When starting your own nonprofit organization from the ground up, there’s a wide variety of expenses you’ll have to think about. This article will focus on the major ones, but there’s also a section down below of other expenses that are worth consideration!
Keeping a well-defined budget will be instrumental in your organization’s long-term success, and hopefully, this guide will help you get there.
To note– costs vary from country to country. The focal point of this article is for US based nonprofits.
| Table of Contents 1. Cost to Start a Nonprofit 2. How Much Does Filing for a 501(c)(3) Status Cost? 3. Marketing and Communications 4. Operational Costs |
Cost to Start a Nonprofit
You’ll encounter a price range between $283 and $2,448, depending on a variety of factors – with the location being the main contributor. Average costs are just below $900, but given that price window, that 900 figure is far from a defined rule.
State fees are what create the most variance here. Articles of incorporation, registering as a charity, and the business registration process often has associated fees, among other factors. Few things are truly universal between American states, but one factor that remains consistent is filing to become a 501(c)(3) nonprofit organization with the IRS.
This registration process grants you a special tax exemption, and will be fundamental to your existence as a nonprofit business.
How Much Does Filing for a 501 (c)(3) Cost?
There’s two answers to that question. The basic way is to fill out form 1023 – which has a flat rate of $600. There is another route, though, through form 1023-EZ – which has a fee of just $275. Other benefits of the 1023-EZ form include a shorter application process and faster response times.
The form that you fill out will depend on a variety of factors. 1023 is the most readily available way, though if you meet certain criteria, you can instead go for the less expensive 1023-EZ. The criteria include, but are not limited to:
- Your organization’s gross income must not have exceeded $50,000 during the past 3 years.
- Your organization’s estimated gross income for the next 3 years does not exceed $50,000.
- Formed in the United States, with a US mailing address.
- Cannot be for-profit, nor can your organization be a successor to a for-profit organization.
- Cannot be any of the following types of organizations (this list is not exhaustive): schools/colleges/universities, hospitals/medical research organizations, churches and church associations, charitable risk pools, credit counseling institutions.
In filling out this form, you can get it all done yourself – though many prefer to hire an agency with experience to do it themselves. That will add another expense to your pile, but will also ensure an accurate submission and leaves your hands free to work on other parts of setting up your nonprofit.
For more exacting information, you are best served by finding eligibility criteria from a primary source. That way, you are guaranteed information that applies in your case. Your location doesn’t just impact costs, it also impacts eligibility, and doing research there will be necessary.
Marketing and Communications
Simply having a nonprofit often isn’t enough to create the kind of results you want to see. You aim to raise funds, and for that, you need donors! There are several ways to reach the donors you need. Setting up a website is a primary step, and building a social media presence is an excellent form of outreach.
Costs here will vary wildly depending on the path you take. Some website building platforms may only pull a few dozen dollars from your pocket per month, with hosting fees and web certification. And that’s not factoring in the costs of branding – some larger companies have famously spent millions on good logo designs. And just like with logos, there is no upper limit the cost of your website, depending on who you hire and the work you need.
Once you have a site, getting a steady flow of content will be another major expense. ____
Finally, once your site is developed, you’ll need to promote it. With a social media presence you’ll already have a headstart, but ideally you’ll accompany that with other forms of outreach. Methods here can vary wildly from your topic and your organization’s reach, ranging from posters and flyers to social media ad campaigns.
If you need an extra boost, look for any sites or platforms that aggregate charities and nonprofits for donors to browse. That’s where the audience is, and establishing a presence there will be instrumental in getting eyes on your nonprofit.
If your nonprofit has a special place in its heart for matters related to the black community, consider partnering with us at SupportBlackCharities! See if your organization passes our vetting process, and let us know you’re interested.
Operational Costs
Once your organization is set up and the donations start rolling in, congratulations! This is worth celebrating, but don’t expect to bask in the accomplishment for too long – the costs of operating a nonprofit organization can creep up on you. Here’s a quick list of nonprofit operational costs to prepare for:
- Events: Stepping away from the digital world, holding in-person events is a staple of any nonprofit organization. Plan your events as early as possible beforehand, and give all the pieces as much time as they need to arrange themselves. This also lets you anticipate and budget for event costs, and offers flexibility should things change.
- Programs and Services: If you plan on offering any kind of services or programs for those involved you must take into consideration the overhead costs in your overall accounting plan. Providing your community with opportunities is the cornerstone of any nonprofit, if you do not fully understand the costs associated from the start then you run the risk of losing your operations before they even begin.
- Accounting a Bookkeeping: You’re not done with governmental paperwork just because your 501(c)(3) went through the system. Legal documents will need to be dealt with, signed, and organized for later use. Developing a strategy to handle this paperwork – either by getting a system to help you or hiring an employee to work on this, is an expense you’ll need to plan for.
Some Other Expenses
- Insurance: While important for many establishments, some insurance companies offer special rates for nonprofit organizations! Keep your eye open for a way to cut easily down costs like this.
- Office Space: Having a physical location can offer a lot – not just for productivity, but also for your nonprofit’s sense of staying power. Just having a central gathering location can establish a sense of legitimacy that’s otherwise hard to earn. If your field allows it, a space like this is worth consideration.
We know that starting a nonprofit organization can be challenging and it requires commitment and determination, but it’s definitely a good way to give to the community, so we celebrate your good work!
