Can I Start a Nonprofit by Myself? A Guide to Starting Nonprofits Solo

There are 1.8 million nonprofit organisations that are all generating around $1.4 trillion in the USA every year. That is a massive number, and it accounts for 6% of the US economy and 10% of the active workforce. It’s heartwarming to see so many people actively striving to make the world a better place, and the best news is that there is plenty of room for more. 

But we also know you’re asking the question of “Can I start a nonprofit by myself?” and it might make you feel nervous about taking those first steps. The truth is that you can do it alone, but there will be obstacles (like the lack of a Board of Directors) that prevent you from becoming a 501(c)(3) registered charitable organisation. 

That doesn’t have to stop you from getting started, and there are a few sole-member nonprofit foundations out there raising money. Plus, with the help of dedicated platforms like PayBee, you’ll find you have a lot less work to get done. We’re going to take you through it all so that you feel as prepared as possible when taking those initial steps. 

Practical Steps if You’re Starting Alone

Getting started on your own is definitely daunting and overwhelming; we aren’t going to deny that. But we can help make things easier to digest by breaking everything down into a series of manageable steps. So, how about we get started? Everything from research to setting things up for the first time is covered here. 

Research and Planning

If you fail to plan, you plan to fail. We’ve all heard the expression before, and it used to drive me insane every time my dad said it, but it’s also very true. It’s especially true for nonprofits because without a solid plan, foundations, and plenty of research, everything will crumble quickly and you’ll be left back at square one with no way forward. 

Thorough research has the power to do the following for your nonprofit:

• Discover who your target audience is and what they enjoy
• Discover what the gaps within your sector are and how you can address them 
• Discover who your competitors are and how you can gain the upper hand 
• Discover your potential collaborators within other nonprofits 

After research, it’s all about showing the world why they should support you and how their donations can make an active difference in the world. You need to make it clear that your nonprofit stands apart from the rest and demonstrate why your mission is unique and what makes your goals important enough that you need consistent support. 

Can One Person Start a Nonprofit Organisation? 

While the answer to this question is yes, it’s a little more complicated than that. You can start your charity, run it, and even raise money, but you won’t be tax-exempt in most states while you’re going solo. Most states require you to have a board of directors that is made up of at least three people. 

It’s actually very rare to see nonprofits run by one person, and this means it can also make it more difficult for donors to trust you. It also makes it harder to get sponsorships and encourage people to raise money for your cause because it sets off alarm bells with regard to where the money is actually going. This is why most nonprofits have at least three members. 

Setting Up a Business Plan for Your Nonprofit Organization

You’re not making a profit when running a charitable organisation, but it’s still a business, and you need a plan to keep it functional and running smoothly. Your business plan just works a little differently because it’s there to work as a guide through funding and budgeting to ensure that your nonprofit is able to raise money and stay afloat. Here’s how to do it.

1. Set Clear Goals: Your business plan should lay out what you want to achieve, when you want to achieve it by, and how you plan to accomplish those goals. That way, you can keep your focus on the overall goal of your nonprofit and ensure your decisions align with it. 
2. Secure Your Funding: Your donors and those who offer grants or funding will want to know where the money is going and how you plan to utilise future payments to keep making a positive impact. Your business plan will have all of this properly listed so that your donors can see a clear and detailed plan for what’s going to happen with their money and the expected outcomes.
3. Preparing for Challenges: Every nonprofit is going to face its own set of obstacles, and your business plan is there to help prepare for them. You can figure out what the risks are, how they might come about, and what you might do to tackle them. Everything from funding issues to operational problems can crop up, and your business plan keeps you resilient.
4. Keeping Your Goals on Track: Your business plan is there to keep you on track and ensure you don’t stray from your goals. It acts as a roadmap that helps you work through challenges, external pressures, and even things like excess funding so that you know where it’s going. As long as the goal remains the centre of your plan and your focus, you’ll be absolutely fine. 

How the Legalities of Starting a Nonprofit Work 

Your nonprofit can’t succeed if you don’t have a clear understanding of the legalities behind starting one. There is a lot to it, including plenty of IRS forms that you’ll need to fill out if you want legal recognition as a nonprofit. We would definitely classify this as the toughest part of the process, but it’s also the most important. 

Understanding and Implementing Nonprofit Bylaws

You’ll need an Employer Identification Number (EIN) from the IRS, which is basically the Social Security number for your business, and it allows the government to keep track of your tax requirements and finances. You will also need it if you end up hiring employees or you want to open a bank account for your nonprofit. 

But after that, you need to work on forming your bylaws. As a nonprofit, these are very important as they ensure that your foundation works with full transparency. The bylaws are a way for you to outline the processes of your nonprofit, roles for members, how often the board meets, the operation of the organisation, and all decision-making procedures. 

How do you create bylaws that are effective and set the expectations you have? The following will give you the perfect start: 

• Make sure your goals are clearly defined and laid out 
• Ensure your board and core personnel have their roles and responsibilities detailed
• Check that nonprofit bylaw amendments are detailed, alongside the decision-making process and all meeting requirements
• Set clear guidelines for financial management for the nonprofit. This should include your auditing procedures 

When you’re drafting bylaws, we strongly recommend consulting a legal professional to ensure that they align with your goals, are compliant with state and federal laws, and are fully comprehensive. For a detailed look at how to do this and ensure you properly draft your bylaws, you can use the IRS website. This ensures that you are definitely in compliance. 

This also applies to those who are seeking nonprofit LLC registration. A lawyer can help you with IRS form management, tax exemption, loans, grants, your fiscal responsibilities, bylaws, and how to file for charity status. Legal aid is important for every type of nonprofit, and it ensures that you completely understand every aspect of your organisation. 

Achieving 501(c)(3) Status

501(c)(3) status is essential for nonprofits. It grants you tax-exempt status, which makes you an official charitable cause, and it also means that donations are tax-deductible for your donors. More than that, it opens so many doors to things like government funding opportunities and grants, and builds an element of trust for your potential sponsors. 

The application process is quite in-depth, and you’ll be expected to go into detail about your nonprofit’s purpose, the operational plans, financial projections, and where the money you raise is going to go. You will have to provide documentation for everything and show long-term sustainability and the impact you expect to make. 

It can feel a little daunting in the beginning, but the IRS has a detailed page on the application process for 501(c)(3) status to guide you. It gives you a closer look at the forms you need to fill out, the details required, and the guidelines you have to follow. 

IRS Expectations for 501(c)(3) Governance 

The IRS expects your nonprofit to appoint and maintain an active Board of Directors. They must be independent, and they will also be in charge of handling all fiduciary duties, implementing internal policies for the organisation, and preventing private inurement. In the eyes of the IRS, transparency is the most important quality for charitable organisations. 

In accordance with their fiduciary duties, board directors are expected to attend all meetings and make clear and educated choices based on the current financial health of the nonprofit and what will benefit them in the present as well as during future fundraising events. Additionally, the message and goals behind the nonprofit must remain the top priority above all else, including any personal or business gains. 

This ties in with the importance of board members ensuring that they remain within the limitations and guidelines of federal laws and state requirements while also steering the organisation towards its goals as a nonprofit instead of any potentially profitable prospects. All finances through Form 990 must be publicly available, and all transactions and filings must be visible at all times to maintain transparency for the nonprofit. 

Finally, the IRS also expects there to be protections in place for volunteers and board members alike. Those who report illegal practices, or unethical ones, must be protected as whistleblowers, just as any volunteers or board members who have conflicts of interest are expected to step down from their position during votes related to the cause. You will find that you will also be asked to keep financial records for at least seven years. 

Getting Your Nonprofit Operational 

Now that you have all the legal stuff out of the way, you can finally get started on working out the day-to-day operation of your nonprofit. The first thing you need to do? Open a bank account in your nonprofit’s name so that you can receive donations, manage the money you raise, and maintain transparency with your donors and supporters. 

If you want to be fully operational, you need to build your team. It doesn’t matter if you’re hiring staff or recruiting some willing volunteers to help out; they are going to become the face of your nonprofit. You want them to be passionate and dedicated, with a love for everything your organisation stands for, so that they can help build a dedicated following.

Using Technology to Boost Your Nonprofit

Technology is a core part of having a successful nonprofit. The tools that we use are evolving every day; that means you need to know how to use them and when. It can be used to help spread the word, gather donations, and even host events. The possibilities are endless, and we’re about to show you how. 

Fundraising and Donations

While you can still use traditional fundraising methods, and they have far from died out, digital platforms offer you a lot more flexibility and more ways to reach potential donors. Platforms like PayBee have revolutionised the way that nonprofits collect donations because they make everything seamless and offer a much more user-friendly experience. 

Fundraising platforms also offer you more tools to make running a nonprofit easier. This includes things like: 

• Donation tracking 
• Donor CRM
• Managing donor information 
• Financial transparency 
• Ticketing and event management 
• Live auctions, silent auctions, and hybrid events 
• Mobile bidding 

Using Social Media to Spread the Word

Everyone is on social media. Using platforms like Facebook, Instagram, and TikTok to help showcase the passion behind your cause has the power to help you build a whole following. You can use them to showcase the change donors are making in real time, let them know when the next fundraising event is going to be, and advocate for your cause. 

Sharing your cause and the meaning behind it on social media is also how you get further outreach through word of mouth. People tell their friends and family about the cause; they come to find you, and you have even more people who want to follow your story and support you through donations and volunteer work. It’s all about creating a ripple effect. 

Resource and Form Management

You can use technology to help manage your resources in a more efficient manner. It streamlines your nonprofit’s operations all the way from event planning to scheduling your volunteers. It can also be used to analyse your data to ensure that your resources are being allocated in the most optimal way so that every cent is used in a beneficial manner. 

Virtual Events and Campaigns

Ever since COVID-19, we have put an emphasis on making events more accessible. This is great for nonprofits because virtual fundraising events and awareness campaigns mean that you’re able to reach remote donors who wouldn’t be able to travel out and make donations in person. Some argue it made fundraising lazy, but it actually made it more welcoming. 

Data Analytics 

Every nonprofit needs data analytics. Using advanced analytics tools is how you measure your success and impact accurately. You can use the results to see what you did right and which areas were successful, as well as those that need more work for future events. Through analytics, you’re able to ensure you remain on track with your goals. 

The Challenges of Starting a Nonprofit Alone

You’re going to have obstacles in your way when starting a nonprofit alone, and not just because you can’t get 501(c)(3) status without a Board of Directors. You’re balancing everything yourself, from the financial side of things down to each of the individual roles you would normally give to the board and volunteers. But we will help as best we can. 

Financial Challenges

The first major challenge you’re likely to face is raising capital for your nonprofit. You’re alone; you need to make connections, and being a solo nonprofit means that it’s harder for people to trust your intentions. But that doesn’t make it impossible. It’s just not as easy. This also means that securing grants is going to be tougher as a result. 

Grants are highly competitive because multiple organisations are battling it out for access to the same resources. You just need to be compelling and really show how passionate you are about the cause alongside your detailed business plan. From there, securing it should be easier than if you went in there entirely unprepared. 

But managing the finances is what becomes tricky once you’ve secured your grants. You will need to track your expenses, manage the budget, maintain transparency, allocate funds, and prep for audit tests without any help. Normally, nonprofits have a dedicated team for the financial side of things because it becomes so complex and it’s the most important part. 

Operational Challenges

Running the operation of the organisation yourself means taking on every role within your nonprofit. That means you have to be everything from the treasurer to the marketing strategist and all the roles between them. You need to stay organised, which is where tools like Slack and Trello come in; otherwise you’re going to crumble under the pressure. 

You will find that taking on every operational role challenges your time management skills, will cause you to burn out quickly unless you find ways to balance your tasks, and can result in things being missed or forgotten if you don’t prioritise properly. This is the part where you need to delegate where possible and remember to try to remain as efficient as possible. 

Legal and Compliance Challenges

You’re going to have your biggest struggle with the legal intricacies, especially if you are not already well-versed in the laws surrounding nonprofits. Conflicts of interest become much more apparent when you’re running things solo, and that means that you might end up accidentally benefiting a friend or family member while making decisions for your nonprofit. 

Since the regulations change a lot, you should consider hiring a legal professional to help you with this side of things. Working alone means you don’t have a board to offer different sets of skills or perspectives, which also means there are no checks and balances taking place. As a result, your choices might not always be in alignment with the goals you set. 

This is why you need to look into having a board instead of going alone. You have to be fully compliant with state and federal laws, and you need the governance and oversight provided by the Board of Directors so that you can remain transparent and to ensure that you are able to understand tax laws and how they impact your organisation.

How Collaboration Can Benefit Your Organisation 

Can you be the only person involved in your organisation? Yes, but it’s not going to end well, and you’re going to struggle massively even if it does end up successful. It might feel incredible to go it alone, but learning to collaborate with others and work as a team can bring your nonprofit to new heights. 

It’s not just the fact that it divvies up the workload and takes some of the pressure off your shoulders; it’s also because you gain a whole new set of perspectives and skills. The most successful charitable organisations are built on the foundations of teamwork and collaboration because new perspectives lead to new and exciting opportunities. 

Diverse Skillsets

Different minds mean unique and interesting solutions to problems. Collaborating with board members can help you tap into the following effortlessly:

• New social marketing campaigns and strategies 
• Access to financial gurus who will apply for grants 
• Volunteers who help run events and outreach campaigns 
• Lawyers who will draft and file bylaws 
• Less stress for you so that you can focus on running the nonprofit 
• Different areas of expertise that will maximise your organisation’s potential 

Shared Responsibilities

Sharing your responsibilities means that your tasks are properly divided among everyone, allowing you to assign jobs to those who are experienced in each area for the best results. It also means there is less of a chance of important details being overlooked because you have everyone in a role they are comfortable and experienced with. 

As a side note, you could also consider a member nonprofit model. This is where members have a say in the decision-making process, and it does have the potential to improve your support network. However, it is not suited to every organisation.

How to Build a Nonprofit Board

Your board members are more than just decision-makers and fresh perspectives. They are the ones who take charge of public accountability, uphold the main goal of the organisation, and serve as ambassadors for your cause. They are the ones leveraging their networks and resources to help build support. This is why you need to know how to build one. 

In an ideal world, you would have a board from the very beginning, but we know that it’s not possible for everyone. If you’re a solo founder, a board is something you’re likely to implement as you grow and running the nonprofit becomes less manageable for you as a single person. That means you need to select the right board members for the cause. 

This process is one that you need to think carefully about. You want people who believe in your cause and bring specific sets of skills that will benefit your organisation. They also need to align with your mission because that way you know that the decisions they make will be in the best interest of your cause and not for selfish or unrelated reasons. 

What Do States Require for Nonprofit Board Members?

There are usually fairly strict requirements regarding the number of board members, their roles, and their backgrounds. This is quite common when determining who is suited to running a foundation group or public charity. While states do tend to vary in terms of what they want to see from your board, the following is a good baseline to start with: 

• A minimum of three directors (in line with IRS requirements)
• A president, officer, and chair, also known as core officers
• They must be unpaid and cannot be family members of the owner
• Many are required to live within the state and be over 18
• Must follow duty of care, duty of loyalty, and duty of obedience 

The last of these points ensures that members of the board follow federal and state laws as well as the rules set by the nonprofit. It also helps to avoid conflicts of interest and discourages personal gain through the nonprofit while also encouraging clear and logical thought processes when making decisions on behalf of the organisation. 

There are some states that will allow one or two board members, but this is pointless if you want to be 501(c)(3) certified because you will need a minimum of three members to be classed as such. The most important thing is that you always check your state laws and requirements first because the variations can be drastic in some cases. 

How to Check Your State’s Board of Director Requirements

It’s actually very simple for you to check the requirements for your Board of Directors. Every state has either a Department of State or a Secretary of State business portal. From there, you will be able to find sections on governance or corporations, which is where you will find all of the rules and regulations that they have set for nonprofits and the boards that are expected to run them. 

What you need to be careful of is that you don’t mix up the rules for nonprofits with those that apply to LLCs and corporations. Similarly, every state has its own regulations around things like residency, age, and even qualifications that directors might need before they can be allowed to be members of the board. 

Why Most Nonprofits Choose Multiple Board Members 

Credibility is the main reason why board members are so important. A sole-member nonprofit isn’t going to garner much trust or help you to build a reputation because most people will assume that you’re keeping the money for yourself and using your organisation as an elaborate cover-up. You need people to believe in you if you want them to believe in your cause. 

It also helps keep your organisation stable because there will always be someone to break a tie in voting, and it means there are likely to be fewer oversights because you have more eyes on each task. It helps split the labour a little while also lowering the risk of fraud or poor spending because you have extra members to ensure that things are checked and then checked again. 

Many organisations go for a minimum of seven board members because it helps with the following:

• Ensures a more diverse set of skills 
• Better oversight and clearer decisions
• Keeps the ideas flowing during meetings
• Prevents burnout from overworking 
• No tied votes when there is an odd number 
• Builds a greater sense of trust for donors 
• Helps build a larger networking web

How to Build a Community That Supports Your Cause 

Your nonprofit doesn’t find success solely in its mission or the amount of money that it manages to raise. It is just as much about the community that is built around it, and the way that you nurture it to support and rally around your cause. A community that feels engaged with you and connected to your cause is the absolute backbone of it. 

This is something that Greg McRay of Foundation Group has done fantastically throughout his career, and it is the perfect example of building a nonprofit community that is diverse, filled with love, and ready to help. That is what you want. You want people from every walk of life to come together and work towards helping a cause that they all believe in. 

But how do you build that community and help it thrive? We have a few tips that will help you get out there and showcase what you have to offer:

• Use social media to engage with those who are interested in your cause 
• Share updates on your cause online as well as success stories 
• Build digital communities that focus on the cause and allow space for discussions, collaborations, mentorships, and forums with specialised networks
• Host in-person events, workshops, and meetings to help showcase what your cause is about and how donors can help bring about change 
• Listen to what they have to say. Take the feedback and roll with it, and allow your in-person and online platforms to be used for advocacy 
• Network with people to build connections that might help you down the line when you need support with your nonprofit

Building a close community that is passionate about the cause is also a great way to help provide emotional and moral support while you’re building your nonprofit. It’s a challenging experience, and a community is the perfect way to keep you motivated. They’ll cheer you on, bounce ideas around with you, and even come to your aid in a crisis. 

Why You Need to Stay Updated on the Latest Tech and Trends

You need to stay ahead of the curve if you want to succeed, and that means keeping yourself updated on the latest tech and the newest trends in nonprofits and fundraising. You’re just like any other industry in that sense, and changes are happening all the time. If you thought homework got left back in high school, you’re about to be proven wrong. 

Adaptation and Efficiency

There are constant changes to the technological, economic, and social aspects of running a nonprofit, and if you don’t adapt to them, then you’re going to lose time and money rapidly. Take digital fundraising platforms. They have transformed the way nonprofits raise money, allowing for worldwide support through huge online campaigns. 

Without technology like that, your nonprofit runs the risk of losing efficiency and falling behind on its goals because you haven’t been able to adapt to the latest trends. 

Staying Informed on Compliance and Regulation Updates

The regulations for running nonprofits change all the time, which impacts every aspect of an organisation. Everything from tax status to reporting requirements and governance is usually impacted. Staying informed about these changes is crucial to ensure compliance and avoid potential legal issues when running silent auctions and fundraisers. 

As an organisation, you need to understand how these regulatory shifts impact everything from your reporting and fundraising right down to your financial management. If you’re continuously learning, you’ll find that it’s a lot easier to implement these changes and understand the complexities of the changes to legal compliance. 

Discovering Networking and Collaboration Opportunities

You will also find that webinars, workshops, and conferences act as an engaging form of continuous learning that keeps you in the loop while also providing networking opportunities. By making new connections, you can discover new and valuable insights, innovative solutions, and even new resources that benefit your nonprofit. 

Stronger Readiness for Funding Through Improved Strategies

Stagnant strategies lead to stagnant fundraising, which means you need to keep up with the way in which they are constantly evolving. If you’re keeping up with the latest trends and the best practices, you will see a massive difference in your nonprofit startup. You might even learn about new fundraising platforms, donor engagement techniques, and grants. 

Developing Effective Research Management

It’s also so important for resource management. When you discover tools and tech that help improve efficiency and new data analysis techniques that enhance the decision-making process, you will find that your nonprofit makes the most of its resources. The same goes for financial management tech that ensures improved spending efficiency. 

For example, if mobile bidding is the most popular way to donate, it becomes something you focus on more strongly next time. It’s because of all of this that organisations are able to put more money towards their goals instead of constantly feeding it into the administrative side of things. Research management is at the core of nonprofit efficiency. 

Read and Subscribe to Nonprofit Publications

Reading nonprofit journals and publications can help you stay updated on the latest trends and the best practices that other nonprofits find beneficial to them. You will usually find that they have detailed case studies, expert insights, and articles on the topic so that you are always getting accurate and valuable information. 

Some of the most well-known nonprofit journals you can check out include:

• Stanford Social Innovation Review 
• Nonprofit Management and Leadership
• The Foundation Review 
• Nonprofit Quarterly 
• The Chronicle of Philanthropy 

Frequently Asked Questions

What is the difference between a nonprofit and a charity?

A nonprofit is a broad term that is used to describe an organisation that operates without the primary goal of making a profit for shareholders and owners; this includes schools, hospitals, and religious organisations. A charity is a type of nonprofit, but it is dedicated to philanthropic goals such as promoting improved education and helping those in need. In short, not all nonprofits are charities, but all charities are nonprofits. 

How long does it take to get 501(c)(3) status?

It can take anywhere from 3-12 months to get your 501(c)(3) tax-exempt status. This is because it can depend on the accuracy of your application, the complexity of your nonprofit, and whether or not the IRS requires more information about your organisation. Essentially, you need to get the paperwork to the IRS as quickly as possible to start the process. 

Can a nonprofit make a profit?

Yes, a nonprofit can make a profit, but it’s all about how that profit is used. You cannot use your profit for anything other than reinvesting in the cause and working on raising more funds for the organisation. The money cannot be given to members, officers, or directors, and this is in place to ensure your nonprofit remains focused on charity and not money. 

How can I fund my nonprofit initially?

You can fund your nonprofit from your personal savings, money from friends and family, crowdfunding, and community fundraisers. You can even use local businesses as sponsors or offer them a partnership in exchange for their support. Once you have more credibility, you can then look at larger grants, corporate sponsorships, and government funding. 

How much money do you need to start a nonprofit?

The initial startup costs for a nonprofit range from $300 to 1,200+ and the core operational costs can easily average $10,000 to $25,000. This can vary massively according to the sector your nonprofit operates in, the size of it, and the number of volunteers and board members that you have. But to make these costs easier to understand, this is how they are broken down:

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• State incorporation fee: $20-100
• IRS tax exemption fee: $275-600 ($275 for smaller nonprofits using Form 1023-EZ)
• Legal/professional fees: $500-5,000
• State licenses and permits: $10-100 (usually annual)
• Board development and governance: $2,000-10,000
• Initial operating costs: $100-5,000
• Marketing and website costs: $100-$5,000
• Insurance: $200-2,000

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Is it better to have an LLC or a nonprofit?

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If you want to raise money for a charitable cause, then you need to have a nonprofit. An LLC is designed to make a profit and pay you from the money it makes. It also has paid staff instead of employees and very basic insurance options. A nonprofit receives a special tax-exempt status, does not make any profit, and relies on funding from the general public and private donors. 

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Can you legally fundraise for yourself?

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Yes, you can legally fundraise for yourself. However, you will not have tax-exempt status because the funds being raised are going to an individual and not an organisation. You will also need to follow state and federal laws regarding fundraising, fraud, and taxes. Usually, fundraising for yourself is done on platforms like GoFundMe. 

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Are You Ready to Start Your Nonprofit and Make a Difference?

You can definitely start a nonprofit by yourself, but you’re in for a difficult journey. It takes a lot of work, and you won’t be able to achieve 501(c)(3) status without a Board of Directors. It’s a great feeling when you start an organisation on your own, but you need a team if you want to get the best out of your nonprofit and a fresh perspective on things. 

But whether you decide to build a strong team or go for it alone, you should consider PayBee to help with your journey. We’re an all-in-one nonprofit platform dedicated to helping charitable organisations raise money and make a difference in the world. All you need to do is get in touch, and we’ll help you build an organisation you can be proud of. 

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