Steps needed to start a 501(c)(3)

Planning and Research

  1. Determine what kind of organization you want to setup.  Research if that type of organization already exists in your ideal operating area.
  2. Select a team and plan the operational plan and fundraising ideas
    1. Why is the organization needed?
    2. What will the organization's mission be or how will it meet the unmet need of the community?
    3. If there are other similar nonprofits, how will your organization be unique?
    4. What will the core activities and services of your organization?
    5. How will you fund the program and services?  Will you fundraise, apply for grants, solicit donations, provide services for a fee?  

Designing and Creating

  1. Determine a name for the organization - pick one that will help describe your mission and one that will be easy to remember.
  2. Select or recruit members for the Board.  Since nonprofits are not owned by anyone but managed by a board of directors.  
    1. Note: The IRS requires at least 3 board members and no more than 50% of the board can be related by blood or marriage.  So if you have three people but two are related, you will need to add additional board members to reach the requirement of the IRS.
  3. Determine the legal structure for the organization 
    1. Will it be organized as a Nonprofit Organization (most common) or will be another type of entity such as an Nonprofit LLC
    2. Prepare and file organizing documentation with the state
  4. Draft Bylaws and Conflict of Interest Policy
  5. Apply for Employer Identification Number (EIN)

Apply for 501c3 Status

In order to gain 501(c)(3) status, an organization must complete and submit the application and all attachments to the IRS for determination.  

The IRS charges a filing fee with each 501(c)(3) application that is dependent upon the organization's projected or actual budget for the first 3-5 years.  The filing fee is currently $400 or $850.

The IRS generally takes approximately 90-180 days to process and make a determination based off the 501(c)(3) application and all attachments.  There have been organizations receive their determination in as little as 3 weeks and some that have taken up to a year.  The majority of organizations receive their determination letter within the 90-180 day window.

After determination letter

After receiving the 501(c)(3) determination letter, there may be additional applications or permits required.  

Some states require separate applications for exemption from state and local taxes.  Please check with us for state requirements and any other applications, such as fundraising permits, that may be required for your organization.