Nonprofit Formation Services

If you are researching how to start a 501(c)(3), it is easy to assume the process begins and ends with an IRS application. It does not.

You are actually dealing with two related but separate processes. First, you create and organize your nonprofit under applicable state law. Then, if your organization qualifies, you seek federal recognition of tax-exempt status under Section 501(c)(3) of the Internal Revenue Code.

In other words, forming a nonprofit does not automatically make your organization a federally recognized 501(c)(3). State law generally governs the organization itself, while federal law and the IRS govern federal tax-exempt recognition.

That distinction matters because the decisions you make before filing—your mission, activities, board, governance structure, funding model, governing documents, and approach to conflicts—can affect how your organization operates long after the IRS issues a determination letter.

This guide walks you through both the filings and the decisions behind them.

Before You Start: Is a New 501(c)(3) the Right Structure?

Before you form anything, ask a more fundamental question: Does your mission actually require a new 501(c)(3) organization?

Creating a separate nonprofit can make sense when you have a distinct charitable mission, need an independent governing structure, and are prepared to operate and maintain the organization over time. But a new entity is not always the only way to pursue a charitable project.

For example, you may be able to collaborate with an existing nonprofit or operate through a fiscal sponsor—an established nonprofit that provides an organizational and administrative home for a qualifying charitable project. These arrangements can sometimes allow an idea to move forward without immediately creating another organization.

You should also consider whether your proposed activities actually fit within Section 501(c)(3). Organizations with substantially different purposes, advocacy goals, membership structures, or activities may need to evaluate another nonprofit or tax-exempt classification.

The goal is not to discourage you from starting a nonprofit. It is to make sure you are building the right organization before investing time and money into forming it.

What You Need to Start a 501(c)(3)

For a typical new charitable organization, the major building blocks include:

• a mission and activities that support a qualifying exempt purpose;

• an appropriate legal organization under state law;

• an initial governing structure;

• legally appropriate organizing documents;

• an Employer Identification Number, or EIN;

• a Form 1023 or, if eligible, Form 1023-EZ application;

• applicable state tax and charitable-registration filings; and

• systems for ongoing federal, state, and governance compliance.

Those pieces are connected. Your mission affects your IRS application. Your activities influence how the IRS evaluates the organization. Your board affects oversight and accountability. Your organizing documents can affect federal exemption. And your governance decisions determine how the organization will actually function after formation.

How to Start a 501(c)(3), Step by Step

1. Define Your Mission, Planned Activities, and Funding Model

A mission statement should do more than sound inspiring. Before you begin filing documents, you need to understand what your organization will actually do.

Ask yourself:

Who will your organization serve? What programs or services will it provide? How will those activities advance a charitable or other qualifying exempt purpose? Where will funding come from? Will you primarily seek donations, grants, program revenue, or another source of support?

These answers matter because the IRS application does not evaluate your organization based on its name or mission statement alone. Your planned activities, finances, relationships, and organizational structure help demonstrate how the organization will operate.

You should also have a basic understanding of whether the organization is likely to be classified as a public charity or private foundation. Every 501(c)(3) receives a foundation classification, although most qualify as public charities.

You do not need to resolve every future operational question before moving forward, but you should be able to explain what you plan to do and how your organization expects to support that work.

2. Choose Your State, Legal Structure, and Nonprofit Name

Your next step is deciding where and how your organization will legally exist.

Nonprofit formation is primarily governed by state law, so the rules depend on the jurisdiction and the legal structure you choose. A nonprofit corporation is common for charitable organizations, but federal tax law does not require every 501(c)(3) to be incorporated. The IRS recognizes qualifying corporations, trusts, and unincorporated associations as possible exempt organizations.

If you are forming a nonprofit corporation, you will generally need to select an available name and comply with your state's incorporation requirements.

Choosing a state should not be treated purely as a matter of convenience. Your organization's actual location, activities, leadership, fundraising, and applicable state requirements can all matter.

3. Prepare and File Your Articles of Incorporation

For a nonprofit corporation, the Articles of Incorporation legally establish the entity with the state.

But your Articles are not merely an administrative form.

This is one of the points where state formation and federal 501(c)(3) requirements can intersect. The organizing document must appropriately limit the organization's purposes and address the permanent dedication of charitable assets, including what happens to those assets upon dissolution.

That means language that is adequate simply to create an entity under state law may not necessarily address everything relevant to federal exemption.

For a deeper explanation of these provisions and how the document functions, see our guide to nonprofit Articles of Incorporation.

4. Establish Your Initial Governing Board

Your board should not be treated as a collection of names you add because an application asks about leadership.

The people you select will help determine how major decisions are made, how finances and leadership are overseen, how conflicts are handled, and how accountability works as your organization grows.

Board requirements vary depending on your organization’s legal structure and the state where it is formed.

Beyond minimum legal requirements, consider what your organization actually needs from its board. Think about skills, independence, mission knowledge, community perspective, founder involvement, relationships among directors, and how future compensation or conflicts may be addressed.

These decisions become especially important when founders, family members, business partners, or other related individuals will play significant roles.

Learn more about choosing a nonprofit board of directors.

5. Adopt Bylaws and Appropriate Governance Policies

Your bylaws are essentially the organization's internal operating rules.

Depending on your structure and state law, they may address matters such as officer responsibilities, board meetings, voting, committees, decision-making authority, amendments, and other governance procedures.

Federal tax law generally does not prescribe specific bylaw language for most organizations, although state law may impose requirements and well-designed bylaws are an important part of operating a nonprofit effectively.

This is why downloading generic bylaws without considering how your organization will operate can create problems later. Your governing documents should reflect the decision-making structure you actually intend to use.

You should also consider procedures for identifying and addressing conflicts of interest. A conflict-of-interest policy can be an important governance safeguard and is relevant to IRS governance considerations, but it should not be described as a universal IRS prerequisite for obtaining 501(c)(3) status.

See our guides to nonprofit bylaws and a nonprofit conflict of interest policy for deeper guidance.

6. Obtain an EIN

After your organization has been legally formed, obtain an Employer Identification Number from the IRS.

An EIN is a federal identification number for the organization. Despite the word “Employer,” you need an EIN for the exemption application even if your nonprofit does not currently have employees.

The sequence matters:

Form the organization first → then obtain the EIN.

The IRS specifically advises organizations not to obtain an EIN before they are legally formed.

7. Decide Between Form 1023 and Form 1023-EZ

Organizations seeking federal recognition under Section 501(c)(3) generally apply using Form 1023 or, when eligible, Form 1023-EZ.

Form 1023-EZ should not simply be thought of as the “small nonprofit form.”

As of August 11, 2026, the financial-size portion of the IRS eligibility analysis generally requires that annual gross receipts did not exceed $50,000 in any of the prior three years and are not projected to exceed $50,000 in any of the next three years, and that total assets do not exceed $250,000.

But meeting those numbers does not automatically make your organization eligible. You must complete the entire IRS Eligibility Worksheet, which includes additional conditions.

Our comparison of Form 1023 vs. Form 1023-EZ explains that decision in greater detail.

8. Apply for Federal 501(c)(3) Recognition

Once your organization is formed, has its EIN, and has determined the appropriate application, you can seek federal recognition from the IRS.

Form 1023 and Form 1023-EZ are submitted electronically through Pay.gov.

Depending on the form, you will provide information about the organization's structure, governing documents, planned activities, financial information, leadership, relationships, and foundation classification.

Submitting the application does not mean recognition is immediate or guaranteed. The IRS may request additional information before making a determination.

Your application should tell a coherent story: what your organization exists to accomplish, what it will actually do, who will govern it, how it will receive and use funds, and how those activities fit the requirements for exemption.

9. Address State Tax and Fundraising Registrations

Receiving federal 501(c)(3) recognition does not automatically satisfy every state requirement.

Depending on where your organization operates and raises money, you may need to address separate state tax-exemption procedures, charitable solicitation registrations, corporate reporting, or other state requirements.

Fundraising deserves particular attention. Charitable-solicitation laws vary by jurisdiction, and registration obligations can arise before you begin soliciting donations, not simply after the IRS has approved your application.

If your organization plans to solicit contributions in multiple states or online, determine which rules apply to your activities rather than assuming federal recognition covers the entire country.

10. Put Ongoing Compliance Systems in Place

Your IRS determination letter is an important milestone. It is not the finish line.

Once your organization begins operating, you still need systems for annual federal reporting, applicable state renewals, board decisions, governance records, conflicts, financial oversight, and regulatory compliance.

Most exempt organizations have a Form 990-series annual filing obligation. When a tax-exempt organization fails to make a required Form 990-series filing for three consecutive years, its federal tax-exempt status can be automatically revoked.

This is why formation should include a plan for maintaining nonprofit compliance—not simply a folder containing your formation documents.

What the IRS Looks for in a 501(c)(3)

Understanding how to start a 501(c)(3) becomes easier when you understand what the IRS is trying to determine.

At a high level, the organization must be established for one or more qualifying exempt purposes. Its organizing document must satisfy the organizational test, meaning the organization's stated purposes and treatment of its assets meet federal requirements.

The organization must also operate consistently with those exempt purposes.

That is why your activities matter so much. Calling an organization “charitable” is not enough if the way it actually operates primarily serves private interests.

A 501(c)(3) cannot be organized or operated for the benefit of its creator, the creator's family, shareholders, or other private interests. Its net earnings cannot improperly inure to insiders.

This also helps explain an important difference between nonprofits and for-profit companies: a nonprofit is not owned by its founder in the same way a privately held business can be. Founders can have important leadership roles, but the organization exists to pursue its exempt purposes rather than to create personal ownership value for its founder.

That does not mean a founder can never be paid. Compensation may be possible for bona fide services, but it should be reasonable in light of comparable services and circumstances, and conflicts and private-benefit concerns should be handled appropriately.

The IRS will also determine the organization's foundation classification—typically whether it qualifies as a public charity or is classified as a private foundation.

The larger point is that your application is not simply a collection of forms. It is a federal review of the organization you have designed and propose to operate.

How Much Does It Cost and How Long Does It Take?

Federal filing fees are only one part of the cost of starting a nonprofit.

As of August 11, 2026:

• Form 1023 IRS user fee: $600

• Form 1023-EZ IRS user fee: $275

These federal fees are subject to change. State filing fees, registrations, and any professional-service costs are separate.

For a fuller cost breakdown, see how much it costs to start a nonprofit.

Processing time also varies. As of August 11, 2026, the IRS reported that it issued 80% of Form 1023 determinations within 191 days. For Form 1023-EZ, the IRS reported 80% of routine determinations within 22 days, while applications requiring further review had a separate benchmark of 80% within 120 days.

Those figures are current IRS processing statistics—not promised approval times.

See how long it takes to start a nonprofit for a deeper discussion of timing.

When Legal Guidance Can Be Especially Valuable

You do not have to hire an attorney simply because you want to seek 501(c)(3) recognition. The IRS does not require every applicant to be represented by counsel.

The more useful question is whether your situation involves decisions that cannot be resolved well through a generic checklist.

Individualized legal guidance may be particularly useful when you are uncertain whether 501(c)(3) is the right structure, have unusual programs or revenue streams, want significant founder involvement, have family members or related directors on the board, plan to compensate insiders, or need customized governance arrangements.

It can also become valuable when you are unsure about Form 1023-EZ eligibility, have a complex Form 1023 narrative, expect unusual transactions or funding relationships, plan to fundraise across multiple states, conduct international activities, or want a compliance framework designed before operations begin.

These are not reasons to assume every nonprofit needs an attorney. They are situations where the decisions behind the paperwork may deserve closer analysis.

Not sure how your structure, board, governing documents, and IRS application fit together? Learn how Association GC approaches nonprofit formation services as a legal and governance process.

Frequently Asked Questions About Starting a 501(c)(3)

What is the difference between a nonprofit and a 501(c)(3)?

A nonprofit is generally an organization created and governed under state law. A 501(c)(3) is an organization recognized under federal tax law as meeting the requirements for exemption under Section 501(c)(3). Creating a nonprofit at the state level does not automatically produce federal 501(c)(3) recognition.

Can I start a 501(c)(3) myself?

Potentially. Attorney representation is not universally required. You still need to satisfy the applicable state formation requirements, federal exemption requirements, and ongoing compliance obligations. Whether a DIY approach is appropriate depends on the complexity of your organization.

Do I need an attorney to start a 501(c)(3)?

No. The IRS does not require every 501(c)(3) applicant to hire an attorney. Legal help may be more valuable when your activities, governance structure, compensation arrangements, related-party relationships, fundraising plans, or exemption application present issues that require individualized judgment.

Do I need a board of directors?

A nonprofit corporation will generally have a governing board, but the exact requirements—including board composition and minimum numbers—depend on applicable state law and the organization's legal structure. There is no universal federal “three directors” rule for every 501(c)(3).

Can the founder serve on the board or be paid?

A founder may be able to serve in a governance or operational role, depending on applicable law and the organization's structure. A founder may also potentially receive reasonable compensation for bona fide services. However, control, conflicts, compensation, related directors, and private-benefit concerns need to be managed appropriately.

Can I accept donations while my 501(c)(3) application is pending?

An organization with a timely filed application may generally treat itself as exempt while its application is pending, but donors do not have advance assurance that their contributions will ultimately qualify as deductible. State charitable-solicitation requirements may also apply before fundraising begins.

Is 501(c)(3) status retroactive?

It can be. Generally, when Form 1023 or Form 1023-EZ is timely filed within 27 months after the end of the month in which the organization was legally formed and the application is approved, exemption can be effective from the organization's legal formation date. Different rules can apply to late filings and particular circumstances.

What happens after the IRS approves my 501(c)(3)?

You move from formation into operation. That can include state registrations and renewals, Form 990-series filings where required, proper governance records, board actions, conflict management, fundraising compliance, and other federal and state obligations. Maintaining exemption requires ongoing compliance.

Build the Organization, Not Just the Application

Learning how to start a 501(c)(3) means learning more than which forms to file.

The decisions you make during formation can shape how your organization governs itself, who exercises authority, how conflicts are handled, how people are compensated, how funds are raised and used, and how the organization stays compliant as its work expands.

A well-prepared IRS application matters. But the larger objective is to create an organization capable of pursuing its mission responsibly after that application has been approved.

Association GC approaches formation with that broader lifecycle in mind—connecting legal structure, governance, exemption, and future compliance instead of treating the determination letter as the end of the process.

Talk with Association GC about your nonprofit formation.

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