GREAT QUESTION!
Many nonprofit founders find themselves in the same situation: you’ve spent your own hard-earned money on filing services, a website, or other startup expenses before your nonprofit is officially up and running. Naturally, you might be wondering if there’s a way to recoup those costs.
The good news? YES!
You have two main options:
Reimbursement
After your nonprofit raises funds or secures grants, the organization can reimburse you for any eligible startup costs you personally covered. This is a straightforward way to get back what you’ve invested once your nonprofit begins generating income.Tax Write-Off
Alternatively, you can write off these startup expenses as a charitable donation on your personal or business income taxes. This option can offer tax benefits if you're not looking for immediate reimbursement from your nonprofit.
What should you do?
Keep a detailed record of all your expenditures. Hold on to receipts, and create a paper trail—whether through invoices, expense reports, or an acknowledgment from your nonprofit documenting the purpose of the expenses. This helps ensure everything is in order for reimbursement or tax purposes.
In summary: You can either be paid back or receive a tax deduction—whichever works best for you!