How to Start a Nonprofit in Illinois

To start a nonprofit in Illinois and get 501c3 status, follow these steps:

Step 1: Name Your Illinois Nonprofit
Step 2: Choose Your Registered Agent
Step 3: Select Your Board Members & Officers
Step 4: Adopt Bylaws & Conflict of Interest Policy
Step 5: File the Articles of Incorporation
Step 6: Get an EIN
Step 7: Apply for 501c3

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Starting a 501c3 Nonprofit in Illinois Is Easy

Starting your nonprofit in Illinois is simple, but before you decide on a name and industry you want to work in, now is a good time to look at the statistics and figure out which kinds of organizations are needed in the state. 

For example, as of April 2023, over 74,432 organizations serve Illinois. Those organizations employ over 833,000 people and bring in substantial revenue streams of over $125 billion in total annually. The majority of the nonprofits in the state are based in Chicago, with 47,568 in the local area. Peoria has 2,477, and Springfield, the state’s capital and another major city, has only 2,054. 

Nonprofits often provide much-needed jobs to people within a region, which is part of why they’re so important. Some of the key nonprofit employers in Illinois include:

  • Advocate Health Care
  • OSF Healthcare System
  • Rush University Medical Center

Universities and hospitals provide the most jobs regionally, but others, like religious organizations and hospital systems, also provide many job openings and opportunities for employment.

The largest nonprofits in Illinois today include big names like:

  • Advocate Health Care
  • The University of Chicago
  • Feeding America

These are also some of the greatest-earning nonprofits. That being said, not all nonprofits are major earners. In fact, 17,451 organizations earn $250,000 or less annually. A total of 181, at the other end of the scale, earn $100 million or more. 

What you do with your nonprofit will depend on what you’re interested in and who you’d like to help, but you might want to consider opening a nonprofit in an industry with very few, such as in public safety, medical research, or civil rights and social justice. 

To start a 501c3 tax-exempt nonprofit organization in Illinois, you must first start a nonprofit in Illinois according to the rules of the state and then apply for 501c3 status with the IRS.

Learn more about 501c3 eligibility in our What is a 501c3 guide.

Want to form a nonprofit elsewhere? Check out our other How to Start a Nonprofit guides. Also, check out our best nonprofit formation services review.

Step 1: Name Your Illinois Nonprofit

Your nonprofit’s name needs to meet the Illinois naming requirements and be easily searched and found by any potential members or donors.

Read our How to Name a Nonprofit in Illinois guide to learn more about naming your nonprofit.

1. Follow the naming guidelines to get started:

  • Remember, your nonprofit’s name has to meet these guidelines:
    • Include “NFP” at the end of the name if you find that the name of your organization suggests that it does something different than designed (the name should have NFP if it isn’t in line with naming via the Nonprofit Act). 
    • Be different and distinguishable from other businesses in Illinois.
    • Avoid terminology related to established political parties unless permission has been granted by the Secretary of State.

The Illinois General Assembly’s official guidelines have more details for you to review on how to name an Illinois-based nonprofit.

2. Is the name available for you to use? Start a name search on the Cyberdrive Illinois website to see if your business name is available.

3. Is the URL available? For a website, you’ll need a web domain. Even if you don’t want to make one now, it’s a good idea to buy the URL. That way, no one else can use it. 

Once you’re ready to move on after selecting a URL and business name, you need to choose a professional business that can help you finish the business formation process. It’s our preference to choose a business with a long history of success, such as:

Northwest ($29 + State Fees)

Step 2: Choose a Registered Agent in Illinois

Your nonprofit must first choose or nominate an Illinois registered agent. 

What is a registered agent? Your registered agent receives legal documents on your business’s behalf (and handles interactions with the state). They also assist with compliance needs, such as filing annual reports.

Who is eligible to become a registered agent? Any individual or business that is a resident of Illinois can be a registered agent. You may choose to use a registered agent service or elect to use someone who is working within your company. You can also be your own registered agent.

If you need more information on choosing an agent, check out our guide: How to Choose a Registered Agent for your Illinois Nonprofit.

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

Both Illinois and the IRS require 501c3 nonprofits to have at least three directors to be eligible for 501c3 status. The majority of directors should not be related to each other.

Illinois does not have any specific officer requirements, meaning titles are left up to the nonprofit to determine in its bylaws.

To learn more about electing an Illinois nonprofit board of directors, read our full guide.

Step 4: Adopt Bylaws & Conflict of Interest Policy

Before you can apply for 501c3 status, you need to create two documents for your nonprofit:

  1. Bylaws 
  2. Conflict of interest policy.

What are your nonprofit’s bylaws? A nonprofit’s bylaws explain the rules for how the nonprofit will operate. 

What is a conflict of interest policy? The point of a nonprofit’s conflict of interest policy is to make sure that the board of directors, officers, and others working with and making decisions for the nonprofit only do things that are in the nonprofit’s best interests. 

NOTE: The nonprofit, during its first organizational meeting, must adopt both of these documents as well as appoint the directors and officers.

Step 5: File the Illinois Articles of Incorporation

To register your nonprofit, you will need to file Not-for-profit Articles of Incorporation with the State of Illinois.

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

1. Purpose:

In order to qualify for 501c3 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

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 501c3 status, the assets of your organization must only ever be used for purposes approved under section 501c3. 

Section 5 of this sample IRS document provides an example of these provisions required for 501c3 eligibility. 

File the Articles of Incorporation

Option 1: File online with the state of Illinois.

File Online

– OR –

Option 2: File by mail or in-person.

Download Form

State Filing Cost: $50

Secretary of State
Department of Business Services
501 S. Second St., Rm. 350
Springfield, IL 62756

To learn more, read our Illinois Articles of Incorporation guide.

Step 6: Get an EIN

To run your business and pay taxes, you’ll need an EIN. 

What is an EIN? EIN stands for “Employer Identification Number” and is used as a Social Security number for your business. In other words, with your EIN, your organization is recognized as its own entity. EINs are also sometimes referred to as a “Federal Tax Identification Number” (FTIN).

There are three main reasons to create an EIN:

  1. You can get a business banking account for your new nonprofit
  2. You can hire employees to work for your nonprofit
  3. Your nonprofit will be recognized for tax purposes

How do I get my own EIN? To get an EIN for your company, you need to finish the business formation process. Then, you can ask the IRS for a free EIN. You can file for an EIN online or by mail. For more details, check out this EIN Lookup guide.

Step 7: Apply for 501c3 Status

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

  1. Elect at least 3 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 501c3 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 501c3. 

See if your nonprofit has 501c3 status in Illinois. Use our Illinois 501c3 lookup table to find all Illinois nonprofits.

FAQ: Starting Your Nonprofit

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 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 that time you can call (877) 829-5500 to inquire about your application. 

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