Why should you start a nonprofit?

So, you’re wondering if you should start a nonprofit. That’s great! The world needs charitable ventures that support worthwhile causes. In the US alone there are over 1.5 million registered charitable organizations helping many areas of need. 

So why does the world need what your nonprofit will offer? How are you going to assess the best way forward? These questions and more are just some of the different aspects for you to consider. 

While individual motivations may differ, there are some common reasons behind the formation of charitable ventures.

7 Common reasons to start a nonprofit

  • You have identified a genuine need that other charitable organizations are not addressing.
  • You are seeking work that is purpose-driven and rewarding.
  • You have something unique to offer: expertise, connections, platform, finances, experience, time, resources, and passion.
  • You are ready to formalize your cause by going through the 501(c)(3) process, or by partnering with a fiscal sponsor.
  • You have donors who would like to give to a group that can provide tax-deductible receipts.
  • You would like to make sure donations to your organization are kept separate from your personal finances. 

Some benefits to formalizing your charitable endeavors include:

Tax-exempt status

When you have gone through the formal steps to become a registered charitable organization, the IRS grants you tax-exempt status. Partnering with a fiscal sponsor is another way to receive the same tax advantage enjoyed by registered 501(c)(3)s. In these cases, donations made to your organization are eligible to receive a tax benefit. Additionally, some organizations may receive outside benefits in the form of discounts on marketing or legal services. 

Access to grants

If you’re looking for grants, you’ll need to start a nonprofit first. Most grant funders will only give to organizations that have 501(c)(3) status and three years of 990s or that operate under the umbrella of a 501(c)(3) organization as a fiscally sponsored group. 

Increased credibility and trustworthiness 

The nonprofit industry is subject to the watchful eye of government oversight and public scrutiny. People trust organizations that have gone through a process to formalize or partner with a Fiscal Sponsor, as this adds a layer of transparency and accountability. 

Reduced personal liability for founders

When individuals personally accept funds on behalf of a charitable cause, they are accepting personal liability for the funds. For example, the money can be considered personal income, and affect personal finances and tax liability. When you start a nonprofit, funds are donated to that 501(c)(3) or fiscal sponsor on behalf of a project, and the risk is mitigated away from individual liability.

What else should I consider before I start a nonprofit?

If you’ve assessed your motivations and are still unsure if you should move forward, consider volunteering at an organization that works in the field you are interested in. This is a fantastic opportunity to learn more, make connections, and get applied knowledge. You can use the nonprofit search on our sister company, RoundUp App, to find a group near you, supporting a cause you care about.

If you are ready to move forward with your own charitable venture, get started right away with Ribbon and skip the long wait and big headaches of filing with the IRS

Ribbon allows you to start a charitable venture, run a not-for-profit project, and get started on your cause through a process that is easier than the traditional route of filing to become a 501(c)(3). Work on the mission at hand while we handle the paperwork and compliance processes. 

Thank you for reading

Why should you start a nonprofit?

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