Financial capital
Status: not complete
Insights and resources
-
What will your potential start up costs be? Please give your best estimate. (By startup costs, we mean costs directly associated with incorporation and obtaining 501 (c)(3) status. This includes lawyer fees, filing fees and application fees.)
Answer this question for more accurate results
Insight
The majority of new nonprofits spend between $1,200 and $20,000 in startup costs, with the average around $5,000. This typically covers registration fees for incorporation and your IRS 501(c)(3) application, initial accounting and lawyer fees, and some business supplies or rent. If you need to purchase equipment or secure specialized space, costs can quickly soar. Be sure you budget adequately for startup costs.
Resources
-
External resource
Estimating Startup Costs for a New Business
https://startupnation.com/start-your-business/plan-your-business/estimating-startup-costs-for-a-new-businessConfounded over how much money you'll require for your startup business? Well, don't fret. There's an easy approach to breaking this mystery down and creating a clear picture of the...
-
-
Where do you intend to get the majority of your funding in your first two years of operations? Check the top two.
Answer this question for more accurate results
Insight
Funding a new nonprofit is rarely as easy as writing a grant. When asked about the most important source of revenue during the first year of operations nonprofit founders reported donations (37%), personal support (14%), earned revenue (13%), foundation grants (12%), and government grants (9%). Many foundations do not accept applications from organizations that have been operating for less than 2 years. Grant money is not easy to win and just because you have received your 501(c)(3) status does not mean that you are competitive for a grant. Earned income, personal donations, and crowdfunding may be the best path for you.
Resources
-
Knowledge base
Where can I learn more about fundraising planning?
https://learning.candid.org/resources/knowledge-base/fundraising-planning/As national reports on funding trends indicate year after year, foundation support (i.e., grants) accounts for only a small percentage of the overall funding picture in the nonprofit world. It...
-
External resource
Ten Nonprofit Funding Models
http://www.ssireview.org/articles/entry/ten_nonprofit_funding_modelsFor-profit executives use business models—such as "low-cost provider" or "the razor and the razor blade"—as a shorthand way to describe and understand the way companies are built and sustained. Nonprofit...
-
External resource
The Importance of Earned Income in Your Funding Model
https://ssir.org/articles/entry/the_importance_of_earned_income_in_your_funding_modelSSIR makes the case that earned income is something your nonprofit should at least consider.
-
External resource
How to Get Funding From Friends and Family
http://www.entrepreneur.com/article/217651Most entrepreneurs have learned that it's almost always quicker and easier to get cash from someone you know, rather than angel investors or professional investors (VCs). In fact, most investors...
-
-
Are you willing to take on personal loans to fund the organization you are developing?
Answer this question for more accurate results
Insight
More than 15% of nonprofit founders reported taking on personal debt while starting a nonprofit. The average amount was $27,000.
Resources
-
External resource
Using Loans: A 101 Guide To Borrowing For Nonprofit Organizations
https://nonprofitquarterly.org/2017/08/30/using-loans-a-101-guide-to-borrowing-for-nonprofit-organizations/
-
-
Do you keep a personal budget?
Answer this question for more accurate results
Insight
As founder, you will have significant influence over the organization. A sound budget is critical to the success your startup nonprofit because it will help you articulate your needs, plan your growth, and gain credibility for the organization.
Resources
-
External resource
Budgeting: A Guide for Small Nonprofit Organizations
https://www.vscpa.com/sites/default/files/resources/Budgeting2012_0.pdfA free resource provided by the Virginia Society of Certified Public Accountants, this booklet outlines the steps in the budgeting process and includes a sample operating budget for a nonprofit.
-
-
Do you have a good sense of the operation costs or have you created a budget for your organization's first year?
Answer this question for more accurate results
Insight
Estimating operating and individual program costs are often the most difficult step for new organizations.
Resources
-
External resource
Nonprofit Cost Analysis Toolkit: Six Steps to Finding the True Costs of Programs
https://www.bridgespan.org/bridgespan/Images/articles/nonprofit-cost-analysis-toolkit/NonprofitCostsAnalysisToolkit.pdf
-
-
How would you describe your current employment status?
-
How do you plan to support yourself as you start this organization? Check all that apply.
Answer this question for more accurate results
Insight
Only 37% of nonprofit founders work full-time on the venture without other employment. Many of those have support from their spouses or retirement savings. The start-up process is not quick and easy, so make sure you have a plan to support yourself as the organization is getting established
Resources
-
External resource
Why You Should Work Your Day Job While Starting a Business
https://www.inc.com/melissa-chu/why-you-should-work-your-day-job-while-starting-a-business.html
-
-
What is your net worth?
Answer this question for more accurate results
Resources
-
Knowledge base
How much does it cost to start a nonprofit?
https://learning.candid.org/resources/knowledge-base/how-much-does-it-cost-to-start-a-nonprofit/One of the most asked questions about starting a nonprofit is how much it costs. Unfortunately, giving a single amount—or even a range—is difficult because the costs can vary greatly...
-