A Cost/Benefits Analysis Is Needed To Fine Tune The Plan

How much does it cost to set up a nonprofit?1

To have a truly operating nonprofit organization, set-up costs will amount to $ 21,350, and yearly costs will amount to $ 117,150.

To reduce costs, one can “give” some operating costs to the nonprofit organization or keep such amount in an open account to be paid off under terms identical to other creditors’ (see above What Are The Operational Relationships Between The nonprofit Entity And The For-Profit Entity?)

To reduce costs, one can use third party professional fund-raisers. Results vary.

Creating a nonprofit organization and not promoting and developing it will not benefit its promoters.

Creating a nonprofit organization at the same time as a new entity is not recommended since the economic basis is not established at that point.

How much can a nonprofit organization raise?

- The first year may be grim: if the nonprofit organization covers its costs and set-up costs, it is a good start.

- Donors (other nonprofit organizations, governmental agencies) will always want to make sure that the funds they distribute are properly used. Based on experience, the standards used to allocate funds will be:

  • Intrinsic viability (a constant losing business is not a suitable candidate)

  • Good governance

  • Financial transparency

  • Proportionality (grants will tied to what the benefiting company represents to be the usage of funds) Example: ABC has 100 clients per year with a facility that has a maximum capacity of 120 clients, grants will usually be capped to the cost related to the additional 20 clients)2

  • Proportionality rules can be overridden in specific governmental programs: these types of “grants” are usually subject to a bidding process to ensure transparency of public funds usage.

    • 1 For more details, please visit (7seasventures)

    2 Specific metrics to optimize grants are part of the S4Success™ system