When getting that 501(c)3 status is not the right move

ioby works every day with all types of community groups and leaders. These range from loosely-affiliated groups of neighbors working together for the first time on a specific and discrete project, to established 501c3 nonprofit organizations with paid program staff and multiple sources of operating revenue.  (Here’s how crowdfunding can help established nonprofits.)


Who We SErve

Oftentimes, we’ll hear from smaller or unincorporated groups (the “deep roots”) that they are  dipping their feet into fundraising as a step to help them grow, and eventually  seek nonprofit status. And while  a crowdfunding campaign can be a great way to raise initial “seed” funding before going on to incorporate , many others rely on crowdfunding in order to stay lean and focus on one project — and this is also great!

Incorporation as a nonprofit  is a heavy lift, and for grassroots groups with limited resources, it can take time and effort away from what you’re really trying to accomplish.  We hear a lot about the pros and cons of incorporation from the people we serve, and we know this step is not necessarily right for all groups at all times.

That’s why we’ve  shaped our service to work well for  unincorporated groups as well.  Here’s how:

  • ioby provides fiscal sponsorship in order to allow community leaders from unincorporated groups to collect tax-deductible donations. This helps ease the pressure to incorporate.
  • Our crowdfunding platform provides an alternative to grant funding. The prospect of being eligible for grant funding can often sway small unincorporated groups toward a path of incorporation and growth, which is not always the best choice.
  • We encourage and train leaders in fundraising from within their own community. The independence of being community-supported can allow leaders to experiment and determine the best long term course: to stay small, disband after accomplishing a single project, or incorporate and grow. All are viable next steps in certain instances.

Rather than serving as a launchpad toward nonprofit incorporation, ioby focuses on building capacity of community leaders to determine the best tactics and strategy to accomplish the positive change they want to see in their neighborhoods.

There is no single correct path, but by working to fundraise, network, and build local movements, leaders emerge with a better sense of what they are good at and what their communities most need.

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