3 Non-Profit Organization Funding Options to Consider

When you are looking for non profit organization funding, you will need to be keenly aware of laws regarding the finance reporting and income of a legal NPO. First, it is important to assure you meet the requirements to become a 501(c)(3) organization in order to be eligible for funding initiatives for non profits. You must also make sure you have legally incorporated as such an institution in order to receive key tax benefits. Once you have completed the steps to formally become a non profit, you can then look to funding specifically geared at charitable organizations.

#1 CDC Loans through the SBA

The Small Business Administration offers a CDC/504 loan program. A CDC is a Certified Development Company. These companies help fund businesses that will contribute sustainable job growth or other services in a given area. Within your city of community, there are a number of CDCs that qualify as such under SBA regulation. You can find a list of these with your Chamber of Commerce or your local bank. The SBA gives direct funding each year to CDCs. The CDCs then disperse these funds to qualified organizations for fixed asset projects. You do not need to be a non profit to qualify, but a number of the businesses that take advantage of this program are 501(c)(3) organizations. Using the SBA for your loan will make it more affordable than approaching a private source. Furthermore, the CDC loan program provides valuable assistance through classes meant to educate you on financial requirements to run your business. You will be required to complete these classes in order to get your funding.

#2 Investor Funding

Many non profit organizations rely wholly on funds from private contributors in the initial steps. When you have private investors in your charity, you may find these investors would like a degree of control over how the funds will be allocated or how your operation will be run. Some NPOs establish a Board of Directors for this reason. A person who has a significant interest in the efforts of your charity may donate funds in an amount large enough to gain a place on the Board. When this occurs, that person can then begin overseeing how the funds are expended. Other investors will not require these benefits. However, this usually means you will be seeking funds in smaller amounts from a wider variety of contributors.

#3 Private Business Loans

You do not have to limit yourself to options for non profits alone. As a small business, you can apply for a variety of private business loans from traditional lenders. In fact, the interest on these loans may be deductible for your charity up to a certain amount each year. Private lenders will require more from you in terms of a business plan and asset base. You are less likely to achieve the start up funds required from these sources than from public sources. However, once your charity is up and running, expansion loans may be possible to gain access to new assets for your operation.