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How to Get Non-Profit Status

Applying for Non-Profit Status from the Federal Government Under Section 501(c)(3) of the Internal Revenue Code

Organizations wishing to apply for non-profit status from the Federal Government have to present a rigorous application to the Internal Revenue Service. But take heart. If your organization is a legitimate non-profit entity, the process will go smoothly. The IRS agents who handled our application were friendly, courteous and well informed. We even had a minor glitch at our end that required rewriting the Articles of Incorporation for our state non-profit corporation and an agent helped us every step of the way.

You can consult a lawyer. We did. And we discovered that all he was going to do was send away for the forms and fill in the information we provided him. For this "secretarial work" he was going to charge us $1500! That fee would have blown our budget for three years. Nothing like necessity (in our case to save money) to turn an organization to self reliance.

In the end, we did persuade a different lawyer to check our application. It took him fifteen minutes and he didn't charge us a nickel.

Step one:

Ask the IRS to send you their "Application for Recognition of Exemption, Under Section 501(c)(3) of the Internal Revenue Code" package. The contents should include Form 1023, instructions and form 872-C. Also ask for their Publication 557--Tax Exempt Status for your organization, a different publication listing all types of non-profit organizations, and forms 8718 (user fee) and SS-4 (application for and Employer identification number).

Form 1023 is the application itself. Read all the instructions carefully. Unlike income taxes, the form is pretty straight forward and easy to follow.

Don't be alarmed by the size of the form. It has to be big in order to cover all possible types of non-profit organizations. You will fill out only those portions that apply to your type of non-profit organization.

This is the point where you should consult Publication 557 to determine what kind of non-profit you are, for example: A Private Foundation or a Public Charity. There are sub-headings under each of these two broad groups which include everything from churches to athletic clubs.

Step two:

Organize all the information you will need to fill out the application. This includes the number of members in your organization; who you intend to help with your organization; what your organization's sources of income will be. Know when your organization was formed, the names of the executive board, what your activities are. Gather together your organizational documents: if you are a corporation, have on hand your state incorporation papers approved and dated by the appropriate state official, plus by-laws of your organization; if you are unincorporated, provide a copy of your organization's constitution and bylaws.

Step three:

Fill out the application. Again, follow the directions and fill out everything that is required of you. Make certain you have copies of the application and all the forms you will need. One copy is your working paper where you can erase, delete, add and rewrite until it is perfect. The second copy is the finished application with all the i's dotted and the t's crossed. Budget between 12 and 24 hours to complete the application and spread the work around. Many hands make light work.

Include a history of your organization and what it has done to promote your goals. Also, write a mission statement that will draw attention to the good works your organization intends to promote. Finally, the letter accompanying your application should printed on your organization's letterhead.

Good luck! Remember, you can always consult a lawyer and have him do the work. However, if your members do the work, your organization will be truly grassroots.

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