A strong Form 1023 Part IV narrative example reads like a plain operational description that answers seven specific questions about each activity your organization conducts or plans to conduct: what it is, who runs it, when and where it happens, how it furthers your exempt purpose, what share of your effort it represents, and how it’s paid for.1Internal Revenue Service. Form 1023 – Detail Required in Narrative Description of Activities Vague mission language is what gets applications sent back. Concrete answers to those seven questions are what get determination letters issued.
Below are sample paragraphs you can model, along with the compliance points the narrative has to touch even when they aren’t part of a specific program description.
The Seven Questions Behind Every Good Narrative
For each past, present, and planned activity, your Part IV description should cover:
- What is the activity? Name it and describe it concretely.
- Who conducts it? Staff, volunteers, contractors, partner organizations.
- When is it conducted? Frequency, schedule, or seasonal timing.
- Where is it conducted? Geographic area, facilities, or online platforms.
- How does it further your exempt purpose? Draw the line between the work and the charitable, educational, or other exempt goal.
- What percentage of total organizational time does it represent?
- How is it funded? Grants, donations, earned revenue, or a combination.
Past activities should be described with dates and outcomes since formation. Current operations get the fullest treatment. Planned programs need enough detail to show a real plan rather than an aspiration.2Internal Revenue Service. Publication 557 – Tax-Exempt Status for Your Organization If your narrative describes a tutoring program but doesn’t say who teaches, how often sessions run, or where they happen, expect an information request that adds months to the timeline.
Sample Narrative: A Charitable Program
Compare a weak description with a strong one. Weak: “We help the poor and needy in our community.” That tells a reviewer nothing operational.
Strong:
“Since March 2025, our organization has operated a free medical clinic at 400 Elm Street, serving uninsured adults in [County Name]. The clinic is open every Tuesday and Thursday evening from 6:00 to 9:00 p.m. and is staffed by three volunteer physicians and two paid nurse practitioners. We serve approximately 60 patients per week, selected on a walk-in basis with priority given to individuals whose household income falls below 200% of the federal poverty guidelines. The clinic represents roughly 70% of our total organizational effort and is funded primarily through foundation grants from [Foundation Name] and individual donations raised through our annual fundraising campaign.”
That paragraph hits all seven questions: what (free medical clinic), who (volunteer physicians and paid nurse practitioners), when (Tuesday and Thursday evenings), where (specific address and county), how it furthers the exempt purpose (serving uninsured low-income adults), time allocation (70%), and funding (grants and donations). The income-based eligibility rule also shows the IRS that beneficiaries are chosen by objective criteria rather than at someone’s discretion.
Sample Narrative: An Educational Program
For education-focused organizations, the IRS expects the narrative to describe curriculum, instructional method, and who benefits:
“Beginning in September 2025, we conduct weekly financial literacy workshops for up to 30 adults at [Community Center Name] in [City]. The program uses a 12-module curriculum developed by licensed financial educators, covering budgeting, debt management, credit building, and retirement planning. Workshops run every Saturday from 10:00 a.m. to 12:00 p.m. for 12 consecutive weeks per cohort. Participants are recruited through referrals from local social service agencies and must complete an enrollment form. Two part-time instructors and four volunteers lead the sessions. This program accounts for approximately 85% of our organizational time and is funded by a combination of government grants and public donations.”
Again, all seven questions are answered in ordinary prose. The curriculum is described in enough detail that a reviewer can see the educational substance without having to ask.
Sample Narrative: A Newly Formed Organization
If your organization has not yet begun full operations, the narrative needs extra detail to show that a genuine plan and real capacity exist. Describe the concrete steps already taken and the resources already lined up. Sample language:
“We have secured a signed letter of intent from [Partner Organization] to provide meeting space at no cost beginning in January 2026. Our board has approved a budget allocating $15,000 to the first year of programming, funded by a confirmed $10,000 grant from [Foundation] and $5,000 in committed individual pledges.”
The IRS is skeptical of applications that project ambitious national programs on a $2,500 annual budget. Your financial projections in Part IX have to match the scale of activities the narrative describes.
What the Narrative Also Has to Cover
Beyond describing programs, the narrative should demonstrate that the organization meets the legal requirements for exemption. These points don’t need their own sample paragraphs, but they do need to appear.
Exempt Purposes and the Dissolution Clause
Your organizing documents must limit the organization’s purposes to those recognized under Section 501(c)(3): charitable, religious, educational, scientific, literary, testing for public safety, fostering amateur sports competition, and preventing cruelty to children or animals.3Office of the Law Revision Counsel. 26 USC 501 – Exemption From Tax on Corporations, Certain Trusts, Etc. They must not authorize activities outside those purposes except as an insubstantial part of operations.4Internal Revenue Service. Organizational Test Internal Revenue Code Section 501(c)(3)
They also need a dissolution clause committing remaining assets, on shutdown, to another 501(c)(3), to a federal, state, or local government for a public purpose, or to distribution by a court for exempt purposes. The IRS offers sample language: “Upon the dissolution of this organization, assets shall be distributed for one or more exempt purposes within the meaning of IRC Section 501(c)(3), or corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose.”5Internal Revenue Service. Does the Organizing Document Contain the Dissolution Provision Required Under Section 501(c)(3) or Does State Law Satisfy the Requirement A missing dissolution clause is one of the fastest ways to get an application kicked back.
The IRS considers an organization to be operated “exclusively” for exempt purposes only if it engages primarily in activities that accomplish those purposes; more than an insubstantial part of activities falling outside exempt purposes will disqualify it.6Internal Revenue Service. Operational Test – Internal Revenue Code Section 501(c)(3) For each program, state the connection explicitly: “This activity furthers our charitable purpose by…”
Compensation and Conflicts of Interest
Section 501(c)(3) prohibits any part of the organization’s net earnings from benefiting a private shareholder or individual.7Internal Revenue Service. Inurement/Private Benefit: Charitable Organizations The narrative should describe how compensation for officers, directors, and key employees is set: board review, comparison to market rates for similar positions, and documentation of how the amount was determined.
The IRS includes a sample conflict of interest policy in the Form 1023 instructions and expects organizations to adopt something substantially similar. The policy should require board members and officers to disclose any financial interest in a transaction, step out during discussion and voting on that transaction, and have disinterested directors decide by majority vote whether the arrangement is fair and reasonable. Officers who receive compensation should not vote on their own pay.8Internal Revenue Service. Instructions for Form 1023 – Appendix A: Sample Conflict of Interest Policy Confirm in the narrative that your organization has adopted such a policy and describe briefly how it works.
The stakes go beyond losing exempt status. Under Section 4958, insiders who receive excess benefits face excise taxes on the excess amount, and managers who knowingly approve such transactions can be personally liable.9Internal Revenue Service. Intermediate Sanctions – Excess Benefit Transactions
Political Activity and Lobbying
The narrative must confirm that the organization will not participate in any political campaign for or against a candidate for public office. The prohibition is absolute, with no threshold or safe harbor.10Internal Revenue Service. Restriction of Political Campaign Intervention by Section 501(c)(3) Tax-Exempt Organizations
Lobbying is treated differently. Some lobbying is allowed, but it cannot be a “substantial part” of activities, and the IRS evaluates this on all the facts, including staff and volunteer time and money spent, with no bright-line percentage.11Internal Revenue Service. Measuring Lobbying: Substantial Part Test Organizations that want more predictable rules can elect the expenditure test under Section 501(h) by filing Form 5768, which sets a sliding scale keyed to organizational size.12Internal Revenue Service. Measuring Lobbying Activity: Expenditure Test Churches and private foundations are not eligible to make the 501(h) election. If your plans include any advocacy, say in the narrative whether you’ll rely on the substantial-part test or elect the expenditure test.
Funding and Unrelated Business Income
Describe each revenue method: grant applications, donation solicitations, fundraising events, membership dues, fees for services. For each source, explain how the money flows to your exempt programs and what internal controls apply.
Income-generating activity needs careful treatment when it isn’t directly related to the exempt purpose. An activity triggers unrelated business income tax if it’s a trade or business, regularly carried on, and not substantially related to the exempt purpose.13Internal Revenue Service. Unrelated Business Income Defined A literacy nonprofit selling branded coffee mugs year-round is a classic example. Such activities are allowed as long as they remain an insubstantial part of operations, and the narrative should include revenue projections and time estimates for them.
Consistency matters. If the narrative describes three ambitious programs but the budget shows $3,000 in total revenue, the IRS will flag it. If 60% of projected revenue comes from selling products only loosely connected to the mission, the organization starts to look more like a business than a charity. The narrative and the Part IX financial projections have to tell the same story.
Mistakes That Trigger IRS Follow-Up
Reviewers routinely slow-walk applications that share these traits:
- Vague purpose statements dressed in inspirational language. “Empowering communities through transformative engagement” describes nothing operational.
- Gaps in the seven questions. Describing what the activity is but not who runs it, or where, or how it’s funded.
- Financial projections that contradict the narrative. Three full-time staff on a $10,000 budget, or 80% of revenue from an activity barely mentioned in Part IV.
- Missing or defective dissolution clause. Distributing residual assets to individuals rather than to exempt organizations or governments.
- Insider compensation without process. Listing officer or director salaries without explaining how amounts were set, or filing without a conflict of interest policy.
- Legalese instead of description. Copying statutory language rather than describing programs in plain terms.
A Note on Who Files the Full Form 1023
These sample narratives are for organizations filing the full Form 1023. Smaller organizations may be eligible for Form 1023-EZ instead, which does not require a full narrative in this form. To qualify, the organization must project annual gross receipts of $50,000 or less for each of the next three years, must not have exceeded $50,000 in any of the past three years, and must have total assets with a fair market value of $250,000 or less.14Internal Revenue Service. Instructions for Form 1023-EZ Churches, schools, hospitals, and several other organization types must file the full Form 1023 regardless of size, and some of them also complete additional schedules: Schedule A for churches, Schedule B for schools, Schedule C for hospitals, and Schedule H for organizations providing scholarships or educational grants to individuals, among others.15Internal Revenue Service. Instructions for Form 1023
Timing note: filing Form 1023 within 27 months from the end of the month the organization was formed allows tax-exempt recognition retroactive to the date of formation. File later, and exempt status is recognized only from the filing date forward, which can leave earlier donations non-deductible and earlier income taxable.16Internal Revenue Service. Form 1023: Purpose of Questions About Organization Applying More Than 27 Months After Date of Formation
The best narratives read like a clear operational plan, not a legal brief. Describe your programs the way you’d explain them to someone who asked what your organization does. If a stranger could picture how the work runs, who it serves, how it’s paid for, and why it fits an exempt purpose, the narrative is doing its job.