How to Start a Nonprofit on a Shoestring Budget

How to Start a Nonprofit on a Shoestring Budget

November 10, 2016 Lynette Garet Business Basics 0 Comment

Starting a nonprofit is hard work and can be expensive; setting priorities will help you stay organized and within budget. Priorities will also help you avoid costly mistakes. It’s possible to cut some corners but unwise to cut others. Here’s how to spend your money to best advantage.

First things first:

  • Develop a business plan that details strategies to carry out your work and achieve your goals. You should come away from the plan development process with a detailed and clear idea of how you will fund your nonprofit, who will carry out the work and what your timeline is.
  • Set up your board: choose people with expertise in business, legal and financial matters in addition to enthusiastic supporters. In a perfect world, your directors will contribute financially to your nonprofit; at a minimum, they should have the experience to support you.

Legal status

Register your nonprofit with your state’s secretary of state. Requirements vary from state to state but typically, you’ll need articles of incorporation and corporate bylaws that specify the purpose and structure of your nonprofit and that designate officers and the structure and function of your board of directors.

Some nonprofit just get started and worry about the paperwork later. At this early stage, you may think legal advice is an unnecessary expense. However, it’s wise to consult an attorney about organizational structure, bylaws and their related advantages and possible pitfalls.

In most cases, an attorney provides incorporation services as a package deal, for a flat fee. Ask local funders and nonprofits for recommendations. Call with your screening questions before selecting an attorney to be sure she has expertise in business law.


Financial Arrangements

The IRS and your state tax board have guidelines for tax-exempt status. IRS Publication 557 outlines the federal government’s policies and procedures. Your state will have similar rules to follow. This is another instance of money well spent: Get professional advice from a CPA or other tax expert. It will save you from legal headaches down the line.

A professional can also advise you on how to set up bookkeeping and the records you need to retain. Knowing your immediate and future accounting requirements and investing in the appropriate software now will help avoid costly upgrades in the future.


Administrative Details

Daily business operations demand procedures and solutions to a host of mundane details. Ask your board or local nonprofits for advice about these must-haves.

  • Computer system(s)
  • Software
  • Internet access
  • Website
  • Email
  • Business letterhead
  • Business equipment
  • Office space and furniture
  • Telephone

A home office will cut expenses until you outgrow it. Your home phone and personal computer may also meet immediate needs. Buy refurbished or used equipment and furniture. DIY letterhead, using templates, can be a short-term solution, but hire a graphic designer for a professional look. Domain registration is a modest expense but website design isn’t. Check online for freelance designers or ask for recommendations.

You can do most of the necessary work to get your nonprofit started by yourself or with a few volunteers, but don’t skimp on legal, financial or design advice. Professionals will save by doing it right the first time.

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