How to start a nonprofit, step by step

Starting a nonprofit is two projects that happen in sequence. First you create a legal entity under your state's law, usually a nonprofit corporation. Then you ask the IRS to recognize that entity as exempt under section 501(c)(3) of the Internal Revenue Code, the section that covers charitable, religious, educational, scientific and literary organizations. The IRS cannot recognize something that does not exist yet, so the state steps come first.

This guide walks through the full sequence and points to a deeper guide for each step.

The steps at a glance

1. Define the mission and decide whether a new organization is the right vehicle.
2. Choose a name and confirm it is available in your state.
3. Recruit a founding board of directors.
4. File articles of incorporation with your state.
5. Draft bylaws.
6. Hold the organizational meeting of the board.
7. Get an employer identification number (EIN).
8. Apply to the IRS on Form 1023 or Form 1023-EZ.
9. Register with your state for charitable solicitation and apply for state tax exemptions.
10. Keep up with annual federal and state filings.

Step 1: Define the mission and test the fit

Write down what you will actually do. The IRS will not recognize an organization based on a mission statement alone; the Form 1023 instructions ask for the specific activities that carry out the mission, who conducts them, where, and how they are funded. "Help kids read" is a mission. "A free after-school reading club, two afternoons a week at the public library, run by volunteer tutors" is an activity.

Ask whether you need a new organization at all. A fiscal sponsor, an existing charity or a for-profit structure is sometimes a better fit. Our guide on whether you should start a nonprofit walks through those options honestly.

Step 2: Choose a name

Your state's corporate filing office, usually the secretary of state, decides whether a name is available, and many states let you reserve one before you file. Search the state's business database, check that the name does not mislead people about who you are, and look for a matching web domain. The name you file becomes your legal name, and it must appear the same way on your EIN application and IRS forms.

Step 3: Recruit a founding board

A nonprofit corporation is governed by a board of directors. Federal tax law does not set a minimum size; state law does, and it varies. New York, for example, requires at least three directors. The IRS encourages boards that include independent members, not just the founder's family or employees, because an independent board is the main safeguard against inurement, meaning the organization's earnings benefiting insiders.

Step 4: Incorporate in your state

You form the corporation by filing articles of incorporation (some states call them a certificate of incorporation) with the state. For 501(c)(3) purposes, the articles must pass the IRS organizational test: they must limit your purposes to exempt purposes and permanently dedicate your assets to those purposes if you ever dissolve. Many state forms do not include this language, so you add it. See articles of incorporation for a 501(c)(3) for the IRS sample clauses.

The filing date matters. The date the state files your articles is your formation date for the IRS, and it starts the 27-month clock discussed in step 8.

Step 5: Draft bylaws

Bylaws are your internal operating rules: how directors are elected, how many make a quorum, which officers you have, how you handle conflicts of interest and how the bylaws themselves are amended. In most states they are not filed with the state, but Form 1023 asks you to upload a current copy if you have adopted them. Our nonprofit bylaws guide covers each provision.

Step 6: Hold the organizational meeting

At the first meeting the board adopts the bylaws, elects officers, adopts a conflict of interest policy, chooses a fiscal year and authorizes the EIN application, a bank account and the exemption application. The minutes of that meeting become a permanent record. See the first board meeting guide for an agenda and sample resolutions.

Step 7: Get an EIN

Every exempt organization needs its own employer identification number, whether or not it has employees, and you cannot submit Form 1023 or Form 1023-EZ without one. The IRS says not to apply until the organization is legally formed: when you apply, the IRS presumes you exist, and the three-year clock for automatic revocation starts running. Details are in our guide to getting an EIN for a nonprofit.

Step 8: Apply for 501(c)(3) recognition

Both applications are filed online through Pay.gov.

User fees as shown on the IRS page "Form 1023 and 1023-EZ: Amount of user fee," last reviewed October 9, 2026.

Form 1023-EZ eligibility, in short. You must answer "no" to every question on the eligibility worksheet in the Form 1023-EZ instructions. The financial questions ask whether you project annual gross receipts over $50,000 in any of the next three years, whether your gross receipts exceeded $50,000 in any of the past three years, and whether your total assets exceed $250,000 in fair market value. Gross receipts are everything you take in before expenses. The worksheet also excludes several types of organizations, including churches, schools, hospitals and supporting organizations. The Form 1023 vs. Form 1023-EZ guide compares the two in detail.

The 27-month window. If you file within 27 months from the end of the month in which you were legally formed and the IRS approves the application, your exemption is generally effective from your formation date. File later and it generally starts on the date you file, unless you qualify for relief on Schedule E.

Who does not have to apply. Churches, and organizations other than private foundations whose gross receipts are normally not more than $5,000, are not required to file. Many apply anyway so donors and grantmakers can confirm their status.

What you get back. If approved, the IRS issues a determination letter, the official letter stating that you are exempt and whether you are classified as a public charity or a private foundation. The IRS publishes current processing figures on its "Where's my application" page, updated regularly; check the date on that page and treat the figures as a snapshot, not a promise.

Step 9: State registration and state tax exemptions

Federal exemption does not settle your state obligations, and rules vary by state.

Charitable solicitation registration. Many states require charities to register before asking residents for donations. California, for example, requires registration with the Attorney General's Registry of Charities and Fundraisers within 30 days of first receiving charitable assets. Start with our guide to state charitable solicitation registration.

State tax exemptions. State income, sales and property tax exemptions usually require separate applications. In California, an organization with a federal determination letter files Form FTB 3500A to obtain state exemption, and it remains taxable until the exemption is granted.

Step 10: Keep up with annual filings

Most exempt organizations file an annual return or notice with the IRS by the 15th day of the 5th month after their tax year ends:

• Form 990-N (e-Postcard) if gross receipts are normally $50,000 or less.
• Form 990-EZ if gross receipts are under $200,000 and total assets are under $500,000 at year end.
• Form 990 for larger public charities, and Form 990-PF for every private foundation.

An organization that fails to file for three consecutive years loses its exemption automatically. Our sister site's guide to which Form 990 to file helps you pick the right return, and most states add their own annual report.

A worked timeline

501Nonprofit.com is a private company, not the IRS. This page is general information, not legal or tax advice for your organization. Example organizations and figures are hypothetical.