Who is giving to nonprofit organizations?
Among private, nongovernmental sources of support, gifts from living individuals — as opposed to bequests from people who have died — have always represented a large portion of total giving, but philanthropic giving by foundations and corporations has been growing. According to the Giving USA Foundation, in 2019 corporations represented the largest portion of total giving and the COVID-19 pandemic is furthering this trend. This resulted in corporations giving the largest share of nonprofit sponsorships and grants. For new nonprofit organizations, the best fundraising strategy is to take a balanced approach that includes multiple forms of contributions.
Supporting your mission with fundraising
Nearly every nonprofit organization depends on generous donors for the cash it needs to pay its bills and provide its services. Even if you have income from ticket sales, admission charges, or contracted services, you’ll find that raising additional money is necessary to keep your organization alive and thriving.
Corporate contributions are the largest source of contributed income to nonprofit organizations. But you can’t just sit and wait by the mailbox for the donations to begin arriving. How will contributors even know that your new nonprofit is up and running, providing services? Two basic rules of fundraising are that potential funders need to be asked for donations and thanked after giving one. Chapter 15 focuses on raising money from individuals, Chapter 16 covers raising money with special events, and Chapter 19 discusses campaign fundraising, which is used when you need to raise extra money for your building or your endowment.
Grants from foundations and corporations make up a smaller percentage of giving to nonprofits, but their support can be invaluable for start-up project costs, equipment, technical support, and sometimes general operating costs. Some organizations get most of their income from foundation grants; others get very little. Chapter 17 introduces you to resources to help you find potential grant sources. Chapter 18 walks you through the process of crafting a grant proposal.
Fundraising works better if people know you exist. That knowledge also helps draw people to your theater or to sign up for your programs. Here’s where marketing and public relations enter the picture. Chapter 13 helps you figure out what your message should be and how to circulate it to the world.
Chapter 2
Understanding What It Takes to Start a Nonprofit
IN THIS CHAPTER
Maybe you’ve been thinking for years about starting a nonprofit organization, or maybe an idea to solve a social problem or provide a needed service has just popped into your head. It might be time to make your idea a reality. But before you file the incorporation papers, you need to consider the positive and not-so-positive factors that can make or break your new organization. As with opening any business, starting and managing a nonprofit organization isn’t a simple matter.
Take a look at the economy around you. Are existing nonprofit organizations in your community thriving, or are they struggling to find financial and volunteer support? In addition, are you equipped to manage money and raise funds — which isn’t an easy task even when business is booming — and can you inspire others to work with you whether they’re board members, staff, or volunteers?
In this chapter, we pose some questions that you should think about (and answer) before you begin the process of incorporating and applying for tax exemption. If some of your answers point to the conclusion that your idea is worth pursuing but you want to test the idea first, we suggest that you consider using a fiscal sponsor. As we point out later in this chapter, the benefits of fiscal sponsorship are many.
www.wiley.com/go/nonprofitkitfd6e for a list of web resources related to the topics we cover in this chapter.
Weighing the Pros and Cons of Starting a Nonprofit
Before you jump headfirst into making your nonprofit dream a reality, you need to absorb some basic facts about nonprofit organizations. Let’s begin with some pros: You will
Receive exemption from taxes on most income to the nonprofit
Be able to receive, for most nonprofits formed under Section 501(c)(3) of the IRS Tax Code, contributions that are deductible for the donor
Have the opportunity to receive grants from foundations, corporations, and government agencies
Get to feel that you’re contributing to the solution of a problem or to the improvement of society. As the founder, your vision is unfolding for the greater good.
Just about everyone would consider these facts to be positive, but they don’t tell the whole story. If you’re thinking of starting a nonprofit to get rich or to avoid paying taxes, consider this list of cons:
Paying
