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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.

You Will Need

  • Mission statement
  • Board members
  • Articles of incorporation
  • Bylaws
  • Application for Recognition of Exemption (Form 1023)
  • Internet access
  • State and local applications
  • Lawyer (optional)

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