How to Start a Nonprofit

Use our free nonprofit formation guide to create your own 501c3 nonprofit in 7 simple steps. To get started, simply select the state in which you wish to form your new business.

For more information on nonprofits and how they function, read our What is a Nonprofit Corporation article before you start.

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Starting a nonprofit is easy

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

Step 1: Name 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 in order 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. Check out our How to Choose a Registered Agent for Your Nonprofit guide for more information about choosing the best registered agent for your small business.

What is a Registered Agent? A 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.

Step 3: Select Your Directors & Officers

The directors of an organization come together to form a board of directors. This board of directors is responsible for overseeing the operations of the nonprofit.

The president, secretary, and other members of the nonprofit who have individual responsibilities and authorities are known as officers.

Eligibility requirements for 501c3 status vary by state. But minimally, your nonprofit corporation must include at least 3 directors who are not related to each other.

Step 4: Adopt Bylaws & Conflict of Interest Policy

To be eligible to apply for 501c3 status, your nonprofit is required to have the following two documents :

  1. Bylaws
  2. Conflict of interest policy

What are Bylaws? Bylaws are the rules outlining the operating procedures of the nonprofit.

What is a Conflict of Interest Policy? A Conflict of Interest Policy is the collection of rules put in place to ensure that any decisions made by the board of directors or the officers, benefits the nonprofit and not individual members.

NOTE: The bylaws and conflict of interest policy must be adopted by the nonprofit during its first organizational meeting where the board of directors and officers are officially appointed.

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

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

  • Charitable, Religious, Scientific, Educational, Literary, Fostering national/international amateur sports competition, Preventing cruelty to animals/children, Testing for public safety,
  1. 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: Get an EIN

What is 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.

Why do I need an EIN? An EIN is required for the following:

  • To open a business bank account for the company
  • For Federal and State tax purposes
  • To hire employees for the company

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 7: Apply for 501c3 Status

Before a nonprofit can apply for 501c3 status it must:

  1. Elect at least three directors not related to each other
  2. File the Articles of Incorporation with the required provisions (As covered in Step 5)
  3. Adopt the bylaws and conflict of interest policy
  4. Have an EIN number

Once these four conditions have been met, your nonprofit can apply for 501(c)(3) tax-exempt status by filing Form-1023 online.

If your application is approved, the IRS will send you a determination letter stating that your organization is exempt from federal taxes under section 501(c)(3).


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?

Soon after sending your application you should receive an acknowledgement 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 that time you can call 877-829-5500 to enquire about your application.

Protect Your Business & Personal Assets

Business Banking

  1. Opening a business bank account:
  • Separates your personal assets from your company’s assets, which is necessary for personal asset protection.
  • Makes 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

  1. Getting a business credit card:
  • Helps you separate personal and business expenses.
  • Builds your company’s credit history, which can be useful to raise capital later on.

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.

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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