How Much Is It To Start A Nonprofit

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Written by: A. Bell


    When starting a non-profit there are several things that need to be considered, mainly the steps it takes to actually get your foot through the door. However, with this belief that anyone is able to start a nonprofit with the correct paperwork some things are looked over, such as how much does it cost to actually start up a non-profit. Well, how much does it actually cost? The answer to this is actually pretty complicated, as there are several stages to starting up a non-profit, and at each stage, there is a charge. 

1. Incorporation costs

    Once you have solidified the concept of your nonprofit and created your initial mission statement, you will be ready to establish your organization as a business. To establish your nonprofit as a business there are several forms that you must complete, which for each state the forms that you must fill out and the charges for these forms change. In one state it may cost $0, but in another state, it can cost as much as $250. The best way to figure out the expenses for your state is by doing research and the best place to start is here. 

2. Filing for tax exemption 

Filing for tax exemption is a completely different thing than establishing your nonprofit as a business. Tax exemption is a bit more tricky than the other stages of costs when starting up a nonprofit. Not all nonprofits seek tax exemption, but those that provide help in education, research, or other charitable sources may end up applying for 501c3 status. While other nonprofits may have to apply for another tax-exempt status.  

    The government has created two different forms to use when applying for the 501c3 status, the easiest form would be the 1023EZ form compared to that of its predecessor the original 1023 form. The 1023 EZ form allows those who are just starting up their nonprofit to be able to easily decide if they will receive no more than $50,000 in receipts each year. To figure out if you could qualify click here.  The price for this 1023EZ form is only $275 compared to the original 1023 form which is roughly $600. 

3. Charity solicitation

In at least 40 states, you must now be registered as a charity to be able to actively fundraise. The fundraising in question can range from in-person, mail, even online. Many states may even consider a simple 'donate' button as a form of active solicitation, so it is best to register as a charity before you even put in that button on your website. Bear in mind to fundraise online to other states, you must be registered in those states as well! So, I would suggest starting off small and registering in the state your organization has a physical presence first, then slowly expand. Also, you may not even have to register depending on what state you are in and what amount you make, so it is best to do some thorough research before accepting all those donations!

4. Additional costs

These costs involve the hidden fees that some people may not pay attention to, such as hiring people to work for you, such as a graphic designer, or simply creating an email for communication (depending on how you would like your company to be viewed if there is no preference a simple Gmail account will work, but for a professional email to add to your website it may cost some money). Or another big component would be the insurance that you would need for your nonprofit to cover the general activities that your nonprofit may participate in. These insurance costs may be up to $500 a year depending on the state that you live in. 

Overall, depending on what state you live in a nonprofit can cost anywhere from $500 to anywhere up to $1000 minimum for your first year. If you are reading this post it may be because you are interested in starting up a non-profit, in which case do your due diligence and research the costs of starting up your nonprofit to make sure that you are economically safe to begin moving forward. 

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