To start a 501(c)(3) charity, you organize a nonprofit corporation in your state, obtain an Employer Identification Number from the IRS, and then file Form 1023 or Form 1023-EZ to apply for federal tax-exempt status. The IRS application costs $275 or $600 depending on the form, and a decision can arrive in about three weeks or take closer to six months. The order matters: each step produces a document the next step needs.
Build the Organization Before You File Anything
Write a specific mission statement first. The IRS wants to see that your organization exists for one or more exempt purposes under Section 501(c)(3): religious, charitable, scientific, literary, educational, fostering amateur sports competition, or preventing cruelty to children or animals.1Office of the Law Revision Counsel. 26 U.S. Code 501 – Exemption From Tax on Corporations, Certain Trusts, Etc. “Helping the community” is too vague. Say what you’ll do, who you’ll serve, and how.
Pick a name and check availability with your state’s business filing office before you commit to it. Then assemble an initial board of directors. Most states require at least three, and these people carry legal responsibility for governance, finances, and strategy. The IRS asks about them on your application, and the composition signals whether the organization serves the public or a handful of insiders.
Draft bylaws covering how directors are elected and removed, how often the board meets, what makes a quorum, and the duties of each officer. Bylaws are internal in most states and not filed with the Secretary of State, but the IRS requires a copy with your exemption application.
Adopt a conflict of interest policy before you apply. Form 1023 asks whether you have one, and the IRS calls the policy “a strategy we encourage organizations to adopt as a means to establish procedures that will offer protection against charges of impropriety involving officers, directors or trustees.”2Internal Revenue Service. Form 1023: Purpose of Conflict of Interest Policy Not having one can slow your application. The policy should require directors to disclose financial interests, recuse themselves from votes where they have a conflict, and sign annual affirmations.
Finally, designate a registered agent: a person or service with a physical address in your state of incorporation who can accept legal notices during business hours.
Incorporate as a Nonprofit in Your State
Filing articles of incorporation with your state’s Secretary of State (or equivalent office) creates the legal entity. You cannot get an EIN as a nonprofit corporation or file Form 1023 without this step.
Your articles must include the organization’s name, the registered agent’s name and address, the names of initial directors, and the stated purpose. This is where many founders lose months: the IRS requires two specific provisions in the articles themselves, and leaving them out will get your 501(c)(3) application rejected or delayed.
First, a purpose clause limiting the organization’s activities to exempt purposes under Section 501(c)(3). Second, a dissolution clause stating that if the organization shuts down, remaining assets go to another 501(c)(3) organization or to a government entity for a public purpose.3Internal Revenue Service. Charity – Required Provisions for Organizing Documents Some states include default dissolution language in their nonprofit statutes, but leaning on that instead of writing both clauses into your articles is risky. Put them in.
State filing fees range from under $30 to several hundred dollars. Once the state approves your articles, you’ll receive a certificate of incorporation.
Get an Employer Identification Number
Apply for an EIN online through the IRS website at no cost. The session takes about 15 minutes and issues the number immediately on approval. You’ll need the Social Security number or taxpayer ID of the person responsible for the organization, and the IRS advises forming your state entity first so the EIN record matches.4Internal Revenue Service. Get an Employer Identification Number The online form can’t be saved and times out after 15 minutes of inactivity, so gather your information before you start.
File Form 1023 or Form 1023-EZ With the IRS
This is the step that turns your state nonprofit into a federally recognized tax-exempt charity. Section 501(c)(3) status exempts the organization from federal income tax and makes donations deductible for donors.5Internal Revenue Service. Exemption Requirements – 501(c)(3) Organizations
Both applications are submitted electronically through Pay.gov.6Internal Revenue Service. About Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) Which one you file depends on your projected size.
Form 1023-EZ is the streamlined application for smaller organizations. You qualify if your annual gross receipts haven’t exceeded $50,000 in any of the past three years, you don’t project exceeding $50,000 in any of the next three years, and your total assets don’t exceed $250,000. The user fee is $275.7Internal Revenue Service. Instructions for Form 1023-EZ
Form 1023 is the full application, required for any organization that doesn’t meet the 1023-EZ thresholds. It asks for narrative descriptions of your activities, financial projections, compensation arrangements, and organizational documents. The user fee is $600.8Internal Revenue Service. Form 1023 and 1023-EZ: Amount of User Fee
Both applications require your articles of incorporation, bylaws, and EIN.
Processing times differ sharply. As of early 2026, 80% of Form 1023-EZ determinations were issued within 22 days. For the full Form 1023, 80% were issued within about 191 days.9Internal Revenue Service. Where’s My Application for Tax-Exempt Status If the IRS needs more information, it will contact you, and your response time extends the clock. A complete, well-organized application is the best way to avoid back-and-forth. If the IRS returns your application as substantially incomplete, you also lose your user fee and have to pay again on resubmission. Organizations that receive an adverse determination can protest within 30 days.
Pick the Right Classification: Public Charity or Private Foundation
Every 501(c)(3) is classified as either a public charity or a private foundation, and the IRS presumes you’re a private foundation unless you demonstrate otherwise on your application.10Office of the Law Revision Counsel. 26 USC 509 – Private Foundation Defined
Most new charities want public charity status. Public charities face fewer regulatory restrictions, and the deduction limit for donors is higher: cash gifts to a public charity are deductible up to 60% of the donor’s adjusted gross income, compared with 30% for gifts to most private foundations.11Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts That gap affects your ability to attract large gifts.
To qualify as a public charity, you generally need to receive more than one-third of your total support from the general public, government grants, or other public charities. Churches, schools, and hospitals qualify automatically. If your charity will be funded primarily by one donor or a single family, expect private foundation classification, which brings minimum distribution rules, self-dealing prohibitions, and excise taxes on investment income.
What You Can’t Do After You’re Approved
Two activity limits apply the moment you’re a 501(c)(3), and crossing them can cost you the status.
A 501(c)(3) cannot participate in or intervene in any political campaign for or against a candidate for public office. That includes endorsements, campaign contributions, published statements favoring or opposing candidates, and distributing campaign literature.12Internal Revenue Service. Frequently Asked Questions About the Ban on Political Campaign Intervention by 501(c)(3) Organizations: Overview There is no permitted amount.
Lobbying to influence specific legislation is treated differently. A 501(c)(3) can lobby, but it cannot be a “substantial part” of the organization’s activities. Many charities file a 501(h) election to replace that vague standard with concrete dollar limits tied to the organization’s exempt-purpose spending, with a 25% excise tax on any excess.13Office of the Law Revision Counsel. 26 USC 4911 – Tax on Excess Lobbying Expenditures
Register to Fundraise in Your State
Federal tax-exempt status does not give you permission to ask for donations in every state. About 40 states have charitable solicitation laws that require registration before you solicit their residents.14Internal Revenue Service. Charitable Solicitation – Initial State Registration Some states exempt small organizations or member-only fundraising, but the exemptions differ by state.
Registration usually means filing with the state’s Attorney General or a dedicated charity regulator, along with copies of your IRS determination letter, organizing documents, and financial statements. If you fundraise online, you can trigger registration requirements in states where your donors live, not just where you’re incorporated. Check your obligations before you launch a donation page.
Stay Compliant After Approval
Getting the determination letter is not the finish line. Nearly all tax-exempt organizations must file an annual return with the IRS, and the form depends on size.15Internal Revenue Service. Form 990 Series Filing Requirements for Exempt Organizations Form 990-N, the electronic postcard, is for organizations with gross receipts normally $50,000 or less. Form 990-EZ is for gross receipts under $200,000 and total assets under $500,000. Form 990 is for everyone above those thresholds.
If your organization fails to file for three consecutive years, tax-exempt status is automatically revoked.16Office of the Law Revision Counsel. 26 USC 6033 – Returns by Exempt Organizations The IRS publishes a list of revoked organizations, and once you’re on it, donors can no longer deduct contributions to you.17Internal Revenue Service. 18Internal Revenue Service. Unrelated Business Income Tax A literacy nonprofit selling branded mugs at an occasional fundraiser likely wouldn’t trigger it; running a year-round café open to the public probably would.
Keep detailed financial records, board minutes, and copies of all organizational documents from day one. They show compliance if a regulator asks and protect the board by demonstrating directors did their job.