How do I start a nonprofit?
You start a nonprofit in two big moves. First, you form a nonprofit corporation with your state. Then you apply to the IRS for 501(c)(3) tax-exempt status. Most small groups can do both themselves.
Here is the whole path in order. You will not do it all in one day, and that is fine.
- Pick a clear mission and a name no one else in your state is using.
- Recruit a board of directors (many states set a minimum, often three people).
- File your Articles of Incorporation with your state, usually the Secretary of State.
- Name a registered agent with a physical address in your state.
- Get a free federal EIN (tax ID) from the IRS.
- Write and adopt bylaws and a conflict-of-interest policy.
- File Form 1023 or Form 1023-EZ with the IRS to request 501(c)(3) status.
- After the IRS approves you, handle state tax exemption and charitable registration.
How much does it cost to start a 501(c)(3)?
The main cost is the IRS application fee. If you file the short Form 1023-EZ, the user fee is $275. If you file the full Form 1023, the user fee is $600. You pay it on Pay.gov when you submit. These fees can change, so check the IRS fee page before you file.
On top of that, your state charges a fee to file your Articles of Incorporation. This amount varies a lot from state to state, so check your Secretary of State's website for the exact number.
Your EIN from the IRS is free. Ignore any site that charges for one, because you never have to pay a fee for an EIN. So a bare-bones DIY start is often the IRS fee plus your state's filing fee. You may choose to pay a lawyer or accountant, but it is not required.
- Form 1023-EZ user fee: $275
- Form 1023 user fee: $600
- EIN: free, direct from the IRS
- State incorporation fee: varies by state
How long does 501(c)(3) approval take?
It depends on which form you file and how busy the IRS is. IRS processing times shift over time, so treat these as recent snapshots, not promises.
In its recent updates, the IRS reported it issued 80% of streamlined Form 1023-EZ decisions within 22 days. For the full Form 1023, it reported issuing 80% of decisions within 191 days, or roughly six months.
Forming your corporation with the state is usually much faster, often days to a few weeks. You can check the IRS's current processing dates on its "Where's my application" page before you worry about a delay.
Form 1023 or Form 1023-EZ: which one?
Most brand-new small nonprofits qualify for the shorter, cheaper Form 1023-EZ. But there are hard limits.
You can use Form 1023-EZ only if you project annual gross receipts of $50,000 or less in each of the next three years, your gross receipts did not top $50,000 in any of the past three years, and your total assets are worth $250,000 or less. If you go over any of those lines, you must file the full Form 1023.
Before you file the EZ, the IRS makes you complete an Eligibility Worksheet in the instructions. Work through it honestly. Guessing wrong can slow you down or cost you the fee.
- Form 1023-EZ: for smaller groups under the receipts and asset limits.
- Form 1023: for larger groups, or those that expect to grow past the limits.
- Both need an EIN first, and both are paid on Pay.gov.
Don't skip the state steps
Getting your IRS letter is a big moment, but it is not the finish line. Your state has its own rules, and they differ everywhere.
Filing for state and local tax exemption usually has to happen after the IRS issues your Determination Letter. So keep that letter handy, because you will need it.
Many states also require you to register before you ask the public for donations. This is called charitable solicitation registration. Check your state's rules so your first fundraising campaign stays clean.
- Apply for state tax exemption after your IRS letter arrives.
- Register for charitable solicitation if your state requires it.
- Watch for annual state filings so you stay in good standing.
A few honest tips before you file
Do your homework first. The National Council of Nonprofits suggests checking whether another group already does what you plan to do. Sometimes joining or partnering beats starting from scratch.
Keep your paperwork in one place. Your Articles, EIN letter, bylaws, board minutes, and IRS letter will be asked for again and again. Losing them costs you time you do not have.
And go slow on the language in your Articles of Incorporation. The IRS wants specific purpose and dissolution wording to grant 501(c)(3) status. This is one spot where a quick review by a pro can save you a rejection.