GUIDE
A nonprofit is a legal structure before it is a mission. This page covers the sequence that gets you formed, recognized as tax-exempt, and ready to pursue funding, in the order the steps depend on each other. Once you are recognized, the work changes shape: you need to find grants for nonprofits in your field, judge which are worth the effort, and keep track of the ones you pursue. That last part is what nonprofit grant software is for.
This guide is general information, not legal, tax or financial advice.
The order matters more than people expect. Incorporate before you apply for exemption. Get your EIN before you open a bank account. Adopt bylaws before your first real board meeting. Doing these out of order is fixable, but fixing costs more than doing it once correctly.
The IRS and your state both care that the organization exists for an exempt purpose and is governed by a board, typically at least three members, most of them unrelated to each other. Recruit people who will actually attend meetings and sign filings, and write a mission statement specific enough that a stranger could say what you do.
File articles of incorporation as a nonstock or nonprofit corporation with your state. The articles must contain the exempt-purpose language and the dissolution clause the IRS expects to see; missing them is the most common reason exemption applications stall. State filing fees are modest and the templates published by many state agencies include the required clauses.
The IRS issues Employer Identification Numbers online at no cost. Every organization needs one, employees or not: banks require it, funders require it, and every IRS filing carries it.
Bylaws are how the organization actually runs: how directors are chosen, how meetings are called, who signs. The conflict of interest policy is asked about directly on the exemption application. Adopt both at an organizational board meeting and keep the minutes; they are part of your permanent record.
Most charitable organizations apply for 501(c)(3) recognition on Form 1023. Smaller organizations that meet the eligibility limits can use the shorter Form 1023-EZ, which is faster and carries a lower user fee. Read the eligibility worksheet honestly: applying on the short form when you do not qualify creates problems later. Recognition can take from weeks to several months depending on the form and the year.
Most states require charities to register before soliciting donations from their residents, separately from incorporation. If you will fundraise online, look at the registration rules of the states your donors are actually in, not just your own.
Nearly every exempt organization files an annual return in the 990 series, and three consecutive missed years revokes exemption automatically. Add the 990 deadline, your state annual report, and your solicitation registration renewals to a calendar the whole board can see, on day one.
Funding is grants, contracts, and donations, and the first two are searchable. AwardsCapture puts federal grant and contract opportunities in one board and matches them to your mission and programs. Behind that sits a directory of nonprofits with their filings rendered readable, which means you can research any funder's actual giving history, not just their stated priorities, before you spend a month on an application.
Your first funded grant is more valuable than its dollar amount, because it becomes the track record every later application cites. Local funders, small federal programs, and fiscal sponsorship arrangements are all legitimate first rungs. When you respond to a federal opportunity, AwardsCapture extracts the requirements into a checklist and assembles the submission package against them.
Formation is paperwork and patience. Funding is a pipeline. The organizations that thrive treat the second one as a system from the beginning, not as a scramble each spring.
Selling services to the government instead? Read How to become a federal contractor.
A new nonprofit is typically expected to have at least three board members, most of them unrelated to each other, because the IRS and the state both want to see that the organization is genuinely governed rather than run by one person. Recruit directors who will actually attend meetings and sign filings.
Form 1023 is the full application for 501(c)(3) recognition; Form 1023-EZ is a shorter version for smaller organizations that meet its eligibility limits, and it is faster and carries a lower user fee. Read the eligibility worksheet honestly, because applying on the short form without qualifying creates problems later, and recognition can take from weeks to several months either way.
Most states require a charity to register for charitable solicitation before asking their residents for donations, and that registration is separate from incorporating. An organization that fundraises online should look at the rules of the states its donors are actually in rather than only its own state.
Nearly every exempt organization files an annual return in the 990 series, and three consecutive missed years revokes tax exemption automatically. The 990 deadline, the state annual report and any solicitation registration renewals belong on a compliance calendar the whole board can see, from day one.
Grants and contracts are both searchable, and a new nonprofit does better to build a pipeline than to hunt each spring. AwardsCapture puts federal grant and contract opportunities on one board, matches them to the mission and programs you describe, and lets you read any funder's actual giving history from its own filings before you spend a month on an application.
Start your free trial and load your real opportunities, or book a walkthrough and we will do it with you.