How to Get Nonprofit Donations Without Having Your Own 501(c)(3) Tax-Exempt Status

by Terry Masters; Updated September 26, 2017

Nonprofit organizations are formed under the laws of a state. Once articles of incorporation are filed, the organization exists as a charitable entity. A nonprofit can accept donations from involved people, such as members of the board, at any time, but most states require nonprofits to register with the charities office before soliciting donations from the public. Donations received are not tax-deductible, however, unless the organization applies for tax-exempt status from the Internal Revenue Service or it uses a fiscal sponsor. The organization can legally accept donations without tax-exempt status or a sponsor but will likely find few willing to donate without the accompanying tax deduction.

Step 1

Register as a nonprofit in the state where your organization will operate. File nonprofit articles of incorporation with the state's corporations department, which is usually part of the secretary of state's office, or other agency that oversees corporations. Visit the state website to download a template for articles of incorporation and to view filing instructions. Some states have an online electronic system that can be used to complete the filing.

Step 2

Register with your state's charities office. In many states, the charities office is part of the state attorney general's office. Fill out any required forms and pay a fee to register as a fundraising entity. Typically, you will have to file an annual report with this office every year to disclose your organization's activities.

Step 3

Solicit donations from the public. You do not need 501(c)(3) tax-exempt status from the IRS to do this, however, the donations received will not be tax-deductible for the donor. Use social networks and Internet charity websites and tools to request donations in small amounts. A tax deduction is not relevant for donations of nominal amounts, but with the extended reach of the Internet, small amounts from many people can make a big impact.

Step 4

Ask a local nonprofit with tax-exempt status to act as your organization's fiscal sponsor. Approach organizations that have a related mission and a stable financial infrastructure. Use the Fiscal Sponsor Directory, available over the Internet, to locate a viable candidate. Sign a formal fiscal sponsorship agreement to memorialize the relationship.

Step 5

Solicit donations for your organization but have the checks made out in the name of the fiscal sponsor. A fiscal sponsor accepts donations on an organization's behalf and enables donors to deduct the contribution using the sponsor's tax-exempt status. This arrangement works for fundraising from individual donors and some foundations, particularly when your organization is in the startup phase.

About the Author

Terry Masters has been writing for law firms, corporations and nonprofit organizations since 1995. Her online articles specialize in legal, business and finance topics. Masters holds a Juris Doctor from Howard University and a Bachelor of Science in business administration with a minor in finance from the University of Southern California.