Your Financial Situation is Overwhelming You, Now What?
Anyone who has the passion and audacity to start a nonprofit immediately earns my respect. For some reason, there is an idea floating out there that says, running a nonprofit is easy. WAKE UP CALL! Nothing could be further from the truth! Here is some statistical truth for you: According to the National Center of Charitable Organizations, 30% of nonprofits fail to exist after 10 years. I am not giving you this information to discourage you, but to lend truth to your experience of the hard work you put into your nonprofit.
There are lists out there on the web telling you the reasons a nonprofit may fail. Those are good to have, Knowing the barriers you will be up against as a nonprofit will help you be more prepared to face them. Here is one of my favorites of such lists. But rather than reproduce another list (although I do love lists) I have decided I am going to take one of the top reasons your nonprofit may fail and give you awesome ways to avoid this mistake.
One of the top reasons a nonprofit fails is because of the lack of the overall financial knowledge needed to run a nonprofit.
So, how do you avoid the killer mistake of lack of nonprofit financial knowledge? Learn things! You could spend hours reading books and doing the research yourself, but I’m guessing you have a nonprofit to run—let me tell you some of the things that would be fabulous for you to know.
Many nonprofits don’t always realize the amount of money it takes to start a nonprofit. Nonprofits have their own set of fees for startups. TheBalancesmb.com put out an amazing article on the costs of starting a nonprofit. Beyond not realizing how much it costs to start a nonprofit they don’t know where to find funding. They also don’t make a fundraising plan. Now that I have told you what those that fail don’t do, let me give you some ideas to help you accomplish these goals.
One thing that makes funding most likely and most successful is having various funding sources. According to GoFundMe, there are at least nine different funding sources available to nonprofits.
1. Grants—not only Federal but also state and local grants.
2. Individuals—yes, the individual persons matter! Individual donations can add up, don’t write them off!
3. Membership Fees—totally do this if you can find a way! Don’t give your time and knowledge away for free in EVERY situation. This can be a tightrope of sorts but it is possible to a nonprofit/for-profit combination!
4. Charity and crowdfunding sites—GoFundMe is not the only one! There is also Classy and Salsa!
5. Foundations—they are the second-largest funding source for nonprofits. To receive foundation funding, in most cases you need to have 501c3 status. Don’t worry if you are a project, fiscal sponsorship can provide you with this status until you receive your own.
6. Earned income—yes, you can be a nonprofit and sell some of your products and services; slight tightrope, like membership fees but having an awesome accounting team behind you that knows the nonprofit world—they can help you with that tight rope!
7. Corporate Sponsorships
8. Planned giving—this goes by many names estate planning, legacy giving, deferred giving
9. Volunteers—although it is not cash in your account per se the number of volunteer hours your nonprofit gets can save you hundreds to thousands of dollars a year—count it!
I TRIED TO STAY A WAY FROM MAKING A LIST, I SWEAR!
You have heard that you need a business plan, right? You have heard that?? Please tell me yes…
Part of your business plan should be your fundraising plan. Fundraising is hard, without a plan you are running blindly through a gauntlet. Don’t do that to yourself. Here is a fundraising template to help you out with this process.
You should always have a fundraising goal. This goal should not be pulled out of thin air. Plan the programs you hope to have and then base your fundraising goal on these plans. Don’t forget to consider your operating costs! After you have settled on a goal think through your fundraising strategy. As a newly started nonprofit a combination of the nine listed above, are an excellent start. Next, WRITE IT OUT! Something about having things on paper makes us more committed to a plan, write it down. It will be worth the time and effort.
As a new nonprofit you may not be able to start collecting individual, foundational, or even some grant funding until you receive your 501c3 status from the IRS. Don’t put the brakes on your life-changing project. Some nonprofits can provide you with fiscal sponsorship. Fiscal sponsors can not only provide you with your 501c3 status, but they should help you with accounting services, obtaining funds, and grant writing. Angels for Angels is here for you! Angels for Angels looks to serve projects with a social purpose and who align with their core values. Check us out to see if we would be an awesome fit for you!