Start a Nonprofit: Find Easier Funding

Funding is the lifeblood of a nonprofit. It is what pays the bills, staff, and keeps the programs funded. However, many, when learning how to start a nonprofit organization, disregard key factors that will affect the ease in which the nonprofit can get certain types of funding. The way in which a nonprofit is put together can be a determining factor in the ability it will or will not have in getting initial funding. I will give you a few pointers below.

There are many different ways a nonprofit can find and obtain funding. The most stable types of funding are individual donors and donations from corporations. The gifts from these two sources may or may not be large and most likely takes a combination of many donations from these sources to fund a nonprofit that has a substantial budget. While donations from individuals is the easiest and many times the most stable form of nonprofit support, a nonprofit may find that it needs to find some larger sources for donations.

Corporations and other nonprofits can be a good source for larger donations. Many corporations give large amounts of funding to charities. While larger gifts might be desirable, donations from organizations are more difficult to rely on. Having a few larger gifts mixed in with donations from individuals can be a good strategy for funding until a stable donor base can be established. Unfortunately for new nonprofits, there is a challenge in getting gifts from corporations and other funding nonprofits, otherwise known as grantmakers. The way in which the nonprofit is created can make a huge difference in its ability to solicit funds from these organizations.

Many are unaware that larger gifts and donations might be unreachable during the first years because the nonprofit has not established a track record for which donors and grantors can be comfortable that the nonprofit will do what it says it will do with funds. Once given, donations and grants are not refundable, and the grantor has no recourse. Many times a corporation or granting nonprofit likes to choose the programs or ways the donations are used inside the nonprofit to which they donate. There are certain programs that many of these organizations like to donate money towards and so they specify how they would like the grant monies used.

This prompts many corporations and granting organizations to work with only established nonprofits with a proven history of honoring grantors’ gifts. This circumvents many newly established independent 501c3 nonprofits from engaging these organizations until after being established for several years.

One easy way to circumvent larger funds being out of reach is by associating your nonprofit alongside other more established nonprofits. The easiest way to do this is through fiscal sponsorship. Through Fiscal Sponsorship, the newly established nonprofit sits inside of an existing independent 501c3 nonprofit. This fiscally sponsoring organization, with its established history, gives the newer nonprofit history. The newer nonprofit can use its sponsor’s history to prove to granting organizations that it can be trusted with their donations. Of course, the Fiscal Sponsor and the sponsored nonprofit will want to track every penny of the granted money in order to establish good grant compliance.

Through Fiscal Sponsorship, a brand new nonprofit can be confident in its ability to engage corporations and granting organizations for gifts and donations.

Learn more about Nonprofits and How to Make them Successful.

Copyright 2011 Scott Michael Ringo