Nonprofit organizations that are registered under 501c3 can easily raise donations with their effective fundraising campaigns. But what if a nonprofit without 501c3 registration wants to fundraise? Is it possible?
Questions also may arise: Can I accept donations without being a nonprofit? In simple words, the answer is yes, you can.
Typically, organizations without 501c3 status are unable to apply for grants, but there are several ways to legally receive donations to secure funding for their operations and fulfill their community-oriented mission.
Maybe the donors can’t write off their tax contributions, but an impactful and compelling cause can still draw in support.
So, in this article, we’ll talk about the 4 best ways to accept donations without being a nonprofit, which is also applicable to a nonprofit without 501c3 status.
What does 501c3 status mean?
First of all, if you’re running a for-profit business, you can skip this heading and go straight to the best way of accepting donations.
501(c)(3) is a specific section of the U.S. Internal Revenue Code (IRC) that designates a nonprofit organization as tax-exempt. Organizations that meet the 501(c)(3) status can claim to their contributors that donations to them are tax-deductible.
A for-profit business never gets registered under 501(c)(3) status as they have to pay tax.
To be eligible for 501(c)(3) status, an organization must be organized and operated exclusively for charitable, educational, religious, scientific, literary, or other specific purposes, as defined by the IRS.
Additionally, by donating to 501(c)(3) organizations, donors can often claim tax deductions for their contributions, which motivates charitable giving.
4 Best ways to accept donations without being a nonprofit
- Crowdfunding
- Donate button
- Donation Drive
- Affiliates with local
Let’s break down each of these sections in depth.
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Crowdfunding
Crowdfunding is a universal way of raising funds. Anyone can arrange or participate in a crowdfunding campaign. You can receive funds without 501(c)(3) status and accept donations without being a nonprofit as well.
Whether you’re a nonprofit or for-profit, crowdfunding is always a great solution to collect donations from mass people. Crowdfunding means collecting small pieces of donations from a large number of donors.
Usually, it’s associated with raising funds for charitable causes, creative projects, or early-stage start-ups. However, crowdfunding is not designed for for-profit businesses as a primary means of financing. It could be used as an additional method of fundraising.
As an early-stage start-up, you must look for ways to reduce the cost and maximize profit. Here, you can use crowdfunding as an option that allocates extra funds to your business.
It’s obvious that people won’t give you money without something in return. So make sure you’re giving them some reason to contribute to you.
You may offer a one-time free service to the donor, offer a non-monetary product or experience, and make a promise to share a percentage of the profit in charity.
These small gestures and details motivate supporters to contribute to the launch of your business.
To do online crowdfunding, all you need to do is choose a platform, create a donation page, and go! To do it in a few clicks, use the Paymattic donation plugin, which offers tons of features along with 11 payment gateways worldwide.
“Pro Tip – Want to reduce the workload? Paymattic offers excellent-looking ready-to-use donation forms for you.”
To do it in a brick-and-mortar store, place a donation box at the checkout point and make it noticeable to everyone.
Donate button
To accept donations without being a nonprofit, you can utilize the PayPal donation button. PayPal offers a donate button to accept donations directly on your website.
You can place the donation button anywhere on your website. Whenever your customers visit your website to buy something, they can contribute some extra with the donate button if they wish to.
Make sure you’re providing a proper explanation of why do you want to raise donations.
PayPal wants to make the WordPress donation process easier, so there is no form or customization available. This is the safest and best way to accept donations without being a nonprofit.
Donation Drive
A donation drive is a collective effort to gather essential items, financial contributions, or assistance to benefit a specific cause or community in need.
If you feel uncomfortable asking for monetary donations because of your nonprofit status, consider a physical donation drive. There are a lot of people around us suffering from less clothing, shoes, food, or other things.
A donation drive can be a great alternative to raising monetary donations. You can ask your consumers to donate their unused clothes or shoes that they no longer wear.
“No one has ever become poor from giving.”
– Anne Frank
If you want to help an organization that works in animal welfare, like crowdfunding, consider placing a donation box on behalf of the organization. And obviously, give the proper reason for donating.
For example, donate to building shelters for domestic animals, buying dog leashes, buying cat food, etc.
People from around the world are often suffering from natural disasters and conflicts. As a for-profit business, you can gather some young blood and run a drive to help the affected ones.
Whether it’s a clothing drive for those experiencing homelessness, a food drive to combat hunger or a fundraising drive for a charitable organization, donation drives serve as powerful vehicles of compassion and generosity.
Affiliates with local
Affiliation with locals is a powerful strategy for you to accept donations without being a nonprofit and also for nonprofits without a 501c3 registration. When you affiliate with another business, organization, or any influencer, you tap into their community.
By gaining their trust and engagement, you’re more likely to raise easy donations because you get recommended by someone they know or a business they trust.
Local affiliation often comes with shared values. By partnering with a local charitable organization, you demonstrate that you care for society despite not being a nonprofit.
It’ll differentiate you from others and people definitely appreciate your participation in the greater good. As a result, the relationship between you and your consumers becomes stronger.
“In fact, 77% of individuals prefer buying from companies with social responsibilities.”
Source – HAVARD Business School report
Partnering with local organizations also opens new windows of marketing opportunities.
Wrapping up
To perform a fundraising campaign for a charitable cause, you don’t always need to be registered by 501(c)(3). Even if you can accept donations without being a nonprofit, all you need is a valid reason.
There are additional ways to accept donations without being a nonprofit, aside from the tax exemption.
But remember, you’re following the rules of fundraising as per the IRS and complying with all tax requirements.
