5 Tips on Financing a New NonProfit
Starting a nonprofit organization from new is neither for the faint hearted nor weak spirited. Whether you are starting a nonprofit organization or joining one that is already in operation, you'll need to find creative ways to fund it to accomplish the work that supports its mission. How one goes about getting those funds will usually look into getting either a grant or a loan. Grants and loans generally come from foundations, the government, and corporations. As a new nonprofit it will have little to no financial history so large grants and loans will be very hard if not impossible to attain.
Here are the 5 bullet points Nonprofits Assistance Fund, they directly addresses new nonprofits and provide insight on how to begin bringing in money and other resources for your organization.
Start with a budget. Your budget communicates your plans and tells prospective donors and funders how realistic you are in your work. A start-up budget is likely to be very modest with minimal staff and facilities. This checklist can help you begin, but keep in mind your first year expenses may need to be very limited to show you understand how to start from the beginning and not take short-cuts. If you have a reasonable plan, supporters are more likely to bring dollars to the table than if you only have good intentions without a roadmap.
Your founding donors probably know you. Covering the first few expenses (even filing the IRS form costs money) has to come from somewhere. People who already know and trust you will be your strongest supporters. Have a party to explain your mission to friends and family, and ask them to help cover the initial costs. Nonprofit founders often stand alone for too long, and paying all the expenses out-of- pocket can cause a lot of stress early on.
Think small. Many nonprofits want to request a large grant right away. The big request is much more likely to be successful if you can show a track record at little achievements. There are many local businesses, houses of worship, and community groups which could afford $100-$500 donations if they see a budget and some initial investment from a start-up organization (see 1 and 2 above).
Be wary of debt. A loan or a credit card advance can seem like a good way to get the ball rolling, but often this start-up debt can hobble an organization for years to come. The money you get in earnings and donations in years 2 and 3 are going to be needed respectively. Spending income to pay off debt from the first year can significantly impact an organization’s financial situation down the road.
Plan long-term. That big foundation request mentioned in number 3? Don’t forget about it completely. Be ready to show how it becomes viable in year 2 or 3 for your new organization. Start looking at funding cycles, time-lines, and begin meeting with philanthropic staff. This, along with proven results, will help you get that first application in on time and ready for approval.
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