Things You'll Need:
- Organization/corporation name (Federal Trademark Registered)
- Employer identification number
- Mission statement
- Board of directors
- Governing documents (articles of incorporation and bylaws)
- Certificate of incorporation (from state)
- Anticipated income & expenses for three years
- IRS form 1023 (application for tax-exempt status)
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Step 1
Develop your organization's mission statement. This states the overall purpose of the organization and its activities as a nonprofit. Clearly outline the organization's purpose and goals, how those goals will be achieved, and who will benefit as a result of the organization's activities. Add organizational values and vision as well. Weigh the language used in the mission statement; make it memorable, focused and easy to read.
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Step 2
Create the "Articles of Incorporation." As one of two governing documents for your organization required for legal incorporation with the state, the articles name the organization and describe its existence. Specify in the articles that your nonprofit organization will not be used to create profit for its directors. Obtain signatures of all incorporators on the document in the presence of a notary (three are required in most states, in other states just one) .
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Step 3
Create the "By-laws." As the other required governing document for your organization required for legal incorporation, organizational by-laws specify and explain important procedures. Include in the by-laws how directors are elected and specify their length of service (terms). Identify the officer positions in the organization and their duties. Provide attendance requirements for members, officers, and directors, and establish quorem attendance requirements. Provide information on the number and frequency of meetings. Define membership qualifications for the organization. Identify board of directors' meetings and the attendance requirements for directors serving on the board. Add a by-law describing how the by-laws can be formally amended.
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Step 4
Incorporate your organization. Nearly all nonprofit organizations have been established as corporations under the laws of their states. Research and determine your state requirements for forming a corporation. Write any narratives required in your state's corporation process. Submit both the articles of corporation and by-laws and pay appropriate fees.
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Step 5
Apply for a Employer Identification Number (EIN). Even if your nonprofit does not plan to employ personnel, the EIN is required for the tax exemption application as well as all state and federal reports. Submit IRS Form SS-4. No fee is required and the EIN is provided in four to five weeks.
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Step 6
Prepare the IRS Form 1023 for tax-exemption. Identify on the form which public charity classification you seek for your organization and be prepared to provide evidence to support your decision (includes public support test and revenue sources). Attach a narrative description of the organization and describe activities; provide much more detail than the Articles of Corporation and make sure to describe the raising of funds, any involvement in foreign countries or organizations, and whether your organization will attempt to influence legislation. Report salaries and conflicts of interest. Provide financial information including estimated income and expenses for three years, the current year plus two additional years, and choose your annual accounting period.
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Step 7
Submit all required documents for tax-exemption to the IRS. Submit completed IRS Form 1023, conformed (exact) copies of the Articles of Corporation, certificate of incorporation from the state (if provided), and by-laws. List your organization's name, address and EIN on every attachment. Pay the appropriate fee: $500 (anticipated revenue greater than $10,000) and $150 (certain that revenue will be under $10,000). Anticipate a response from the IRS and approved tax-exemption within 15 months, but up to 27 months.
