Almost a Nonprofit…Can I Apply?

shutterstock_101610340Dear Libby:

I'm still working on becoming a 501(c)(3).  Is there any way that I can still apply for grants from organizations?  

Regards,

Almost a Nonprofit

Dear Almost a Nonprofit:

Your question is a good one and it’s one that we see often at GrantWatch.com. You found a great grant opportunity for your organization, but the grant is only being offered to 501(c)(3)s. You haven’t quite gotten there yet. Is there still room to be hopeful?

The answer, in short, is yes.

As you are probably aware, a 501(c) organization is a tax-exempt, nonprofit organization in the United States. There are 29 ways to receive exemption status under the Internal Revenue Code section 501(c), including the 501(c)(3). The 501(c)(3) determination is limited to organizations whose activities relate to religion, education, charity, science, literacy, testing for public safety, fostering of national or international amateur sports competitions or prevention of cruelty to children or animals.

Once an organization establishes its 501(c)(3) status, its donors can claim tax deductions, provided their contributions meets certain regulations.

Before you receive 501(c)(3) status, there are ways in which you can still apply for grants that will not turn off funders who want the IRS tax deduction. Fiscal sponsorship might be a good choice for you right now.  By joining a fiscal sponsorship, you may qualify for more funding opportunities and be able to start your project sooner.

According to the National Network of Fiscal Sponsorship, this process refers to the practice of legal, nonprofit organizations offering their tax-exempt status to groups with similar missions as the nonprofit. It typically involves a fee-based, contractual arrangement between the organization which does not yet have 501(c) status and the established nonprofit. This will give you time to continue working on getting your own nonprofit status, your 501(c)(3).

Fiscal sponsorship has become more common in the past decade as there are many advantages to this arrangement. However, it is important for both parties to understand the exact terms of this set-up before an agreement is final. An organization that is joining a fiscal sponsorship must understand that its project will be controlled by its sponsor(s), who may be held legally responsible for the operations and activities of the venture. Therefore, it is wise to weigh the benefits of immediate tax-exempt status and administrative support against the lack of autonomy and the fees typically charged by the fiscal sponsor.

To find grant opportunities related to fiscal sponsorships for which you may be eligible to apply, search for "fiscal sponsor" at www.GrantWatch.com in the search box on the right side of the page.

fiscal sponsor

On behalf of GrantWatch.com, I wish you success in receiving your 501(c)(3) status, and in funding all of your worthy projects.

All the best to you and yours,

Libby Hikind
CEO & Founder
 
Have a question that you want featured on “Ask Libby?” Send it to libby@grantwatch.com with the subject line, “Ask Libby.”

7 thoughts on “Almost a Nonprofit…Can I Apply?

  1. Hi Libby,

    I would like to start a marketing business and was looking for a start up grant are you aware of any? I live in the state of Ohio and of course it would not be a non profit.

    Thank you for your help.

    Jackie

  2. I am looking for a grant for transportation, (golf cart) for a Tile One Middle School in Phoenix. Any ideas

  3. I want to try out this website and that is why I will select monthly but I do not want to be stuck with an automatic charge every single month. I want to do a trial for one month only and if it helps me then I will do one year. Please tell me if this is the way you operate. One month, one fee and then I get to make a decision if it is worth going on for a year.

    • Dear Joan, thank you for commenting. You can cancel your auto renew at any time by logging into your account and clicking “My Account” under your name in the top right corner. If you’d like to call to confirm your cancellation, please call us at (561)249-4129. 

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