How to Raise Funds for a New Nonprofit Organization - dummies

How to Raise Funds for a New Nonprofit Organization

By Stan Hutton, Frances Phillips

One tried-and-true rule of nonprofit fundraising is that people give money to people they know. They also give money to causes they care about. However, making a contribution is an expression of trust. That means the likeliest contributors to a new nonprofit organization are people and agencies that know and admire its founders and their work.

Hit up people you know

A few people have launched their organizations with the help of major grants from a government agency or a large, national foundation, but many more start close to home with gifts from their founders, their founding board members, and people they know. They then build out from that inner circle of relationships, gradually creating networks of associations with the friends, family members, and business associates of their initial contributors.

After asking some people who founded organizations how and when they got their first sources of income, they reported different things. One invited 20 people to her house and, after a convincing pitch and some good wine, got most of them to write checks.

Another started a youth mentoring program out of his dorm room when he was a college student. He talked his college into paying him a work-study stipend to begin his project, and then he charged his volunteer mentors modest membership fees to cover basic costs.

Another noticed a city department’s neglect of small city parks after budget cutbacks and, by knocking on local politicians’ doors, secured a city grant to involve volunteers in park cleanup days.

Many organizations start up with contributions from individuals, in part because individuals often make up their minds more quickly than businesses or foundations.

Branch out with special events

Although special events are one of the more expensive ways of raising money, you probably can see real advantages to including them in the fundraising plan for a new organization. Events create a way to inform dozens or hundreds of people about your organization at the same time.

The best part is that those people then begin to spread the word about your good work. Remember that events don’t have to be elaborate. A gathering of a dozen people can be a good start.

Approach Foundations

When approaching foundations, you may think that you’re at a disadvantage because your project doesn’t have a track record. On the contrary, some foundations specifically like to support start-up projects and organizations.

If your agency is new, when you’re using The Foundation Directory, check the “types of support” listings to see whether the foundation you’re looking at awards seed funding — that is, support for new activities. If the foundation makes grants in your field of interest and geographic area, it may be a good prospect for helping you launch your organization.

Government grants

Government grants and contracts may provide significant underpinnings for a new effort, but they come with three distinct disadvantages for new nonprofit organizations:

  • In general, they take longer to secure. The review and approval process may be slow, and many government agencies have only one annual deadline.

  • They often require grantees to comply with rules and regulations regarding permits, board policies, hiring practices, and financial reporting. Although their rules may be good rules, when you’re just starting out, your organization may still be working out its systems and policies.

  • They sometimes require their funded organizations to spend money upfront and then submit invoices in order to be reimbursed for an agreed-upon amount of money. If you have few sources of income, you may not have any funds available for this upfront spending.

If your organization is applying to the federal government, you must first register with This registration ordinarily takes three to five days, but to be safe, plan on two weeks for completing it in case questions arise about your organization.