How to Claim Non-Profit Status

A non-profit organization is formed to benefit the community. Claiming non-profit status offers benefits such as tax exemption and the ability to receive donations and grants. Learn how to claim non-profit status through the IRS and your state and federal governments to secure benefits for your organization.

Instructions

1. Understand the advantages and disadvantages of claiming non-profit status. The benefits of being a non-profit organization include tax exemption, employee benefits, having a concise purpose in your organization and the ability to accept donations and grants, both private and public. The disadvantages include following strict regulations and keeping up with paperwork, restrictions where endorsements of public officials and lobbying are concerned and the law that if your non-profit fails, all assets must be given to another non-profit. Make sure non-profit status is what you need before you begin the process.

2. Know that the process to claim non-profit status varies by state. An organization seeking non-profit status needs to go through the IRS and the federal government. Some states require state participation as well while other states are satisfied with the federal application process. Check with the National Association of Charity Officials for the regulations in your state.

3. Contact the office of the Secretary of State to begin the process to claim non-profit status. You need to file articles of incorporation with the office of the Secretary of State. There are strict laws that must be followed in order to become a non-profit organization and these laws vary by state. Once the articles of incorporation are approved, you can proceed to the federal level of tax exemption and contact the IRS.

4. Fill out the IRS Package 1023 for federal tax exemption. This package of information and the application can be confusing. Use reference books or hire an attorney who specializes in tax law for assistance.

5. Wait for approval from the federal government. If not approved, hire an attorney who specializes in non-profit law to help you.

Resources

• The National Association of State Charity Officials website lists the appropriate contacts by state for information on non profit status