How to Determine Start Up Costs for a Non-Profit

When determining costs for a non-profit entity, it is important that you consider it as a business venture where you will be incurring expenses and making revenue, but with the aim of helping the society prosper on the whole.


  • 1

    Before calculating the start-up cost for a non-profit organization, it is important that you perform proper research and planning. This may add up to your costs but is an essential element for any business.

    Although non-profits are not in the money making business, they will still have to pay expenses and wages.  Before doing that, perform a market research to check if any other organization is providing a similar service in your community.

    Now, it is important that you develop a business plan. The business plan will give you a more detailed view of the costs you will incur and the fundamental fund raising options you have at your disposal.

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    Like any other business, you will separate your costs into broad categories – fixed and variable. The former will include all those expenses which you will incur regardless of any profit, such as paying rent, mortgage payments and other related services including legal, accounting and maintenance.

    You will need a company lawyer who handles all legal paperwork, while accountants are essential for any business. Then you will be paying salaries to your workers, and other staff which may work on voluntary basis or paid hourly wages.

    Now work out insurance costs. This should cover a wide range of elements, such as vehicle, health and building. Determine each cost separately or you could combine the premium into one.

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    The most important element to work on will be advertising and fund-raising. You should determine the amount of money you need to raise, and the purposes for it. Fund-raising will be your ideal source of income so networking with other people and organizations is necessary. You need to set aside a large chunk for advertising purposes where you reach out to bigger clients.

    However, since you are in the initial phase, you cannot expect a large inflow. Therefore, keep your estimation to a minimum and work with it until you become a more established entity.

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    Finally, you will be paying the organizational setting up fee by filing an application with the Internal Revenue Service, specifying your existence as a non-profit organization.

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