How to Start a Fundraising Consulting Business
Donor contributions and volunteers are what often help a nonprofit organization really thrive and shine.
However, finding reliable donors and volunteers can be a bit of a challenge and this is where the business of Fundraising Consulting comes into the picture.
Fundraising Consultants help nonprofit organizations connect with donors and volunteers by implementing strategies for raising support.
With over 1.5 million non profit organizations nationwide, there is definitely a demand for the fundraising consulting industry.
If you already have experience working as a fundraiser for nonprofits or have worked at nonprofits and know the logistics, this may be a great business for you!
If you already have ties to the nonprofit industry and are looking for ways to build your own business, this could be your next big career move into entrepreneurship.
With your existing knowledge, skills and abilities in the nonprofit industry, you could really shine as a fundraising consultant.
Not sure how to get started? We got you covered!
Here’s How to Start a Fundraising Consulting Business:
Write a Business Plan
Many entrepreneurs and business owners skip this step when they are first starting out.
A business plan maps out the specifics of your business and can shed light on unknown factors that could negatively impact your business down the road.
A business plan is actually a key component to success and so we strongly recommend every small business owner create one from the beginning.
Take some time to sit down and write out your business plan.
The business plan should identify your target market and target audience, potential costs and funding needs, what you plan on charging your customers, marketing strategies, and goals for growth, among other things.
Identify How You Will Make Money
In order for any type of business to be successful, it needs to be profitable.
This is a big part of your business plan so we want to talk a little more about it here.
Fundraising Consulting Businesses can make money in a few different ways:
- Charge an hourly rate for time spent helping a nonprofit organization. This is the recommended method that a fundraising consulting business should use. Non profit organizations can either pay up front as a retainer or be billed Net 15, Net 30, etc.
- Commission based compensation – although these can be considered unethical, some business still operate this way. With a commission based compensation model, non profits will offer a percent of the total funds raised as compensation to the Fundraising Business Consulting firm.
You will also want to make sure you have a way to reimburse any expenses and include that in your model.
For example, you may have the client reimburse you for certain travel expenses, etc.
Expanding into more specialties can help you grow your business and make more money.
For example, you could also offer job placement services for nonprofit organizations or organizational development consulting services if you have the experience.
Choose a Name for your Business
Now that you have an idea of what your business will look like and the scope of your services, you can choose a suitable name!
Perhaps you already have a name or two in mind, you can reserve your business name so that it doesn’t get taken by someone else while you make a final decision.
You can reserve a business name buy completing a Name Reservation Request online in the state where you live.
There is a usually a filing fee ranging anywhere from $10-$25 and you can get name exclusivity for up to 90 days.
This gives you time to choose a name without losing the one or ones that you love but are undecided on for now.
If you already have a name in mind you will want to do an internet search to make sure you name is not already taken.
You may also want to consider trademarking your business name once you decide on one.
This will prevent anyone from trying to create a business with the same name as your.
Form Your Business Entity
Once you have a name, you’ll need to decide on a business structure, also know as a business entity.
Your business is not legally recognized until you complete the appropriate formation paperwork with the government and state.
There are several business structures to choose from including sole proprietorship, limited liability company (LLC), Corporation, etc.
You will want to consult an attorney if you are not sure which business structure to choose.
You can also use a formation service that will handle the entire process for you.
Many small business owners choose an LLC (limited liability company) because it provides limited liability protection to you as the owner and it benefits from pass-through taxation.
Here is a quick Business Formation Checklist
- Select a business entity type: Sole proprietor, LLC, Corporation, etc.
- Obtain an EIN (Employer Identification Number) from the IRS – once your online application is complete, you will receive an EIN instantly.
- Register your business locally in the State in which you will be conducting business. This is done with the Secretary of State in the State in which you will be doing business.
- Obtain any business licenses or permits required in your State to operate a non profit consulting business. These can also be found at your local Secretary of State website or by simply doing a Google search.
Setup Your Logistics
The following things will help you finish setting up your business:
- Open a business checking account (you will need an EIN to do this)
- Setup a way to manage your accounting whether it be a software program or spreadsheet to begin. This will help you track your income and expenses.
- Create a website and any marketing material that outline your services. This is something you can hand out or post online and have on your website.
- If you plan on having employees work for you, setup a payroll system or a way to pay your 1099 contractors.
- Decide if you need any additional funding such as a credit card, line of credit or loan.
You can learn more about setting up a business in our step-by-step guide here.
You never know what could go wrong and this is why business insurance is important.
There are different types of business insurances depending on the type of business and here are three of the most common types:
- General liability insurance – should a customer be injured while on your property, this will cover any costs as a result of that injury. It also covers costs for property damage claims against your business and advertising injury claims as well, among other things.
- Commercial property insurance – if your business inventory or equipment should get damaged or stolen, this will have you covered. If you are working from home, most homeowners insurance policies won’t cover business inventory or equipment.
- Workers compensation insurance – this is only applicable if you plan on hiring employees to work for you. Workers Comp Insurance covers the business should an employee be injured on the job.
For the fundraising consulting business, general liability insurance should cover most of your needs and is a great place to start.
Know Your Startup Costs
Luckily, starting a fundraising consulting business doesn’t require a lot of start up funding like other businesses.
In fact, you may already have everything you need and you could work from home and just meet clients at their locations.
Here are some anticipated startup costs for a Fundraising Consulting Business:
- Marketing materials
- Website design and setup
- Computer and/or laptop
- Rent/Lease if you plan on having an office outside of the home
- Business insurance
- Professional work attire if applicable
While word of mouth is a great way to gain new clients, sometimes it is not enough, especially when starting out.
You will want to tap into your local resources to get your name out there.
Consider dropping off marketing materials at as many non profit organizations as you can or cold calling.
You can even put ads up on certain websites where people can go and look for opportunities.
Sometimes investing in a referral program where leads are sent your way can help you build your initial client list.
Have a website where people can go and learn more about your business, rates, and services.
The more you market and get your name out there, the faster you will grow.
- Spend time developing your Business Plan. It should identify your target market, marketing strategies, goals or growth and could identify any foreseen challenges down the road.
- Your business is not legally recognized until you complete the appropriate formation paperwork with the government and state and file an EIN for tax purposes. Consider using a formation service to help you setup your business correctly.
- Clearly identify how you plan on making money and and how you plan on growing or perhaps expanding into more specialties.
- Setup the logistics of your consulting business such as your business bank account and accounting software.
- Identify and budget for your startup costs. Consider funding if needed.
- Invest in marketing to help grow your business and get your name out there.
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