5 Tips for Starting a Nonprofit

The term nonprofit confuses some business owners. Just because a business does not make a profit does not necessarily mean it qualifies as an ‘official’ nonprofit. To become a nonprofit and collect donations, you first need to incorporate your organization, apply for tax-exempt status and register in your state. At GrantWatch.com, they want to make sure you have the tools you need to succeed when starting a nonprofit. We hope the tips below will be of help.

When considering starting a nonprofit, you must consider a number of points. A nonprofit’s income is different than that of a for-profit (business). A for-profit business generates its revenue to benefit the private interests of the company or its shareholders. On the other hand, a nonprofit does not exist to make money; rather, its goal is to make a positive social or charitable impact.

Nonprofits rely heavily on these key contributions:
  • Donations
  • Fundraising events
  • Grants (monetary and/or in-kind grants)
  • Selling Products or Services (examples could include charity gala tickets or girl scout cookies)

A number of steps are involved in registering a nonprofit, including appointing board members, obtaining an EIN (Tax ID) number, filing articles of incorporation, applying for (IRS) tax-exempt status and setting up a Unique Entity Identifier (UEI). This process can be quite lengthy and costly. It is important to note that grants are not available to support these steps. In other words, costs related to setting up a nonprofit are all out-of-pocket expenses.

5 Tips Once You Register as a Nonprofit

1. Learn about the Grant World

Once you are finally registered as a nonprofit, you can start your grant search! When looking for grants, you may regularly come across certain keywords and funding terms, such as LOI (Letter of Intent) and RFP (Request for Proposal). It is best to familiarize yourself with the nonprofit glossary of terminology so you can better understand the fundamentals of applying for a grant.

The 4 types of grant funders you should be aware of:
2. Don’t Overreach at the Beginning

Every grant has its own unique application process. Research shows that new nonprofits are more likely to be awarded micro-grants and in-kind grants. Funders first want to see how new organizations managed previously awarded grants. Once you have a few smaller grants under your belt, you can start working your way up to larger grant funding proposals.

3. Follow the Instructions for Success

When starting your grant search, be sure to keep in mind what components of your program(s) are eligible for funding. Once you receive a grant, you must use the grant funds as instructed. Read the fine print. Failure to follow funding criteria may lead to the grant being rescinded. You will then have to repay the grant funds received.

4. Take Advantage of Free Resources

Before applying for grants, we recommend reviewing our Grant Application Toolkit. Your organization may also wish to join local or state nonprofit associations for additional resources and networking services.

5. Don’t Be Afraid to Ask for Help!

If you are not comfortable completing the grant application process on your own, we recommend hiring a grant writer. You can also view our sample grant document collection, which includes examples of grant proposals and other documents you may need when preparing a grant funding proposal. Overall, pay careful attention to the grant funder’s directions – they are your ‘roadmap’ to success!


In conclusion, starting a nonprofit can be a long journey, but the potentially huge impact your nonprofit can have on the people and communities you serve will make it worth the time and effort involved. For more free grant resources, visit the GrantWatch website.

With close to 8,000 grants currently available, GrantWatch.com is the leading grant listing directory. A MemberPlus+ subscription is required to view the full grant details, including eligibility criteria and application information. For more information, you can also visit the GrantWatch FAQ page, and to see the great value with the top 20 GrantWatch features, click here.

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