A Faster Way to Setup a Nonprofit

Would you believe there’s a way to start a nonprofit initiative and receive tax-deductible donations in less than a week? For reals! For example, you can now donate to support the Erasing Shame podcast at erasingshame.com/donate – what a great nonprofit hack!

How long it usually takes to setup a nonprofit

Usually it takes 6 to 12 months to get all the paperwork, application, board governance, incorporation, meetings, etc etc etc to get a 501c3 nonprofit organization launched. That’s a long time in today’s fast-moving and fast-changing world. And depending on what your team is planning to do, that is the appropriate process for long-term efforts and complete control.

“It only takes 7 days and $1,000 to setup a for-profit. But it takes up to 12 months and $25,000 to setup a nonprofit.”

pledges.com/about

I’ve been working in the nonprofit world for nearly 20 years and didn’t know there was an alternative; it’s called a fiscal sponsorship. There’s a whole directory and network for these special types of nonprofits that provide the organizational legal and financial structure. With their fiscal sponsorship, a smaller social impact initiative can get setup for more funding potential (like grants, and donors who give more because of a tax deduction) than a mere crowdfunding campaign on kickstarter, gofundme, or patreon.

[UPDATE June 2022]

Pledges.com is now concentrating on tech bootcamps and other forms of technical training and upskilling. Their fiscal sponsorship and other efforts will be limited to projects in this domain. The remainder of this article is no longer applicable to any nonprofit kind of project or initiative, like Erasing Shame, but only for tech upskilling initiatives.

A suggested alternative for fiscal sponsorship is opencollective.com via Open Collective Foundation, which has 5% fiscal hosting fee on credit card transactions and 4-8% on bank transfers and checks, plus payment processor fees.

How to Get a Nonprofit Status Super Fast

Each fiscal sponsor has its own terms of use, policies, causes it will or will not sponsor, add-on services, and an admin fee of typically 5% to 10%. Please do your due diligence to find one that fits what you’re doing by using the directory.

For Erasing Shame podcast, I went with Pledges.com. The simplicity, their back story, and the flat-fee pricing were 3 of the primary reasons I decided to go with this fiscal sponsor.

Oh, btw, some people won’t like calling this a nonprofit hack; lawyers and accountants especially. So, this is not a nonprofit hack; it’s a legitimate legal entity and organizational relationship called a fiscal sponsorship, though the technical definition for that term isn’t used consistently by all.

And One More Thing—a Big Bonus

How about $10,000 to match every dollar your project raises during the first 4 years? That’s what Pledges.com will do, is match your donations up to $2500 per year. So if your project receives $1000 in donations in year one, you get $2000 in your bank account! (Note: this matching fund is subject to change, though no urgency has been indicated that it’s a “limited time offer” at the time of this writing)

Does this sound amazing? Too good to be true? The best kept secret, right? You can prove it works by donating $20 to Erasing Shame and I’ll show you the amount that drops into its bank account.

What else do you want to know?

Add your questions and comments, then I’ll answer what I can and others can chime in too. As I continue this adventure, I may be inspired to share more of good learnings and insights.

One last thing, a shout out to Breaking Taboo. Several months ago, I noticed that they were receiving tax-deductible donations via Social Good Fund. Then when I felt motivated and inspired to look into this a bit more recently, I discovered a whole new world!

By the way, another example of a fiscal sponsor with current UX/UI design is dot.NGO [with an admin fee of 8% and donations received in 2-3 business days]

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