Starting a charitable foundation is something many individuals seek to achieve given the amount of prosperity it can possibly bring many underprivileged communities in developing countries. Over the years the public has been watching successful philanthropic foundations like the Bill and Melinda Gates Foundation, Open Society Foundation, Ford Foundation, and many more from afar. For many, it is just wishful thinking to be able to put up their own charity or philanthropic organization as they are not always able commence due to financial reasons. In order to even begin improving the lives of the less fortunate, you yourself will need enough funds to provide for them. This brings about the question, how much money is actually needed to put up a charitable foundation?
There are various types of charitable foundations to build up from the ground, each with their own set of advantages and disadvantages. An example of this are public charities and private foundations – both of which differ in many ways. For example, a private charity is one that provides grants and basically give away money. Some refer to them as philanthropists who give to individuals. Likewise, a private foundation’s funds are also mostly derived from their personal accounts whereas public charities will need to rely on the public for support. They acquire most of their funds from donations or fund-raising activities. Additionally, public charities have things more complicated as they need to document and make sure that they can provide sufficient documents which can prove their funds indeed come from public donations. On the other hand, since most of a private foundation’s funds come from them directly, it isn’t necessary for them to provide as much documentation.
It is needless to say that public charities have things more difficult. Less control is given to this type of charity and more guidelines are present for them to follow, such as the election of a board of directors. This is the opposite of what private foundations experience given the fact that funds would normally come from their side.
Fact is, to begin a charitable foundation requires immense amount of funds, as much funds as possible. This is true with both public charities and private foundations. But the exact amount needed is not definite as some things are still dependent on for example the focus of your organization, the country in which you would like to be registered in and their policies, as well as the type of organization you intend to build.
Tax breaks per country differ in policies and hence the actual amount or range is difficult to determine. For organizations focusing on thematic areas relating to disaster and relief, the funds needed to begin will cost more than of those who focus on areas like education. Both areas require effort and continuous maintenance but handling relief and rehabilitation is something which requires immediate action where funds are likewise required immediately.
An important thing to remember when building a charity is that not everything is dependent on funds. Although funds play a huge role, other factors in building your nonprofit should not be overlooked. Factors such as the level of gravity needed to be addressed in the area in which you plan to work on, what other organizations are doing the said area, and the other ways certain issues can be addressed.
Another thing to remember is to treat your nonprofit as you would any other type of business model. This means always remember than although you will not be working for profit specifically, the money to come into your organization should be more than you shell out. Hosting ambitious projects are great and can help numerous people but if you would need to declare bankruptcy and be unable to pursue more projects in the future, there would be no point left in doing so.
Although it would seem as if things are done more easily if a private foundation were to be run instead of a public charity, this shouldn’t hinder your plans of putting up a public charity in case that’s the only place your budget can currently bring you. A public charity may have a couple of restrictions and a lot more documentation to be processed, but many good things can still be achieved and many lives can be changed through an initiative like a public charity.