How to Start Fundraising

You’ve got a vision. You’ve seen a need and decided to start a nonprofit so you can meet it. You may even have a name and some branding ideas for your new organization. All you need is the money to get started.

So how do you get it?

Starting a nonprofit from scratch is a huge undertaking, and getting your start-up money can be a daunting task. Here are some ways to get started.

1. First, do your paperwork

One of the first things you need to do is file with the IRS to become a 501(c)(3). That means you’re officially a nonprofit, are exempt from paying taxes on the money you raise, and allows your donors to write off their donations. It’s also a huge step towards establishing credibility with your donors; most people don’t want to donate to a charity that doesn’t already have its IRS exemption letter. You may also be a 501(c)(4), but those are pretty rare.

Make sure you’ve got your stuff together and start the process to become a 501(c)(3). Do not put this off ’til the last minute! It can take a long time for the IRS to process these requests.

You don’t have to have a 501(c)(3) to start operating, but you do need to be careful about how you run your organization in the interim. Make sure you know the right forms to file with the IRS in the event that you do raise money and accrue costs, and be very careful to let your donors know about the current tax status of your organization. This is an instance where talking to an accountant is a must — they’ll make sure you do everything right the first time and prevent headaches in the future.

2. Talk to potential donors

Many nonprofits start their funding with money from one or more interested donors. If you choose to pursue this option, you need to be prepared to persuade your donors that your nonprofit is a worthy investment. Your donors will ask you what you want to do, what your plan is, how you’ll use their money, and more. Be ready to answer a lot of questions and give convincing, fact-based answers to each one.

3. Consider a Fiscal Partnership

A fiscal partnership is an arrangement that allows an exempt organization to partner with a non-exempt project. The non-exempt party can raise money for their project under the umbrella of the exempt organization’s 501(c)(3) status. You don’t have to be non-exempt to be part of a fiscal partnership, though; it’s also a useful arrangement for fledgling organizations that need help getting started. They’re often a boon for new nonprofits; being part of a fiscal partnership helps establish legitimacy with potential donors who are leery about donating to a brand new charity.

If you want to look into a fiscal partnership, do some research into other nonprofits in your area. There are different types of fiscal partnership but, no matter what type you pursue, it’s best to approach organizations that share a similar mission. Be aware that there is often a fee associated with working under another organization’s tax exempt status, and make sure that any financial investments will pay off in the long run.

4. Look for Grants

Getting a grant is huge for nonprofits who need the funds to get started. You can apply for grants if you don’t yet have your 501(c)(3) status, but most foundations look for charities who are already exempt. Applying for grants can be a long process; applications can be long and can require extensive planning and editing to complete. The application and review process can also take months to complete. For the best results, make sure to begin your applications as early as possible, and account for the review process in your organization’s timeline.

5. Get Back to Your Roots

Building grassroots support is one of the most common ways new nonprofits raise money. The key for building grassroots support is to build personal connections in the community — blanketing your area in flyers or placing ads in the newspaper probably aren’t effective fundraising methods. Offering community events is a great way to gain attention, meet people, and start building valuable connections. At any event, focus on ensuring attendees get a good grasp of your nonprofit, its mission, and how they can get involved.

6. Crowdfunding

Getting a nonprofit started using crowdfunding can be tricky, but it’s not impossible. It’s another instance where it’s best to already be established as a 501(c)(3) — donors are more likely to give if you’re tax exempt, and some charitable crowdfunding platforms require it. Crowdfunding is best used when working towards a single tangible goal, so trying to raise several thousand dollars to cover start-up expenses probably won’t work. Choose one project and make it the focal point of your campaign, and build a really amazing story to go with it. If you play your cards right and focus on great donor retention practices, a successful crowdfunding campaign is a great way to engage your current donors and find new ones.

7. Scale Up!

Once you’ve established a solid base of donors, it’s time to start scaling up. There’s a few things you’ll want to emphasize in your efforts to gain new supporters; among them are fiscal transparency, fact-based examples of how you’ve used older donors’ support to achieve your mission, and, ideally, references for potential donors who want to talk to someone who’s already supported you.

As you focus on increasing your donor pool, remember not to neglect your current donors! Donor retention is, by far, the most efficient way to raise money, and having excellent donor retention strategies in place will help.

There are nearly endless ways to get your nonprofit up and running. Whatever you decide, do your research, make good connections, and be patient! Results may not be immediate but, if you choose the right strategies and work hard, you’ll see your efforts pay off.

For more info, check out our ultimate guide to asking for donations!