We are asked many times, does it cost money to start a nonprofit? Even when we don’t receive that question, when we are meeting with a young nonprofit, we still come across this topic. We find that this question is asked so often because there is a gap in correlating the management of a nonprofit organization with running a business.

Here, we will answer this ever important question, ‘Do I need money to start a nonprofit?’

YES, starting ‘any’ business requires money. Let’s face it, there are key fundamental areas in your business that will require funding. Beginning at a minimum of a few dollars to acquire a domain name for your business to basic business supplies, money will be required. However, you should recognize that it is extremely important where you direct those funds. I see many nonprofits fall into one of two holes, they have a significant amount of funding and begin pouring it into the startup process and when the nonprofit is ready to launch, there is no money. Or, the nonprofit begins on the assumption that ‘it can be done without money’ and the process is halted when money is required to move to the next phase, and there is none.

Let me help you answer two important questions, do I need thousands of dollars in order to start a nonprofit? And how much will I need? .

Let me help you answer two important questions, do I need thousands of dollars in order to start a nonprofit? And how much will I need?

The costs of starting your nonprofit will depend on the amount of administrative work you intend to devote to the startup process. If you have the bandwidth to incorporate the research, application and implementation of these basic steps from startup to launch, go for it because it will limit the amount of money you spend during this time. In reality, the process of self application from nonprofit startup to launch could cost you as low as $600 This amount includes incorporating your nonprofit in Arizona state (amount could differ in other states) and filing for a 501(c)3 exempt recognition by the IRS (there are a number of IRS exempt designation, be sure to review what’s appropriate for your organization. 

Of course, if you need to consult with certain professionals to receive advise and/or if you have questions, such as an accountant, attorney, etc, these consulting services would increase your startup costs. But you should really do your research, because in theory starting a nonprofit should not break the bank. Costs in upward of $1,000 may not be required for a basic nonprofit process from startup to launch.

Now, I caution you. When a decision is made to start a nonprofit, it is often times matched with either responding to an urgent crisis within the community or supporting ones passion to help others. Even so, they will require either the immediate application of services or delivery of programing. Those involved in this nonprofit will have very little time to devote to the administrative tasks necessary at start up to launch.  This is when MONEY will be necessary and you may need more than the minimum of $600.

I mean when you think about it, which type of business do you think normally begins with so much momentum than a business founded to address an urgent need within the community? Yes, a nonprofit.