type of financing.
Government grants and financing
The following financing program also applies specifically to not-for-profit organizations:
The Trillium Foundation
The Trillium Foundation offers a variety of funding programs in support of organizations that give back to the community. Charitable or not-for-profit businesses are eligible for funding.
Contact the Trillium Foundation:
Ontario Trillium Foundation
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