New nonprofits crop up all the time, yet there are still a lot of questions floating around surrounding fundraising from startup organizations. Can you solicit donations before receiving tax-exempt status from the government? What about grants? What exactly goes into incorporating and applying for 501c3 status?
That’s why we’ve put together this quick guide for helping new nonprofits and the philanthropists behind their missions begin to explore fundraising in a new way. Specifically, we’ll cover the following:
- Fundraising before receiving 501c3 status
- Seeking grants as a new nonprofit
- Acquiring initial donor support
- Getting started with fundraising software
Are you ready to learn more about the beginning stages of fundraising as a startup nonprofit—and how to make your efforts as productive as possible? Let’s get started.
1. Fundraising before receiving 501c3 status
As a new nonprofit, you’re likely eager to get started fundraising as soon as possible. You don’t want to sit around waiting for some government official to approve your application. Luckily, you might not have to wait.
Nonprofit experts share that while it is possible to begin raising funds prior to receiving official 501c3 status, there are a few critical components to keep in mind:
- You must disclose your uncertain tax status to donors before accepting gifts.
- If your organization is denied tax exemption by the IRS, donors’ contributions will not be tax-deductible.
- The rules and regulations can vary from state to state.
Make sure you look into the specific state and local laws where you’ll be fundraising to make sure you—and your donors—don’t end up in a difficult situation. Still, other organizations choose not to begin their fundraising until they’ve become an officially certified 501c3 nonprofit just to be certain.
2. Seeking grants as a new nonprofit
Grant funding is a fantastic way to supplement individual contributions and bankroll your organization’s mission—especially for startup organizations. This Grants Plus guide to nonprofit grant-writing stresses that a grant proposal should be clear, tailored, compelling, and persuasive. After all, it’s critical that you make a compelling case that your organization is the best recipient for the funding, as grant funding is limited and very competitive in nature.
If you’re seeing relevant grant funding for your organization, these are the most common sources to look into:
- Corporations: Building partnerships with businesses and getting corporate sponsors is one of the best ways to raise support for your nonprofit. Corporate philanthropy is a win-win for all involved. The nonprofit receives critical funding while the business builds a charitable reputation among consumers and employees.
- Government: Government funding is another great way to support your nonprofit as it’s beginning to grow. Specifically, there are federal, state, and municipal-funded grant programs in place to help charitable organizations pursue their missions. A great place to get started with federal grants is with the comprehensive database at grants.gov.
- Foundations: Finally, there are also private grant-giving foundations that exist solely to financially support nonprofits looking to better the world, usually within the same community as the funder. These grants are typically more targeted, so it’s a good idea to search for foundations in the area that align with your own organization’s mission.
One thing to keep in mind when soliciting grant funding for your nonprofit is that while individual supporters might be willing to contribute to your fundraisers before you’ve received 501c3 status, most grant-giving institutions will not. Instead, you’ll likely want to wait to pursue grant funding until you’re an officially incorporated nonprofit organization. And in the meantime, you can begin building relationships with individual donors.
3. Acquiring initial donor support
Acquiring initial donor support for your new nonprofit can be an overwhelming task. After all, if you’re newly incorporated, it’s likely that you don’t have a lot of existing brand awareness in the community. When getting started seeking donor support, here are a few best practices to consider:
- Explain the need. Why are you starting a new nonprofit in the first place? What need exists in the world that you plan to fulfill by creating this new organization? Before you can expect donor support, you need to make your community aware of the problem you attend to address—and how they can help.
- Share where donations go. Be specific about where individuals’ donations will go and how they will be used. For example, can a donation of $X feed a family of four for a month? When you explain where funding is directed upfront, donors can see not only what their money is being used for (food), but who it is going to help (a family of four).
- Leverage your own network. More than likely, you have your own existing network of individuals who want to see you succeed. This might include family members, friends, colleagues, neighbors, and more. Try getting their support first, and encouraging them to share your campaign to their social media pages to garner even more traction for your fundraisers.
Then, be sure to begin the donor stewardship process to work toward building long-term relationships with your supporters. Although acquiring new donors will be critical at the beginning, it will be most cost-effective for your organization to begin retaining existing support rather than continually seeking new, one-time donors.
4. Getting started with fundraising software
Selecting your fundraising software is a critical aspect of getting your fundraising efforts up and running as a new nonprofit. Luckily, there are a ton of existing software providers to choose from.
Top donation software will prioritize aspects that enhance the donor experience and provide benefits to your organization, such as:
- User-friendliness: Make sure your fundraising software is easy to use for both your nonprofit team on the backend setting up campaigns and your donors and supporters on the frontend contributing to your cause. Otherwise, you risk losing out on critical support due to a lengthy or otherwise complicated giving process.
- Functionality: The features included will vary from provider to provider, but it’s a good idea to look for a solution that offers online giving pages, text-to-give, event and ticketing tools, and even mobile bidding software for fundraising auctions. The more functions your donation software encompasses, the more you’ll be able to raise for your mission using a single tool.
- Affordability: Robust fundraising solutions can be great investments, but sometimes you just don’t have the money to shell out for new technology as a startup organization. Luckily, there are a ton of free and low-cost solutions available to help new and small nonprofits raise money without straining their wallets. Plus, if you invest in an easily scalable solution, you can add on new features and functionality as you need it. This way, your fundraising software is able to grow alongside your organization!
With the right fundraising software provider, you’ll be able to accept online donations and bring in online fundraising revenue for your new nonprofit. Then, additional fundraising software solutions (such as your donor database or CRM) can help you collect, organize, and leverage information about your supporters to build relationships and craft future campaigns.
As you surely know, starting a nonprofit organization is difficult—but it doesn’t have to be impossible.
By launching your fundraising efforts as quickly as possible, exploring available grants, acquiring critical donor support, and setting up a foundation of high-quality fundraising software, you’ll be well on your way to fundraising success. And with that, you’ll be better equipped to pursue the mission that inspired you in the first place. Good luck!
John Killoran is an inventor, entrepreneur, and the Chairman of Clover Leaf Solutions, a national lab services company. He currently leads Clover Leaf’s investment in Snowball Fundraising, an online fundraising platform for nonprofit organizations. Snowball was one of John’s first public innovations; it’s a fundraising platform that offers text-to-give, online giving, events, and peer-to-peer fundraising tools for nonprofits. By making giving simple, Snowball increases the donations that these organizations can raise online. The Snowball effect is real! John founded Snowball in 2011. Now, it serves over 7,000 nonprofits and is the #1 nonprofit fundraising platform.