How to Start a Nonprofit in 2026: A Step-by-Step Guide

Most people who start a nonprofit start with a cause, not a legal plan: a food pantry that outgrew a church basement, a youth soccer league that needs to accept donations, a scholarship fund in a parent's name. The cause is the easy part. Here is what most founders miss about how to start a nonprofit in the United States: it is really two projects that run in parallel. The first is creating a legal entity under state law, usually a nonprofit corporation with a board, articles of incorporation and bylaws. The second is earning federal tax-exempt status from the IRS, which for most charities means recognition under section 501(c)(3), so donors can deduct their gifts and the organization pays no federal income tax on its exempt activities.

This guide walks through eight steps: testing the mission, recruiting a board, incorporating, adopting bylaws and a conflict-of-interest policy, getting an EIN and a bank account, applying to the IRS on Form 1023 or Form 1023-EZ, handling state tax and charitable solicitation rules, and staying compliant year after year. It is written for US organizations, and the federal rules it states are ones we checked on irs.gov as of 2026. State law varies widely, so treat every state step as a question for your secretary of state, your attorney general's charity office and a nonprofit attorney or CPA who knows your situation. Nothing here is legal or tax advice.

Write the mission in one or two sentences a stranger would understand: who you serve, what you do and where. Then pressure-test it. Search for organizations already doing the work in your area and call two or three of them. You may find a partner, a gap you had not seen, or a reason not to start a separate organization at all. Running a nonprofit means annual filings, a board, bookkeeping and fundraising for as long as it exists, and some founders do more good by running a program under someone else's umbrella.

Two alternatives deserve a serious look. Fiscal sponsorship lets an established nonprofit accept tax-deductible gifts for your project and handle the compliance, usually for an administrative fee, while you run the program. It suits new projects, time-limited efforts and founders who want to test demand before incorporating. The second is volunteering or giving through an existing charity. If you still want your own organization after that exercise, you will start with a sharper mission, a rough first-year budget and a list of people who told you the work is needed, which is exactly what a founding board and your first donors will ask about.

A nonprofit corporation is governed by its board of directors, not by its founder. The board hires and oversees the executive director, approves the budget, protects the assets and makes sure the organization does what its mission says. Your state's nonprofit corporation law sets the minimum number of directors and other basic rules, so confirm the requirement with your secretary of state or an attorney before you file.

Recruit for skills and independence, not just enthusiasm. A strong founding board of three to seven people often includes someone who understands money, such as an accountant or a small-business owner, someone rooted in the community you serve, someone with legal or governance experience, and someone who is comfortable asking for gifts. Avoid a board made up of your relatives and your employees. Independent directors make the organization more credible to donors and grantmakers, and the IRS exemption applications ask about compensation and financial arrangements with officers and directors. Elect officers, typically a chair or president, a secretary and a treasurer, as your bylaws and state law require. Put expectations in writing from the start: meeting attendance, a personal gift at a level that is meaningful to each director, committee work and help with fundraising.

Most charities organize as a nonprofit corporation, which gives directors and officers liability protection and a clear legal structure. You file articles of incorporation, sometimes called a certificate of incorporation, with your state's secretary of state or corporations division and pay the state filing fee. Before you file, search your state's business records to confirm the name is available, and appoint a registered agent with a physical address in the state to receive legal papers.

If you plan to apply for 501(c)(3) status, write the articles with the IRS in mind. The IRS instructions for Form 1023-EZ say your organizing document must limit your purposes to those described in section 501(c)(3) and must permanently dedicate your assets to a 501(c)(3) purpose, so that if the organization ever dissolves, its remaining assets go to an exempt purpose rather than to individuals. Many states publish sample nonprofit articles, and the IRS instructions explain the purpose and dissolution language it looks for, but have a nonprofit attorney review your draft anyway. Fixing articles later means amending them with the state, which costs time and another filing fee. Keep the stamped, filed copy, because you will attach it to your federal application.

Bylaws are the internal rulebook. They cover how many directors you have and how they are elected, term lengths and limits, officer roles, how meetings are called, what counts as a quorum, how votes happen (including by email or video, if your state allows it), committees, the fiscal year and how the bylaws themselves are amended. Adopt them at your first board meeting and record the vote in the minutes.

Adopt a written conflict-of-interest policy at the same meeting. It requires directors and officers to disclose financial interests in any transaction the organization considers, to step out of the discussion and vote, and to have the outcome recorded in the minutes. The IRS takes this seriously enough that the Instructions for Form 1023 include a sample conflict-of-interest policy in an appendix, a sensible starting point to adapt with your attorney. Many boards also adopt a whistleblower policy, a document retention and destruction policy and a gift acceptance policy early, because it is far easier to agree on rules before the first awkward situation than during it. Keep signed minutes of every board meeting from the first one onward. They are the organization's memory and its evidence that the board actually governs.

Every nonprofit needs an employer identification number, even with no employees. The IRS instructions for Form 1023-EZ put it plainly: all organizations must have an EIN, it is required regardless of whether you have employees, and you will not be able to submit the exemption application until you have one. You can apply online through the IRS at irs.gov/ein once the state has approved your incorporation, and the IRS does not charge for it.

With the EIN and your filed articles, open a bank account in the organization's name. Never run donations through a founder's personal account, even for a few weeks; commingled funds are a governance problem, a bookkeeping mess and a trust problem with donors. Set up basic financial controls from day one. Require two people to approve large payments, have someone other than the person who writes checks review the bank statements each month, and give the treasurer read access to every account. Choose a bookkeeping setup that tracks income and expenses by program and separates gifts that donors restrict to a specific purpose, because restricted money has to be spent the way the donor specified. Pick your fiscal year deliberately too; many small organizations use the calendar year, while a school-year program might run July through June.

To be recognized as a 501(c)(3), most organizations file Form 1023 or the streamlined Form 1023-EZ. Both are filed electronically through Pay.gov, and both carry a user fee: as of 2026 the IRS lists $600 for Form 1023 and $275 for Form 1023-EZ, so check the IRS user fee page for the current amounts before you file. Per the current Form 1023-EZ instructions, churches (including synagogues, temples and mosques) and organizations whose gross receipts are normally not more than $5,000 a year may be considered tax-exempt without filing, though many still apply so donors and grantmakers can see an IRS determination letter.

Eligibility for the 1023-EZ is set by a worksheet in its instructions. As of the January 2025 revision, you must use the full Form 1023 if you project annual gross receipts above $50,000 in any of the next three years, if gross receipts exceeded $50,000 in any of the past three years, or if your total assets exceed $250,000 in fair market value, and other worksheet questions can also rule the short form out. Timing matters as well. Generally, if you file within 27 months after the end of the month in which you were legally formed and the IRS approves the application, exemption is effective back to your formation date. The full Form 1023 asks for a narrative of your activities, financial data and your organizing documents, so budget real time for it.

Federal exemption does not settle your state obligations. Many states follow the IRS on income tax exemption, but some require a separate application or notice, and sales tax and property tax exemptions are usually separate applications with their own rules, available only in some states and for some activities. Ask your state revenue department what applies, especially if you will sell goods at events or own a building.

Charitable solicitation registration is the step new founders most often overlook. Many states require charities to register with a state office, often the attorney general or secretary of state, before asking residents for donations, and to renew each year with a financial report. California's Attorney General, for example, states that all charities and fundraisers are required to register and file annual financial disclosure reports with its Registry of Charities and Fundraisers, with limited exceptions. If you raise money online or by mail from donors in other states, ask a nonprofit attorney whether those states' registration rules reach you. Finally, keep the corporation itself in good standing: most states require an annual or biennial report to the secretary of state, and falling behind can lead to administrative dissolution. Put every state deadline in the same calendar as your IRS deadlines.

Most exempt organizations file an annual information return with the IRS, and which one depends on size. As of 2026, the IRS says organizations whose gross receipts are normally $50,000 or less can file the Form 990-N e-Postcard; those with gross receipts under $200,000 and total assets under $500,000 can file Form 990-EZ or Form 990; and those at or above either threshold file the full Form 990. Churches and certain church-related organizations are excepted from the annual filing requirement. Do not skip the filing because the organization is small: the IRS states that organizations that do not file for three consecutive years automatically lose their tax-exempt status.

Donor acknowledgments are the other federal bright line. Under the current IRS rules, for any single contribution of $250 or more the donor needs a written acknowledgment from your organization to claim a deduction, stating your organization's name, the amount of a cash gift or a description (not the value) of a noncash gift, and whether you provided any goods or services in return, with a description and good-faith estimate of their value if you did. The current rules also cover quid pro quo gifts: when a donor pays more than $75 partly as a gift and partly for something of value, such as a gala dinner, you must give a written disclosure that only the amount above the fair market value of the benefit is deductible, with a good-faith estimate of that value. IRS Publication 1771 covers the details, so read it and have your CPA review your templates.

Once the paperwork is filed, the day-to-day work begins, and most of it is relationships and records: donors, volunteers, board members, event guests, grant deadlines and the acknowledgment letter that follows every gift. Set up systems before the first fundraiser rather than after it. For a detailed walkthrough of donor, volunteer and fundraising workflows, read our guide on how to manage nonprofit donors, volunteers and fundraising, and for a side-by-side comparison of donor databases and giving tools, see our best nonprofit software roundup.

Deelo, the platform we build, runs the operations layer in one login. The CRM keeps donors, volunteers and board members with custom fields for giving history and interests, plus segments for appeals. Events sells gala tickets through Stripe with QR check-in, Marketing sends newsletters and year-end appeals, Forms collects volunteer sign-ups and pledge details, E-sign handles annual conflict-of-interest disclosures and volunteer waivers, Invoicing bills sponsors, and Docs keeps bylaws and minutes, with mail merge for batches of letters. Be clear about the boundary: Deelo is not a donation platform or a nonprofit accounting system. It does not host a giving page with recurring gifts, issue automatic tax receipts or year-end giving statements, or keep fund accounting for restricted gifts, so pair it with a donation processor and have your bookkeeper or CPA confirm your books meet your reporting needs.