Updated:: Nov 7, 2018
Original:: Oct 14, 2010

How to Get Nonprofit Status

If your organization won't be distributing profits to shareholders, follow these steps to start the process of being recognized officially as a nonprofit organization.

Instructions

Step 1: Write a mission statement Write a mission statement. The mission statement should include the organization's goals, values, and vision.
Step 2: Create and sign the articles of incorporation Assemble board members, if you have a board, to create and sign articles of incorporation.
TIP: Board members should have the same goals, values, and vision as the organization.
Step 3: Agree on bylaws Agree on bylaws that stipulate how the board will operate. All members must sign these laws as well.
TIP: Bylaws should include each member's position, job requirements, and attendance schedule.
Step 4: Incorporate your organization File for incorporation with your state government. Each state will have its own requirements, but you are usually required to prove that shareholders won't receive company profits.
Step 5: Complete Form 1023 Complete Form 1023, Application for Recognition of Exemption. Download a blank file of the form from the Internal Revenue's web site at irs.gov. There is a fee of up to $850 to file a Form 1023.
TIP: Hire a lawyer to complete the form, or at least review it, if you have concerns about accuracy.
Step 6: Wait Wait for your letter of approval. After receiving the letter, apply for tax-exempt status if you qualify, and then for exemptions from your state and for property tax exemptions from the city.
FACT: Donor lists for nonprofit organizations are generally not public information, but annual return figures are.