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For new nonprofits
The 501(c)(3) purpose and dissolution clause (with sample language)
To get 501(c)(3) status, your Articles of Incorporation must limit your purposes to exempt purposes, and your assets must stay dedicated to exempt purposes if you dissolve. Most organizations meet both requirements with two clauses: a purpose clause and a dissolution clause. In a few states, state law covers dissolution, but including the clause is still the safest course.
Leaving them out, or getting them wrong, can stall your application. Here is what each clause has to do, with the IRS's own sample language you can adapt.
This is general information, not legal advice. The IRS reviews the substance of your language; when in doubt, use your state's nonprofit template or ask a professional.
What the IRS requires
| Purpose clause | Limits the organization to 501(c)(3) exempt purposes |
| Dissolution clause | Dedicates assets to another 501(c)(3) or government if you close |
| Where it goes | Your Articles of Incorporation, not just the bylaws |
| Source | IRS Publication 557, the organizational test |
Why these two clauses matter
To be recognized as a 501(c)(3), your organizing document has to pass what the IRS calls the organizational test. Two parts of that test live in specific clauses: your purpose has to be limited to exempt activities, and your assets have to stay dedicated to charity forever, even if the organization dissolves. Reviewers look for both, and a missing or vague clause is a fast track to a rejection letter or a request to amend and refile.
One key point: this language belongs in your Articles of Incorporation, the document you file with the state, not only in your bylaws. Bylaws are internal rules; the IRS wants the commitment in your public charter.
The purpose clause
The purpose clause says your nonprofit exists only for purposes the tax code recognizes as exempt, such as charitable, religious, educational, or scientific work. It keeps you from being organized for private benefit. The IRS offers this sample language in Publication 557:
You can name the specific mission too, but keep the exempt-purpose limitation in place. A purpose written so broadly that it could cover non-exempt activity is a common stumbling block.
The dissolution clause
The dissolution clause promises that if your nonprofit ever closes, whatever assets are left go to another 501(c)(3) or to a government for public purposes, never to founders, directors, or members. The IRS sample language reads:
Where to put them
Both clauses go in your Articles of Incorporation. Many states give you a fill-in template, and some already include this language or a place for it. If yours does not, you add the clauses yourself before filing. Because state forms and wording vary, check your state's guide: our how-to-start guides by state walk through where this fits.
Common mistakes
- Putting the clauses only in the bylaws, not the Articles.
- A purpose clause so broad it could allow non-exempt activity.
- A dissolution clause that sends assets to members or founders.
- Skipping the dissolution clause entirely.
Ember Spark
Ember Spark is a free, step-by-step checklist for starting a nonprofit, and each step explains why it matters. In Ember it drafts your bylaws, conflict-of-interest policy and Form 1023 narrative for you to finish, and puts your filing deadlines on Ember's compliance calendar. Turn on Ember Compliance and it emails you a reminder before each one. Unlimited users on every tier.
General information for people starting a nonprofit, not legal or tax advice. Rules change; confirm specifics with the IRS, your state, or a qualified professional.
Sources: IRS Publication 557 · IRS, organizational test · councilofnonprofits.org. Verified August 2026.