If you want to do meaningful work outside a traditional nonprofit job, two paths often come up: starting your own nonprofit or becoming a nonprofit consultant. Both can do a lot of good, but they're very different jobs, with different costs, risks, and ways of getting paid. Here are the pros and cons of each and some questions to help you decide.
The main difference
Starting a nonprofit means building an organization around one mission. You form a board, apply for tax-exempt status, and raise money from donors and grants to pay for the work, including your own salary.
Consulting means running your own business that helps nonprofits with their missions. Organizations pay you for your expertise, like fundraising, strategy, or communications. Consulting businesses are usually set up as for-profit businesses, like a sole proprietorship or an LLC, because they sell services to clients. For more on the work, read what is nonprofit consulting and is it for you?
Pros and cons of starting a nonprofit
Pros
You lead a mission you care about and shape how the work gets done.
Donations to a 501(c)(3) are usually tax-deductible, and you can apply for grants that only nonprofits can receive.
A strong organization can keep the work going long after you leave.
Cons
It takes time and money to get started. Beyond state filings, the IRS application fee alone is $275 or $600, depending on the form.
Your board has the final say on big decisions, including your job.
Your pay depends on fundraising. According to Candid, nearly 60% of U.S. nonprofits have budgets under $50,000, which leaves little room for salaries.
The paperwork never stops: annual IRS filings, state reports, and board meetings.
Pros and cons of nonprofit consulting
Pros
You choose your clients, your schedule, and the kind of work you do.
It costs less to start. Many consultants begin with a laptop, a simple contract, and their network.
You can work with many organizations and causes.
Your income depends on your prices and how many clients you have, not on fundraising. In the 2026 State of Nonprofit Consulting report, full-time consultants had an estimated median income of about $87,000.
Cons
You have to keep finding clients, and your income can be uneven.
You support other organizations' missions instead of leading your own.
You handle everything a business needs, including taxes, contracts, marketing, and sales.
Your business can't accept tax-deductible donations, and you generally can't apply for grants for it.
Questions to ask yourself
Do I want to lead one mission for the long haul, or help many organizations?
Am I ready to raise money for an organization, including my own salary?
Do I want a board to share big decisions, or do I want to make them myself?
How soon do I need a steady income?
Is the need I care about already being met by another organization?
You can do both
The two paths can work together. One consultant I'm working with has done pro bono consulting for years because he loves meaningful work. Now he wants to start a nonprofit and use his consulting income to help fund its programs. Others consult first and start a nonprofit later, once they've seen what the sector needs.
If you run both, keep them separate. Your nonprofit needs its own board, bank account, and books, and any payment from the nonprofit to your consulting business should follow its conflict-of-interest policy.
If you want to test a nonprofit idea first, the Minnesota Council of Nonprofits suggests options like joining an existing organization, starting a program inside one, or working with a fiscal sponsor, a nonprofit that accepts tax-deductible donations for your project, usually for a fee of about 10% of what you raise.
If you're leaning toward consulting, read how to start a nonprofit consulting business for the setup steps.
About the author
Catalina "Cat" Parker is the founder of Relatable Nonprofit. She has a master's in nonprofit management from Columbia, her business has generated nearly $1 million in revenue, and 100+ nonprofit professionals have joined her Mentorship program. Read her story.
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