What Does It Really Cost to Start (and Keep Running) a Nonprofit?

By Willie Finklin, CFRE, The Grant GOAT

You’ve got the mission.
You’ve got the vision.
But do you have the budget?

Starting a nonprofit is about more than heart and hustle—it’s about having the resources to do the work.
And if you don’t understand the costs upfront, you’re setting yourself up for stress and struggle down the road.

So let’s break it down.
Here’s what it really costs to start—and keep running—a nonprofit organization.

Initial Startup Costs

Before you can even open your doors, there are startup costs you need to account for.
Think of it like laying the foundation for a building.
You don’t see it when the walls go up, but without it? Everything collapses.

Here’s what you need to plan for:

1. Incorporation Fees

To become a legal nonprofit, you have to incorporate in your state.

• Cost: $50 to $150 depending on your state

2. IRS 501(c)(3) Application Fee

This is how you get your tax-exempt status.

• Form 1023-EZ: $275 (if your revenue is under $50,000)

• Form 1023: $600 (if your revenue is projected over $50,000)

3. Legal and Accounting Fees

You might be able to DIY the paperwork, but many founders hire professionals to make sure everything’s right.

• Cost: $500 to $2,000 depending on the complexity

4. Website and Marketing Materials

You need an online presence from day one. Funders, donors, and community members are going to Google you.

• Cost: $250 to $1,000 (domain, hosting, basic design)

5. Office Supplies and Equipment

Even if you’re running lean, you still need essentials:

• Business cards

• Letterhead

• Office supplies

• Cost: $200 to $500

Total Estimated Startup Costs: $1,500 to $5,000

Ongoing Operational Costs

Getting set up is one thing—staying open is another.
Every month, there are fixed costs that you’ll need to plan for.

1. Rent and Utilities (if you have a physical space)

• Cost: $500 to $2,000/month

If you’re virtual, you save here—but remember that many funders want to see a physical footprint.

2. Insurance

Even if you’re small, you need protection—liability insurance, directors and officers (D&O) insurance, and possibly workers’ comp.

• Cost: $500 to $1,500/year

3. Marketing and Outreach

You can’t raise money if nobody knows who you are.

• Cost: $100 to $500/month

4. Payroll and Staffing

Even if you’re the only one on staff, you need to account for payroll, payroll taxes, and maybe even benefits.

• Cost: $3,000 to $5,000/month for one full-time employee

5. Compliance and Reporting

To keep your 501(c)(3) status, you have to file an IRS Form 990 every year.

• Cost: $0 if you DIY, $200 to $1,000 if you hire an accountant

Total Estimated Monthly Costs: $1,000 to $6,000

Program Costs: Where the Real Work Happens

Here’s the part that most founders forget:
Your programs cost money to run.

If you’re feeding families, you need food.
If you’re running mentorship programs, you need materials and staff.
If you’re offering job training, you need supplies and instructors.

Example:
If you’re running an after-school program:

• Staff: $2,500/month

• Supplies: $300/month

• Transportation: $150/month

• Snacks and meals: $200/month

That’s about $3,150 every month—just to operate one program.

Time Investments: The Hidden Cost of Running a Nonprofit

One thing I hear from founders all the time is:
"I didn’t know it would take this much time."

Beyond the day-to-day running of your programs, there are time costs that most people don’t plan for.
But let me tell you—these hidden time investments are what separate the hobbyists from the professionals.

1. Grant Research and Writing

The truth is, grants don’t just show up.
You have to find them, vet them, and then write compelling proposals.

• Time Commitment: 10–60 hours per grant application for simple to moderate complexity 

• Recurring Need: Year-round

If you’re applying for 5–10 grants a year, that’s a massive time commitment.

2. Fundraising and Donor Cultivation

Fundraising events don’t plan themselves, and donors don’t just appear out of thin air.
You have to build relationships, follow up, and keep people engaged.

• Time Commitment: 5–10 hours a week

• Activities: Calling donors, sending thank-you notes, setting up meetings

3. Reporting and Compliance

When you receive grants, you have to report on progress.
That includes:

• Tracking data

• Writing reports

• Submitting updates

• Time Commitment: 5–15 hours per report

4. Board Meetings and Governance

Your board is there to help lead, but that means you have to prepare for meetings, gather documents, and follow up on decisions.

• Time Commitment: 3–5 hours per month

5. Community Engagement and Networking

Your nonprofit won’t survive in isolation.
You need to be in the room where decisions are made, at the table with other community leaders, and visible in your community.

• Time Commitment: 5–10 hours per month

Hidden Financial Costs to Consider

Aside from time, there are financial costs people overlook:

• Grant Report Prep: If you don’t have the time, you may need to pay a grant writer.

• Data Collection Software: For evaluation and impact tracking.

• Donor Management Systems: To keep track of relationships and follow-ups.

Pro Tip:
If you don’t plan for these hidden costs—both in time and money—you’ll end up stressed, scrambling, and potentially losing funder confidence.

Final Word: It Takes More Than Heart—It Takes Strategy

Nonprofits are built on vision and driven by passion.
But if you want yours to last, you have to plan for more than just the program.

Plan for the time.
Plan for the reporting.
Plan for the networking and the paperwork.

Because real impact? It’s not just about what you do.
It’s about building the infrastructure to keep doing it.

We’re here when you’re ready to build that structure the right way.