How to Start a Nonprofit Organization with No Money in 6 Steps

Looking to start a nonprofit organization but discouraged by how much it costs? 

Many changemakers want to make a lasting impact but abandon their hopes when considering finances. 

While there are fees and costs to consider, there are plenty of free resources and strategies to help get your nonprofit off the ground. This guide will explore the essential steps to launch your nonprofit using as little money as possible with or without board members.

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Can you really start a nonprofit organization with no money?

While minimizing costs through volunteer efforts and strategic planning is possible, starting a nonprofit typically involves some financial investment. However, with careful budgeting and resourcefulness, you can launch your nonprofit organization at little to no cost.

When considering starting a nonprofit, you must consider several costs and fees.

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Registration and legal fees for nonprofit organizations

• Incorporation: Depending on your location, fees may be associated with incorporating your nonprofit organization.

• Filing for tax-exempt status: Applying for tax-exempt status with the IRS typically involves filing Form 1023 or 1023-EZ, ranging from $275 to $600.

• Annual filing fees: Some states require nonprofits to pay to file annual reports, renew licenses, and maintain compliance with regulatory requirements.

• Legal advice: Some nonprofits seek legal counsel to ensure compliance with nonprofit laws. (More on how you can save big below)

• Trademark registration: If you want to protect your nonprofit's name or logo, you may need to register trademarks, which can involve legal fees.

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Save on incorporating your nonprofit with Zeffy

Outside of your Internal Revenue Service (IRS) filing fees, Zeffy helps you skip the additional $2,000 in legal fees by supporting nonprofits to incorporate. Supporting 50,000 nonprofits in North America helps us bring expertise and guidance to take care of every legal step for you from assembling documents to securing tax exempt status.

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Once you’ve legally registered your organization, you’ll then need to consider a few other costs like:

• Operational costs: Rent for office space, utilities, supplies and equipment, and personnel costs (salaries, benefits, etc.).

• Fundraising expenses: Event costs (venue, catering, etc.), fundraising platforms and donor management software, marketing, promotional costs, etc.

• Program costs: Expenses associated with delivering the nonprofit's mission and programs, such as materials and equipment.

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What type of nonprofit should you start? Understanding Tax Exempt Status

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A nonprofit organization is an entity that provides services or resources to address societal needs. Unlike for-profit businesses, nonprofits don’t sell products or services for revenue—they collect donations purely to create change and impact.  

Some of the most popular nonprofits are 501(c)(3) organizations, 501(c)(4) organizations, and 501(c)(6) organizations. Any of these statuses can make you a successful nonprofit organization.

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501(c)(3) organizations

• Purpose: Must operate exclusively for charitable, religious, educational, or similar purposes.

• Tax status: Donations to these charitable organizations are tax-deductible for the potential donors.

• Examples: Hospitals, schools, or religious organizations.

• Costs: Often requires funds to implement programs, run fundraising events, and manage volunteers.

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501(c)(4) organizations

• Purpose: Focus on promoting social welfare and community improvement.

• Examples: Advocacy groups, civic leagues, and social welfare organizations.

• Tax status: Donations to these organizations are typically not tax-deductible for donors.

• Costs: These groups may incur expenses related to lobbying efforts and public awareness campaigns.

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501(c)(6) organizations

• Purpose: Primarily serve the interests of a particular industry or profession.

• Examples: Trade associations, chambers of commerce, and professional societies.

• Tax status:  Donations to these organizations are generally not tax-deductible for donors.

• Costs: Costs may include incorporation fees, legal expenses for compliance membership recruitment costs, and operational expenses.

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What is the easiest nonprofit to start?

The ease of starting a nonprofit depends on factors like mission, structure, and requirements. Charitable nonprofits, especially those helping communities directly, are often seen as easier to start because they have clear goals and simple operations. They focus on providing services like food aid, shelter, education, or healthcare.

These nonprofits usually face fewer legal and regulatory challenges than those involved in lobbying or specialized industries. Also, they might find it easier to attract volunteers and donations because people see the positive impact of their work.

With the help of a Zeffy expert tackling the legal steps for you, nonprofits can get started even more easily and save in costly legal fees on top of their incorporation costs. The best part is that your nonprofit status will be confirmed in just 2 weeks!

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Can you make a living owning a nonprofit?

A nonprofit organization exists to serve charitable, educational, religious, or other beneficial purposes, not to make profits for individuals. They are governed by a nonprofit board, fiscal sponsor, or trustees and need owners like traditional businesses.

However, people working for nonprofits, such as founders and staff, can get paid for their services. Any compensation made through the nonprofit startup and throughout its growth must be supervised by the organization's board and meet industry standards.

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Here's how individuals within nonprofit organizations may be compensated:

• Salaries: Executives, directors, program managers, and other staff members in nonprofits may earn wages based on their duties and experience. Nonprofit salaries can compete with for-profit companies but differ based on organization size, location, and budget.

• Benefits: Nonprofit employees can get health insurance, retirement contributions, paid time off, and similar perks to those in for-profit jobs.

• Stipends: Some nonprofit workers, especially volunteers or part-timers, may get stipends instead of salaries. Stipends are usually small payments to cover expenses or compensate for time spent on specific projects.
  
  

While individuals working for nonprofits may receive compensation, it's crucial to remember that nonprofits prioritize fulfilling their charitable missions over generating income for individuals. Nonprofit leaders and staff are usually driven by a passion for the organization's mission statement rather than financial gain.

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Starting a nonprofit organization with no money: 6 easy steps

Starting a nonprofit organization with no money may seem daunting, but it's possible with careful planning. You may eventually find board members to support big decisions, but in the beginning it may feel like a balance between raising more without having to spend money that's unnecessary. 

You must determine your mission, vision, and goals, recruit a team, develop a business plan, file for charitable status, and adhere to state-specific rules and regulations. Once your nonprofit is formed, you’ll need to start building relationships and finding creative, cost-free ways to raise money.

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Here are the key steps you can take to get started:

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Step 1: Lay the groundwork

To get started, you'll need to determine the purpose of your nonprofit and the impact you aim to make in your community or beyond. 

• Mission statement /vision: Conduct thorough research to understand the needs of your target audience and the existing landscape of nonprofits in your area. Identify any gaps or opportunities where your organization can make a meaningful difference.

• Goals: Clearly define specific, measurable, achievable, relevant, and time-bound (SMART) goals and objectives.

• Name: Choose a name for your nonprofit that reflects your mission, vision, and values. Ensure the name is unique, memorable, and aligned with your organization's goals. In some states, nonprofits must have a unique name that hasn’t already been used.

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Step 2: Recruit your team

Once you clearly understand your mission and target audience, it's time to recruit a passionate and committed team. While not all states require that nonprofits be operated by more than one person, bringing in collaborators is a great way to bring diverse skills and expertise. 

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This might include:

• Board members

• Incorporators

• Advisors

• Staff

• Volunteers

• Partners

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Tip: Reach out to existing networks or use social media as a free tool to find the right people.

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Step 3: Create a nonprofit business plan

With your team in place, it is essential to create a solid business plan outlining your organization's goals, objectives, strategies, and financial projections.

While you may not have money initially, a well-thought-out business plan will help attract donors, volunteers, and other stakeholders who can support your cause.

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This might include:

• Organizational description

• Mission statement

• Programs and services you intend to provide

• A SWOT analysis of the organization

• Marketing and outreach strategy

• Financial projections 

• Methods for evaluating progress

• How your organization will benefit local communities

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Pro tip: Use software like Canva to create free professional business plans.

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Step 4: Fulfill legal requirements for tax exemption

Next, you must incorporate your nonprofit to become a tax-exempt organization and obtain the right status. This usually includes state and federal government fees.

Research the legal requirements and regulations for nonprofits in your state, and follow the necessary steps to register your organization with the appropriate authorities. You may also need to apply for charitable status with the IRS to receive donations and community grants.

You'll also most likely need an employer identification number (EIN). The application to obtain one is entirely free.

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Step 5: Build relationships with local businesses and raise awareness

Once your nonprofit is officially registered, build relationships with potential donors, volunteers, and community partners. 

Attend free networking events, contact local businesses and organizations, and leverage social media to raise awareness about your cause for free.

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Step 6: Find free fundraising strategies

In the absence of money, consider what free fundraising campaigns you might launch to generate revenue for your nonprofit. 

Consider corporate matching, launching a peer-to-peer fundraising event, and seeking in-kind donations of goods and services from businesses and individuals in your community.

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4 common pitfalls to avoid when starting a nonprofit organization

When starting your nonprofit from scratch, there are a few key things to avoid:

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1. Not diversifying funding streams

Relying too much on a single funding source, like grants or donations from one donor, can make your nonprofit vulnerable to funding fluctuations. To ensure financial stability, cultivate relationships with multiple donors and funding sources. 

That might mean sponsorships, corporate matching programs, text-to-give options, and more.

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2. Ignoring technology 

Overlooking technology and innovation can hinder your nonprofit's ability to adapt and thrive. Embrace technology solutions — especially free ones like Zeffy — to streamline operations, manage donors, and even host events.

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3. Lack of creativity in fundraising

It’s easy for nonprofits to stick to a few tried-and-true fundraising ideas. But to keep donors engaged and excited to give, you’ll need to remain creative. That means offering in-person events like galas, selling merch through an online store, or even hosting a raffle.

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4. Avoiding collaboration with likeminded nonprofits 

Nonprofits often work in a silo and neglect crucial community connections. Partnering with like-minded stakeholders and organizations can double your impact, pool resources, and even reduce costs.

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What are the best ways to raise money for your nonprofit with no upfront investment?

Raising money for your nonprofit without upfront investment requires some strategic planning. Here are some practical ways to raise funds without spending money upfront:

• Online fundraising platforms: Utilize free online fundraising platforms like Zeffy to create campaigns, collect donations, and manage donors without any hidden fees or costs.
  

• Social media campaigns: Most social media is free to use. Promote your nonprofit's mission and fundraising efforts by creating engaging content, sharing success stories, and encouraging your followers to donate or share your posts with their networks.

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• Peer-to-peer fundraising: Encourage your supporters to fundraise on your behalf. Provide them with peer-to-peer fundraising platforms and resources to create their own fundraising pages and reach out to their friends, family, and colleagues for donations.

• Grant writing: Research and apply for grants from foundations, corporations, and government agencies that align with your nonprofit's mission. While grant writing requires time and effort, it can yield significant funding without upfront investment.

• In-kind donations: Seek donations of goods, services, or expertise from individuals or businesses that support your cause. In-kind contributions can include office supplies, event space, professional services, or pro bono support, reducing your need for upfront capital.
  

• Corporate or fiscal sponsor: Approach businesses in your community or industry for corporate sponsorships or partnerships. Offer visibility and recognition in exchange for budgetary sponsorship or in-kind donations.
  

• Donation matching: Encourage donors to maximize their impact by offering donation matching opportunities. Partner with businesses or individuals willing to match donations up to a certain amount, effectively doubling the impact of each donation.
  

• Volunteer fundraisers: Mobilize your volunteers to organize and raise money for your charity events or initiatives on your behalf. Empower them to leverage their networks and creativity to raise funds without upfront investment.
  
  

Start your nonprofit for free with Zeffy

We're excited to announce that Zeffy is finalizing its nonprofit incorporation feature. We’re looking for proactive individuals to participate in our beta program. We want to hear from you if you're looking to start a nonprofit in the United States and meet our specific criteria!

To enter the program, simply answer a few questions so we can assess your eligibility. Fill out the Google Form, and if you align with the right qualifications and we still have places available in our next test group, we’ll reach out to you very soon.

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How MC Boys Soccer Booster Club raised $15,000 for free

The Boys Soccer Booster Club, a dedicated group supporting youth soccer in the community, faced the challenge of raising funds to cover equipment, travel expenses, and other essential needs. With limited resources and a growing demand for financial support, the club needed a free, user-friendly platform to raise funds.

Enter Zeffy, a true game-changer for the Boys Soccer Booster Club. With its fee-free fundraising platform, Zeffy offered a seamless solution to the club's fundraising woes. The club was able to create custom fundraising pages, tickets, and online shops to raise money. 

Plus, with Zeffy's intuitive dashboard, they could track donations in real time, monitor campaign progress, and send personalized thank-you messages to supporters.

Thanks to these tools, the Boys Soccer Booster Club raised an impressive $15,000 to support its programs and activities—and didn’t pay a cent in fees.

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Best free tools for starting a nonprofit

When starting a nonprofit without as many financial resources, it’s essential to take advantage of free tools and softwares for nonprofits. These platforms can help you organize your team, spread your message, and collect funds without paying much.

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Securing nonprofit status

Zeffy: Zeffy helps nonprofits get started for free and obtain charitable organization status in 2 weeks. An expert will review your information, take care of the legal steps at zero cost to you, and all you’ll have to pay is the IRS incorporation fee which falls between $275 and $600. We’ll show you how Zeffy can support you with everything from fundraising to donor management, too below. 

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Association and task management 

• Google Workspace (formerly G Suite): Google Workspace offers a suite of productivity tools, including Gmail, Google Drive, Docs, Sheets, and Slides, which are great for communication within your nonprofit team.

• Trello: Trello is a flexible project management tool that uses boards, lists, and cards to organize tasks and collaborate with team members. Its free version provides basic features useful for planning and executing projects within your nonprofit.

• Asana: Asana is another project management tool that offers a free version for small teams. It allows users to create tasks, set deadlines, assign responsibilities, and track progress, facilitating efficient project coordination and workflow management.

• Zoom: Zoom offers free video conferencing and webinar hosting for meetings, workshops, and virtual events. It's a valuable tool for nonprofits looking to connect with stakeholders, conduct training sessions, or host fundraising events online.

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Marketing and promotion

• Canva: Canva is a versatile graphic design tool that allows users to create professional-quality graphics, presentations, and marketing materials for free. It offers many templates and customization options, making it ideal for nonprofits looking to create compelling visual content.

• Mailchimp: Mailchimp is a popular email marketing platform that offers a free plan for nonprofits. It enables organizations to create and send email campaigns, manage subscriber lists, and track engagement metrics, helping to build and nurture relationships with donors and supporters. Check out our article on Mailchimp alternatives here

• WordPress: WordPress is a popular website-building platform that offers free website hosting and customizable templates for nonprofits. With its user-friendly interface and extensive plugin library, WordPress allows organizations to create and maintain a professional online presence without incurring hosting costs.

• Google Ad Grants: Google Ad Grants provides eligible nonprofits $10,000 monthly in free advertising credits to promote their missions and raise awareness. By leveraging Google Ads, organizations can increase their visibility online and attract more supporters to their cause.

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Fundraising and donor management

• Zeffy: Zeffy is a platform for nonprofits to manage events and sell tickets online. It allows nonprofits to manage donors, host lotteries and raffles, and so much more. Unlike other fundraising platforms, Zeffy lets you collect donations and promote your events all in one place, completely for free. 

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• Double the Donation: Double the Donation is a tool that helps nonprofits find extra funding by discovering if employers can match donations. It has a database of companies offering matching gift programs, so nonprofits can quickly check if their donors' contributions qualify for matching gifts. This way, nonprofits can increase their funds without donors paying extra.

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FAQs

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