Starting a nonprofit is exciting, time-consuming and sometimes confusing. Maybe this is not the best sales pitch to give before you start a nonprofit, but it is the straight talk. Luckily there is plenty of information on the internet to help you get through the process.
The pages in this section will walk through the steps of forming a 501.c.3 tax-exempt organization. It starts with picking a name for your nonprofit and takes you through filing out your 1023 application for 501.c.3 status.
1. Choose a Name for Your New Nonprofit
Naming your nonprofit may seem like a simple thing to do, but it is an important step in starting a nonprofit. And it is the first step most states require you to do.
In fact, some states will have you reserve your nonprofit name prior to doing any other paper work.
Well, a nonprofit is a corporation. And in some ways nonprofits are competing with for-profit businesses, especially when it comes to branding and marketing.
So, take your time when deciding a name for your nonprofit. And be sure your name is unique, identifiable and says something about what you do.
2. File Your Nonprofit Articles of Incorporation
Filing your nonprofit articles of incorporation is done through the state and should not be confused with becoming a federally recognized nonprofit with 501.c.3 status.
In this step you become an official entity within your state. And each state has its own incorporation process.
Be careful. Some nonprofit incorporation paperwork is deceiving easy. The state doesn’t necessarily require all the same information as the IRS. So, when you go to apply for your 501.c.3 you may find your articles of incorporation are lacking vital information.
Be sure to future proof your articles and include the necessary IRS verbiage, even if your state does ask for it.
3. Write Your Nonprofit Bylaws
Writing your nonprofit bylaws is a time consuming process that requires research and decision making. The bylaws you create will become the operating manual for your nonprofit. So, it is important to be specific about the purpose of your organization, board guidelines, membership rules, conflict of interest clauses and other legal matters.
And of course, the IRS wants to see specific language in your bylaws regarding the nature of your nonprofit business.
I have include some free sample nonprofit bylaws, in the How to Write your Nonprofit Bylaws section of this website, to help get you started.
So, take your time, be thorough, and if necessary, contact a lawyer for guidance.
4. Hold your First Nonprofit Meeting
It’s time to hold your first official nonprofit meeting. During this meeting you will be appointing officers to your board, adopting your bylaws and setting up various accounts.
This is an important nonprofit meeting and should be documented with meeting minutes. Our “Hold Your First Nonprofit Meeting” section includes a free sample agenda you can download to help you conduct this meeting.
5. Create your Nonprofit Corporate Binder
Running a new nonprofit means keeping good records. At this point, you’ve already incorporation with your state, created your nonprofit bylaws and held your first meeting. Now it is time to organize these nonprofit documents into your Nonprofit Corporate Binder.
I know it sounds fancy, but it is actually just a binder full of documents. The important thing is keeping it up to date.
Some things are more important to document and keep than others. So, don’t go overboard keeping every document, memo and sticky note. On the other hand, there are “must haves” that all nonprofits should keep in the corporate binder.
6. File for your Nonprofit 501.c.3 Status
Getting your 501.c.3 tax exemption is the ultimate goal for most nonprofits. This involves gathering all the documentation you’ve created – your articles of incorporation and nonprofit bylaws . Making sure you’ve included all the necessary verbiage, clauses and disclaimers. And submitting these documents along with the IRS Form 1023.
It is important to note there is a fee associated with applying for nonprofit tax exempt status. And submitting the form and paying the fee is not a guarantee of approval.
But if you have been deligent in your research and documentation, then 501.c.3 status should only be a few months away.
Disclaimer: following this guide is not a guarantee of 501.c.3 tax exempt status. In matters of uncertainty we recommend consulting a nonprofit lawyer for guidance and advice.