How to Secure Nonprofit Status - dummies

By Stan Hutton, Frances Phillips

Part of Nonprofit Kit For Dummies Cheat Sheet

Before you can begin operating as the kind of nonprofit organization that receives tax-deductible gifts from donors, you need to secure 501(c)(3) nonprofit status in the eyes of the Internal Revenue Service (IRS) and your state. Take the following steps to gain that nonprofit status for your organization:

  1. Choose a name for your nonprofit. (While you’re at it, select and reserve a web domain name.)

  2. Form your incorporating board of directors (often only three people are needed).

  3. Write articles of incorporation including a statement of your purpose and submit them to the appropriate office in your state government with the required fee.

  4. Wait for a response from your state. (In some states you can expedite the process by paying a surcharge.)

  5. Obtain a Federal Employer Identification Number, submitting IRS Form SS-4.

  6. Develop organizational bylaws — the rules by which you will operate.

  7. Hold your first board meeting and prepare meeting minutes.

  8. Review IRS Publications 557 (Tax-Exempt Status for Your Organization).

  9. Carefully read the instructions for completing and filing IRS Form 1023 or Form 1023-EZ if you’re applying to become a 501(c)(3) tax exempt organization (preferably within 15 months of the date of incorporation).

  10. After filing your form, sit back and relax. Celebrate when your letter of determination arrives!

  11. Register as a charity within your state. While you’re at it, check your state’s laws: Some require you to apply for a separate (in addition to federal) tax exemption.