A nonprofit wouldn’t be able to enact change without the tremendous help of its supporters. While large, established organizations are able to survive due to the constant flow of financial support, getting your new nonprofit off the ground can take a lot of work. Are you looking for a way to finance your new nonprofit? We’ll lay out your choices.
Donation-Based Fundraisers
Donors are a nonprofit’s greatest allies. A network of dedicated donors will not only give their money, but their time in order to support the organization. Although creating a fundraiser can be done with a few clicks of a mouse and keyboard, keep in mind that they are very intensive projects. You’ll need to work hard, both on and offline, to raise money and drum up support.
Combined with other sources of financial funding, donation drives and fundraisers are an essential part of the financing process. When your nonprofit grows in size, recognition and support, you can expect a steadier influx of donations.
Startup Loans
Shake off your preconceived notions; it’s actually not uncommon for nonprofits to take out loans. Before you borrow, you need to know that a bank loan or line of credit requires a guarantor and collateral. You need to prove to the lender that your nonprofit isn’t going to flop, and of course, you need to agree to repay the loan. Personal loans are another option, but if not carefully outlined and agreed upon, can leave you open to legal issues.
In some instances, a large loan may be your best option. Maybe you need to borrow money for large-scale building renovation or purchase of equipment. If you truly want to avoid taking out a loan, consider applying for a grant instead.
Publicly and Privately Funded Grants
Searching for the perfect grant can take a lot of time, but the effort is worth the reward. Grants are a form of funding that, unlike a loan, does not need to be repaid. However, grants tend to allot money under particular circumstances. For example, an institution may issue your nonprofit a grant as long as your organization shares the same mission.
When applying for a grant, you need to present a funding plan for your nonprofit. Your plan should fit within the scope of a year, and contain your organization’s goals, resources, and strengths and weaknesses. Describe the potential hurdles your nonprofit can encounter, and how you intend to take advantage of funding opportunities. You also need to include a detailed projection of how you’ll fund your nonprofit in the future, and a way to keep track of results.
Grants can be a reliable way to finance your nonprofit without worrying about debts. As long as your nonprofit adheres to the contingencies of your grant, you can receive continuous funding throughout the years.
