By Jeni Putalavage-Ross, SVP of Operations at Ribbon – a platform that helps nonprofits and charitable individuals start nonprofits quicker while saving time, money, and effort.

Inspiration has struck and you have an amazing, world-changing idea for a public good group that you would like to make a reality. What do you do to get started? “Lean startup”, “bootstrapped startup”, “pre-seed startup”… Silicon Valley uses these terms all the time, but what is the nonprofit equivalent? How does someone test an idea for a nonprofit without committing the time, effort, and money to apply for 501(c)(3) status, find a board, and secure long-term funding? Is a 501(c)(3) determination the only option for people who want to start a group with a vision and mission to help others?

Notebook on a desk with drawn images surrounding the word “startup”, including teamwork, success, planning, strategy, ideas, and investment.

Entrepreneurs are driven by the desire to innovate, not necessarily the desire to make a profit. 

According to the U.S. Chamber of Commerce, “Social entrepreneurship is the process by which individuals, startups and entrepreneurs develop and fund solutions that directly address social issues. A social entrepreneur, therefore, is a person who explores business opportunities that have a positive impact on their community, in society or the world.”

Social entrepreneurs have several options if they have a startup concept they’d like to introduce to the world in order to help others.

1. Create a for-profit business: The U.S. Small Business Administration lists 10 steps to starting a small business.  

2. Start a nonprofit organization: The National Council of Nonprofits has five steps to starting a nonprofit.

3. Seek a fiscal sponsor and test the waters under the umbrella of an existing nonprofit sponsor: Use Ribbon to find a sponsor and manage your sponsored program with three short steps: 

  • Create a business entity (LLC or corporation)
  • Apply for sponsorship
  • Accept a sponsorship agreement and get started!

Sponsored groups can always file for a 501(c)(3) status after you’ve proven your concept can gain support from donors and volunteers.

How do you decide which of these options is right for you and your idea? First, think about your idea and decide if it’s a good or service you want to sell or is it a service you want to provide. If you’re not immediately picturing your profit and loss statements and dreaming about “going public” on the stock exchange one day, for-profit startup life may not be for you. Research the reasons why many people start nonprofits.

Next, you’ll want to understand the key differences between a 501(c)(3) and a sponsored organization. If fiscal sponsorship is a new concept to you, you may want to take a deeper dive into how sponsorships work. 

At Ribbon, our platform is built around the fiscal sponsorship model. We provide groups with an all-in-one platform to manage or start new fiscal sponsorships.

Screenshot of Ribbon’s homepage for a sponsored groups.

We’ve found the biggest hurdle to fiscal sponsorship is finding the right sponsor, so we have streamlined the application process, accept applications all year round, and have several sponsors you can choose between.

The second biggest headache we hear about fiscal sponsorship is financial transparency. Ribbon can help with that, too as we provide real-time financials via our dashboard where you’ll also find ways to get the money in (use our donation forms, campaign pages, and deposits) and ways to spend your donations (virtual and physical credit cards, bill pay, and reimbursements are all built-in to our platform).

Screenshot of a sample spending report.

We’re adding new sponsors and helping startup organizations find new sponsors all the time, so get in touch with us for a demo!

A promo graphic visually demonstrating how Ribbon software works for nonprofits.