How to start a nonprofit organization with no money (free checklist!)

You don’t need major funding or expensive tools to launch the nonprofit of your dreams. You simply need a mission, a plan, and a platform to amplify your message. 

In this guide, we’ll walk you step-by-step through how to start a nonprofit organization. You’ll learn how to file for an EIN number, apply for tax-exempt status, and draft your nonprofit bylaws. Along the way, we’ll share best practices and free resources to set you up for success. 

What you need to know before you start a nonprofit

Forming a nonprofit is a powerful way to unite people around a cause and create meaningful change in your community. This process may also open the door to generous tax breaks, which means you can do more with each donation you receive from supporters. Sounds like a win-win situation, right? 

The challenge is that starting a nonprofit isn’t easy, and keeping one running is even harder. But don’t let this news scare you! You can often make a bigger and better difference in the world as a nonprofit organization. 

Keep in mind that the process can take anywhere from a few months to a couple of years to complete, so having the right guidance and tools will make things much easier. 

How to start a nonprofit for free (or close to free!) in ten steps

How much does it cost to start a nonprofit? Turns out you can get a lot done without a big budget, although some expenses are inevitable. The key to success—and avoiding the dreaded paperwork purgatory—is to follow clear steps. 

Most of these tasks are sequential, so you can’t move on until you’ve completed the previous one.

Step 1. Assess the need 🤔

Across the United States, 1.8 million nonprofits are making a difference in their communities—and competing for funding dollars and volunteers. Before you start applying for tax-exempt status and planning your marketing strategy, you need to answer one key question: 

Is a new organization needed?

One way to figure out the answer is to do a nonprofit needs assessment. Here are a couple of exercises to get started:

• Create a positioning statement 🎯 Make a list of other organizations with a similar mission. What makes you different? Use this to draft a positioning statement that explains why your organization is needed.‍
• Do a SWOT analysis 🔎 SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It's a way to identify the primary factors that will distinguish your organization in the nonprofit sector. 

Being objective when you’re passionate about a new idea can be challenging. We recommend exploring different types of nonprofits, as well as asking trusted individuals or leaders of non-competing organizations to volunteer their time and insights for your needs assessment. You’ll hear different perspectives and have more insights to draw from.

Step 2. Identify your “why” 💓

Now that you’ve considered the need, you’re ready to identify and document your “why.” Ask yourself: 

Why am I starting a nonprofit organization? What problem do I want to solve?

The answers to these questions will guide you to your mission. Draft a mission statement that explains your organization’s reason for existing and how you’ll serve that purpose. Once you’re clear on your mission, you’ll need to brainstorm other key qualifiers for your organization—like your operating principles and values, your vision for the future, and your name!

Step 3. Decide on your organizational structure 👯

Nonprofits aren’t like for-profit businesses. As a charitable entity, a nonprofit can’t be owned by a single person or group. That means you’ll need to establish a board of directors to get your organization up and running.

For your nonprofit board, you’ll want to assemble a passionate team of people who can pool their knowledge and draw on different skills to build a long-lasting organization. Before you bring on a full team, your initial board members will develop and execute strategies themselves. This is what’s known as a “working board.” Later on, it may transition to a “governing board,” where board members handle higher-level responsibilities and your staff handles day-to-day tasks.

Fiscal sponsorship is an alternative route that smaller organizations can choose to take in the beginning stages of becoming a nonprofit. This allows you to register as a project of a larger nonprofit or foundation. In exchange for a percentage of your income, your fiscal sponsor provides your organization with nonprofit tax status and legal compliance resources. It can be a quicker route to making your mission a reality. 

🤑 Money-saving tip: As a nonprofit startup, you may not have the budget to hire full-time staff, but you still need all the help you can get. What can you do? Rely on volunteers! Start your volunteer recruitment efforts by creating email newsletters, attending local events, and asking current supporters to help spread the word. 

Step 4. Write and adopt bylaws ✍️ 

Bylaws are the main governing document for your organization—a set of internal rules and procedures for how your nonprofit will operate. In times of conflict, confusion, or change, nonprofit bylaws guide your executive director and board of directors on what to do.

Gather your board and draft the first version of your bylaws. Be sure to cover the following areas:

• Mission and legal powers
• Member elections, roles, and compensation
• Policies on conflicts of interest
• Fund distribution
• Financial reporting
• Amendment of bylaws
• Dissolution

Bylaws are typically required for 501(c)(3) organizations and policies can vary from state to state—so be sure to check with the attorney general or Secretary of State within your home state. 

It might be tempting, but avoid using bylaw templates from unfamiliar websites. Search for lawyer-reviewed templates or submit yours directly to a lawyer familiar with nonprofit law. Many nonprofits adopt their bylaws at their first official board meeting, and you can update bylaws as your organization evolves. If you do, you may need to report changes ​​to the Internal Revenue Service (IRS) and your state.

🤑 Money-saving tip: Don't think you can afford an attorney? Think again. Many states have a mandatory pro bono requirement under their state bar association. Reach out to firms in your community to see if an attorney can offer legal advice on a pro bono basis—ideally one that’s well-versed in federal and state tax laws for charitable organizations. 

Step 5. Register with your state 🙋

Many nonprofit organizations are required to register at the state level. Even if this isn’t required in your state, there can be benefits to doing so.

Incorporation legitimizes your operation, provides legal protections, and makes it easier to get approved for federal tax-exempt status. The application process is straightforward, and it’s best to start early. It can take weeks or months to get state approval.

Here’s a quick breakdown of the process:

• Choose a business name: Come up with a potential name, then check it isn’t taken by searching your state agency’s business name directory. Make sure you can also secure a matching domain name and social media handles.
• Prepare your articles of incorporation: Add your business name, address, purpose, expected duration, and board member details. We recommend having a legal consultant review these documents.
• File the articles with your state office and pay fees: The Secretary of State’s office typically processes applications. One cost you can’t avoid is a $20 to $100 filing fee. If you plan to serve in additional states, you may need to register there, too.

For tips and guidance, reach out to your state’s nonprofit association. You can also outsource this entire process to an online service like LegalZoom or BizFilings. 

Step 6. Get an Employer Identification Number 💯

An Employer Identification Number (EIN) is like a Social Security number for your charitable organization. You’ll use it to complete tax forms and hire staff later on. 

Having an EIN lets you:

• Open a business bank account
• Get a business credit card
• Apply for federal and state tax exemptions
• Apply for any small business licenses and permits
• Establish your business credit score

Great news: It’s free to apply for an EIN online! 

Step 7. Apply for the right tax exemption 🤑

A big money-saving step for cash-strapped changemakers is filing for tax-exempt status with the IRS. Not only does 501(c)(3) status spare your organization from the financial burden of paying state, federal, and even property taxes, but it ensures all donations are tax-deductible for supporters.

To qualify, you’ll need to meet the Section 501 exemption requirements, fill out an IRS form, and pay the associated fees. There are two main ways to apply:

• IRS Form 1023: You’ll have to answer detailed questions about your nonprofit in IRS Form 1023 and include the right organizing document (such as the articles of incorporation you wrote in step 5). You may need to ask a legal or financial consultant to help you.
• IRS Form 1023-EZ: This is the easy (“EZ”) version of the 1023 created to streamline applications for small nonprofits. Generally, you need gross revenue under $50K and total assets under $250K to qualify. It’s three pages of fairly simple questions and checkboxes. Unfortunately, you will have to pay a filing fee of $275. 

State tax exemption laws vary from state to state, so be sure to check your state's compliance guide to see if you have to apply at the state level or pay another registration fee (usually under $50).

It can take anywhere from six weeks to six months to get approved. In the meantime, remain compliant with any federal and state laws—especially rules about solicitation.

Once you’re all set, you’ll need a dedicated bank account to track tax-deductible donations and operational expenses. Keep your tax-exempt status protected by saving detailed records of your business activities and finances. 

Step 8. Create a strategic fundraising plan 💸

Most nonprofits rely on a combination of funding sources including small business loans, grants, fiscal sponsorships, and individual donations. A strategic fundraising plan will help you decide where, when, and how to fundraise.

Creating a fundraising plan involves gathering stakeholders, setting goals, and defining objectives for the future that align with your mission and values. It also involves choosing which strategies and tools you’ll use to reach your goals. 

🤑 Money-saving tip: It’s unavoidable—you will need to cover some startup costs. Take advantage of the community connections and resources you already have to save money where you can. Partner with local businesses, seek corporate sponsorships, reach out to community centers and libraries that may waive venue rental fees, and build relationships with other nonprofits, your elected officials, and municipal agencies. 

Step 9. Put it all together in a nonprofit business plan 📌

A nonprofit business plan is a living document that provides a snapshot of your organization for prospective donors, banks, and foundations. You’ve already done most of the work for this in the previous steps—here’s where you put it all together. 

Your business plan should include these sections: 

• Executive summary: Provide a short overview of your business plan, mission, and vision. 
• Programs, services, and impact: Detail your goal and how your programs and services will create a positive impact. 
• Industry analysis: Identify who your nonprofit serves, your target donors, and your competitors. 
• Marketing strategy: Outline your plan for advertising, promotion, and outreach.
• Operations plan: Cover the short-term and long-term actions that will help you meet your nonprofit’s goals.
• Management team: Describe the experience and qualifications of your leadership team. 
• Financial plan: Include financial projections and describe how you’ll distribute money, handle market changes, raise funds, and cover costs.

Step 10. Start marketing your nonprofit 📣

You’re a fully-fledged nonprofit corporation, and now you need to tell the world about your organization’s mission! 

Before implementing a marketing strategy, research your target audience to identify which channels resonate most with them. Plan your campaigns and materials around this for the greatest impact. Some popular and budget-friendly ways to jumpstart your marketing efforts include: 

• Launching a newsletter 📫 Take advantage of the power of free email marketing software and start a monthly newsletter. Promote events and services, share photos, and show how you’re making a difference.
• Building your online presence ✨ Based on your research, choose the social media sites that resonate with your audience (bonus: most are free!), and start posting regularly to keep your community updated and engaged in your progress.
• Creating a website 🖥 A central place for potential donors and volunteers to learn about your organization and support your cause is a must. Make sure you have a reliable donation landing page that makes giving as easy as possible. ‍
• Planning your first event 🎉 Consider launching an in-person, hybrid, or virtual fundraising event to introduce your nonprofit to the world and attract new donors.

🤑 Money-saving tip: Plenty of nonprofit software doesn’t come with a hefty price tag, and many marketing platforms offer discounted or even free versions for nonprofits.

Download your free checklist for starting a nonprofit 

Wishing you could have a guide handy as you take each step? We’ve put together this free checklist on how to open a nonprofit, even with a limited budget. Simply download the document to keep it on your desktop or print it out and pin it to your wall. Check off each step as you complete it and visualize your progress.

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Download this free nonprofit startup cheat sheet so you don't miss a single step ->

Launch your nonprofit with Givebutter

With the right help and tools, it’s completely possible to start a nonprofit organization with almost no money at all. Use this guide to help you complete the process from start to finish, so you can maximize the impact of any budget. 

As you prepare to launch your nonprofit, look for free tools to help you along the way. As an all-in-one platform, Givebutter brings together everything you need to accept donations, manage donors, run fundraising campaigns, connect with supporters, and more. 

From donation forms and fundraising pages to marketing and engagement tools and a free nonprofit CRM for tracking contributions, activity, and correspondence, Givebutter’s core fundraising features are free for nonprofits of all sizes—so you can spend your dollars where you need them the most. 

‍Sign up for a free account today to see how Givebutter can help you raise more and pay less on your nonprofit journey.

Explore more budget-friendly ways to kickstart your nonprofit

You can run your nonprofit on a budget well beyond the startup phase. There are plenty of methods to raise funds and generate interest in your nonprofit without breaking the bank. 

Find even more ways to help your new nonprofit thrive with these resources:

• Discover more than 70 free or low-cost fundraising ideas
• Challenge yourself to raise $1K in 30 days
• Compare the best free online fundraising platforms for nonprofits
• Discover the best free CRM for nonprofits

How to start a nonprofit with no money FAQs

How much does it cost to start a nonprofit?

While many steps in the process can be done with almost no cost, there are some fees involved with starting a nonprofit organization. You’ll need to incorporate with your state, which can cost $40+, and file for tax exemption with the IRS at a fee of either $275 or $600.

Is it hard to start a nonprofit with no money?

It can certainly be more challenging to achieve your nonprofit status with no money. Having access to a big budget means you can invest in expert legal, marketing, and branding teams. With a small or zero-dollar budget, these tasks fall to you. Still, starting a nonprofit organization with no money takes something you have plenty of—passion and enthusiasm. 

What is the easiest nonprofit to start?

The easiest nonprofit to start is one that closely aligns with your passions. Maybe you’ve always wanted to open an animal shelter in your local community or help children achieve their educational goals. Starting small with a group or club dedicated to a specific niche or geographic area can make it more manageable.

How do I start a nonprofit organization by myself?

Starting the journey solo can be tough at times. Seek advice, support, and encouragement from the people closest to you—your friends, family members, and professional network. Don’t be afraid to speak to other nonprofit leaders, too. They’re often more than happy to support another changemaker. 

Where do most nonprofits get their money?

Nonprofits can raise funds from a variety of sources. The most common nonprofit funding sources include corporate sponsorships, grants from foundations and the government, individual donations, monthly giving plans, and crowdfunding campaigns.

Where can I find grants for nonprofits?

Grants can be a valuable source of funds for nonprofits, but it’s not always easy to find them. We’ve put together a guide on grants for nonprofits to help you find government, corporate, and foundation grants.