What advantages do tech startups with tax exempt 501(c)(3) status enjoy beyond tax exemption, if any?

This past March I co-founded a (for-profit) NV corporation, which created a Facebook App in the C2C social gifting space. This software, however, can be used in multiple industries, and I wanted to demonstrate this by applying the core concept to NGOs and 'donations', where I think there would be a disproportionate interest and demand.

The problem is, even though we already developed the core software (which has been beta tested) and we are in talks with a well respected National/International charity (with ~400,000 Facebook fans) to pilot it's use in this industry, and we seem to have traction with them… we do NOT yet actually have the money to tweak the software to use it in this fashion, even though it's not that much, and I think $5k should cover it.

But I'm personally tapped out just getting our main App 'mobile friendly' right now, Angels aren't going to touch it (and neither will the micro-funding sites) because there is no real money to be made in the non-profit industry… so I'm considering forming a 501(c)(3) organization myself, with hopes that might bring with it some funding options (and press) that are not open to us right now, so we can move forward. But, if I want to do that, now I need another $5k just to get the non-profit shell up and functional, so now I need more money…

Any thoughts, feedback, rules of thumb, advice (or even loosely masked shallow insults) are welcome:) Am I just making red tape for myself here? Or am I really creating options? Maybe I just need to pitch the idea to some Internet savvy philanthropists and see if anyone wants in? I got software, mockups, and I think a big brand partner... I need $5k to make it happen, and then I can replicate for other non-profits.

I've seen worse propositions.

I don't think creating a non-profit entity is going to help your chances much.

And don't think because your prospects are 'non-profit' that they don't have money. Non-profit's are sometimes in situations where they have to spend money.

Anyways, $5,000 is a pretty minor investment for any company / individual to put in for the development of a concept. You could probably get a prospect to pay that and pilot it... or find 5 unrelated non-profits and have them each pay $1,000.

Be open about how you are getting the money together and that you have commitment form organization X, and you just need 2 more 'or whatever.' That way they can get a cool app at a fraction of the cost.

Then once it is built you can sell it to more at low incremental costs. Just make sure you have a clear license agreement where they don't expect they own it.

You have 10 friends? set aside 10% of the company and they can each buy 1% for $500/each ;)

You should be able to raise $5,000 if you have mock-ups, and the concept ready to pitch to people.

I don't think the 501(c)(3) is really going to help you, you will just end up with 2 companies that have no money and your effort divided.

You could try defining a project that appeals to your non-profit client and see if they bite

OR

Instead for that sort of money, I think your best bet early on is to start with the crowd funding websites like:

• http://www.kickstarter.com/
• http://rockethub.com/
• http://www.pozible.com.au/index.php
• http://www.quirky.com/
• http://www.fundbreak.com.au/
• http://www.catwalkgenius.com/
• http://en.fansnextdoor.com/
• http://www.indiegogo.com/
• http://www.cofundos.org/
• http://www.profounder.com/