How to Start a Nonprofit

Starting a 501(c)(3) nonprofit organization is a powerful way to make lasting change in your community and beyond. Whether you’re passionate about education, healthcare, the arts, or any other charitable cause, nonprofit organizations provide the legal framework to turn your vision into reality.

While forming nonprofit corporations requires several important steps, we’ve broken down the process into 8 simple steps that anyone can follow. This guide shows you exactly how to start a nonprofit the right way, from initial planning to achieving tax-exempt status.

Ready to launch your nonprofit with confidence?

Download our Free Nonprofit Formation Checklist to guide you step-by-step through the process, ensuring you don’t miss any key details.

Recommended: For just $29 + state fees, start your nonprofit with Northwest. Get the best privacy protection and customer service, plus FREE registered agent services for your first year.

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How to Start a Nonprofit Organization in 8 Steps

Starting a nonprofit is easy, just follow the steps outlined below. Be sure to download our nonprofit formation checklist at the end to ensure you don’t miss any important steps during the formation process.

To learn more about starting a nonprofit corporation in a specific part of the US, select your state below:

Step 1: Name Your Nonprofit

The first step toward starting your organization is naming your nonprofit.

Choosing a name for your nonprofit organization is the first and most important step in starting your nonprofit corporation. Be sure to choose a name that complies with your state’s naming requirements and is easily searchable by potential members and donors. Is the URL available? We recommend that you check to see if your business name is available as a web domain. Even if you don’t plan to make a business website today, you may want to buy the URL to prevent others from acquiring it.

Step 2: Choose a Registered Agent

Your nonprofit is required to nominate a registered agent from your state for your organization.

  • What is a Registered Agent? A nonprofit registered agent is an individual or business entity responsible for receiving important legal documents on behalf of your business. Think of your registered agent as your business’ point of contact with the state.
  • Who can be a Registered Agent? A registered agent must be a resident of your state or a corporation, such as a registered agent service, authorized to transact business in your state. You may elect an individual within the company including yourself.

We recommend reading our guide on how to choose a registered agent to get started.

Step 3: Select Your Directors & Officers

Every nonprofit corporation must have two key leadership groups: a board of directors and officers. While state requirements vary, the Internal Revenue Service (IRS) requires a minimum of three unrelated directors on your board of directors to qualify for 501(c)(3) tax-exempt status. 

Important details about board of directors:

  • A group of individuals who provide oversight and strategic direction
  • The group makes major decisions about the nonprofit’s mission and finances
  • Must have at least three directors who are not related by blood, marriage, or business
  • Required for federal tax-exempt status

Important details about nonprofit officers:

  • Can be board members or separate individuals
  • Handle day-to-day management and operations
  • Typically a nonprofit’s President, Secretary, and Treasurer

Step 4: Adopt Bylaws & Conflict of Interest Policy

To qualify for 501(c)(3) status, your nonprofit must create and formally adopt two essential documents:

Bylaws

These are your organization’s operating rules that outline how the nonprofit will be governed. Think of bylaws as your organization’s internal rulebook – they cover everything from board meetings and voting procedures to officer roles and decision-making processes.

Conflict of Interest Policy

This document protects your nonprofit by establishing clear rules about decision-making. It ensures that board members and officers make choices that benefit the organization rather than their personal interests.

Both documents must be officially adopted during your nonprofit’s first organizational meeting — the same meeting where you’ll appoint your board of directors and officers.

Step 5: File the Articles of Incorporation

To register your nonprofit, you will need to file the Articles of Incorporation with your state.

To ensure that your nonprofit is eligible to apply for 501c3, in your articles of incorporation you must explicitly state the following:

1. Purpose

To qualify for 501(c)(3) status, the organization’s purpose must explicitly be limited to one or more of the following:

  • Charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.

2. Dissolution

You must explicitly state what the assets of the organization will be used for, and what will happen to the assets if the organization is dissolved.

To be eligible for 501(c)(3) status,  the assets of your organization must only ever be used for purposes approved under section 501(c)(3).

Section 5 of this sample IRS document provides an example of these provisions required for 501(c)(3) eligibility.

Step 6: Hold Your First Board Meeting

The first board meeting is a crucial step in getting your nonprofit off the ground. During this meeting, you’ll make important initial decisions for your organization.

There are a few important agenda items required during board meetings, including:

  • Approving the bylaws
  • Electing officers (e.g., President, Secretary, Treasurer)
  • Adopting a conflict of interest policy
  • Authorizing the opening of a bank account
  • Discussing initial fundraising strategies
  • Setting a schedule for future meetings

Be sure to keep detailed minutes of this meeting, as they may be required when applying for 501(c)(3) status.

Step 7: Get an EIN

An Employer Identification Number (EIN), or Federal Tax Identification Number (FTIN), is used by the federal government to identify a business entity. It is essentially a social security number for the company.

An employer identification number is required to do the following:

  • Open a business bank account
  • For federal and state tax purposes
  • To hire employees for the company
  • Apply for tax exemption

How do I get an EIN?

An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail. Check out our EIN Lookup guide for more information.

Step 8: Apply for 501c3 Status

Next, you will need to apply for tax-exemption or 501(c)(3) status, this step is crucial for obtaining federal tax-exempt status from the IRS. It’s a complex process, but the benefits are significant, including exemption from federal income tax and the ability for donors to make tax-deductible contributions.

To complete this step, nonprofits must have: 

  • At least three unrelated directors
  • Filed Articles of Incorporation 
  • Adopted bylaws and a conflict of interest policy
  • Obtained an EIN 

If all previous requirements have been fulfilled, nonprofits can file Form-1023 (as well as additional forms if applicable) online.

Note: Some states, such as California and New York, require a separate application to obtain state tax-exempt status.

Free Nonprofit Formation Checklist

Don’t miss important steps when forming your nonprofit. Download our free nonprofit formation checklist for step-by-step guidance from naming your nonprofit to securing tax-exempt status.

Steps After Forming a Nonprofit

Set Up Banking For Your Nonprofit

Your nonprofit will need its own business bank account in order to separate personal and business assets, a crucial step for personal asset protection. Additionally, this will make accounting and tax filing easier.

To open a bank account for your nonprofit corporation you will typically need the following:

  1. The EIN for the nonprofit
  2. A copy of the nonprofit’s bylaws
  3. A copy of the articles of incorporation

Read our Best Small Business Banks review to find the right bank for your nonprofit’s needs

Additionally, you should consider getting a business credit card for your organization. This helps to build your company’s credit history, which can be useful to raise capital later on and provides your nonprofit with cash to start making a difference. 

Recommended: Learn about the best small business credit cards here.

Get Insurance

Business insurance helps you manage risks and focus on growing your business. The most common types of business insurance are:

  • General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance.
  • Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers against claims of malpractice and other business errors.
  • Workers’ Compensation Insurance: A type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths.

Get a quote with Next and find an insurance product tailored to your needs. It only takes a few minutes.

Get a Quote Today

Properly Sign Legal Documents

Improperly signing a document as yourself and not as a representative of the business can leave you open to personal liability. When signing legal documents on behalf of your nonprofit, you could follow this formula to avoid problems:

  1. Formal name of your organization
  2. Your signature
  3. Your name
  4. Your position in the business as its authorized representative

See the image below for an example.

This ensures that you are signing on behalf of your nonprofit and not as yourself.

Frequently Asked Questions

When should an organization apply for federal tax exemption?

Form 1023 must be filed within 27 months from the end of the first month your organization was created.

How long will it take for the IRS to process Form 1023/1023-EZ?

Once you have submitted your application for tax-exempt status, you should receive an acknowledgment of receipt of your application. If your application is simple and complete, IRS will send your determination letter within 180 days for Form 1023

If you have not heard from them by then you can call 877-829-5500 to inquire about your application.

How many board members does my nonprofit need?

The number of board members required for a nonprofit varies by state, but most states require a minimum of three directors.

What is the best formation service for nonprofits? 

While there are several reputable nonprofit formation services, Northwest Registered Agent consistently receives high marks for their specialized nonprofit expertise, personalized customer service, and competitive pricing. Plus, they offer comprehensive formation packages that include registered agent services, which can be particularly valuable for new nonprofits.

Quick Links

IRS – Information for Charities & Nonprofits

IRS – Required Provisions for Organizing Documents

IRS – 990 Series for Tax-Exempt Organizations

IRS – Applying for Tax-Exempt Status

IRS – 501c3 Compliance Guide

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