You get 501(c)(3) status by forming a nonprofit corporation in your state, getting an EIN, and then applying to the IRS on Form 1023-EZ ($275) or the full Form 1023 ($600). Small organizations that qualify for the EZ form often hear back in weeks. The full application can take a year. That’s the short version of how to get 501c3 status. The rest of this guide covers which form you can use, what the IRS wants to see, and the mistakes that slow approval down.

Once approved, your organization won’t pay federal income tax on mission-related activities, and donors can deduct what they give you.

What do you need before you apply?

Get these done first. The IRS application assumes they exist.

• Articles of Incorporation filed with your state as a nonprofit
• 501(c)(3) language in those Articles (see below)
• Bylaws adopted by the board
• An EIN from the IRS (it’s free)
• A functioning board of directors, with your first meeting documented
• A conflict of interest policy

Missing language in the Articles is a common mistake. They need three provisions. A purpose clause along the lines of: “This corporation is organized exclusively for charitable, religious, educational, and scientific purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code.” A dissolution clause: “Upon dissolution, assets shall be distributed exclusively to organizations described in Section 501(c)(3) of the Internal Revenue Code, or to federal, state, or local government for public purposes.” And a private inurement clause: “No part of the net earnings shall inure to the benefit of any private shareholder or individual.”

If your Articles are missing any of these, amend them with the state before you apply. Check this even if you used your state’s standard nonprofit form.

Form 1023-EZ or Form 1023: which one can you use?

You can use the 1023-EZ if your projected gross receipts are $50,000 or less in each of the next 3 years and your total assets are $250,000 or less. You also have to be organized in the United States, and you can’t be a church, school, hospital, foreign organization or successor to a for-profit business, among other exclusions. The IRS’s eligibility worksheet in the 1023-EZ instructions covers the full list.

If you fail any part of that worksheet, or your activities are complicated, you file the full Form 1023.

Our view: if you qualify for the EZ, use it. It’s cheaper, faster and far less work, and the determination letter you get at the end is the same 501(c)(3) recognition.

How to get 501c3 status with Form 1023-EZ

1. Complete the eligibility worksheet and confirm every answer qualifies you.
2. Gather your organization’s name, EIN, address, formation date, fiscal year end, the names of officers, directors and key employees, and a short description of your activities.
3. Create an account on Pay.gov and search for “Form 1023-EZ”. The form must be filed electronically there.
4. Complete the form. It covers identification, organizational structure, your specific activities, and foundation classification.
5. Pay the $275 fee and submit, with an authorized official’s signature.

Then you wait, typically 2-6 weeks. You’ll get a determination letter, a request for more information, or (rarely, for the EZ) a denial with an explanation.

How do you file the full Form 1023?

Download Form 1023 and its instructions from IRS.gov and read them before you start. This is a long application, and the IRS reads your answers closely.

Expect to provide:

• Your organizing documents (Articles and any amendments) and bylaws
• Board and officer information, plus compensation for officers, directors, trustees, highly compensated employees and independent contractors
• A detailed narrative of your past, present and planned activities, how they serve your exempt purpose, your fundraising plans, and relationships with other organizations
• Financial data: a current-year budget and 4 years of actual or projected revenue by source and expenses by category, plus a balance sheet
• Your foundation classification (public charity or private foundation) and public support information

Certain organizations also complete a schedule: churches, schools, hospitals, supporting organizations, homes for the elderly or disabled, successors to for-profits, organizations providing scholarships, and organizations filing more than 27 months after formation.

Attach a signed, stamped copy of your Articles, your bylaws, financial statements, your conflict of interest policy, board minutes (at least the first meeting), program descriptions and any fundraising materials you have. Then file electronically through Pay.gov and pay the $600 fee.

The narrative is where applications succeed or stall. “We will help underserved youth” invites follow-up questions. “We will run a free after-school tutoring program two afternoons a week at the community center, staffed by volunteers” usually doesn’t.

If the IRS sends questions, answer them fully and promptly, usually within 30 days. That’s when a nonprofit attorney or CPA earns their fee, if you haven’t hired one already.

How long does 501(c)(3) approval take?

You don’t have to stop working while you wait. You can run programs and accept donations while the application is pending.

Will donations made before approval be deductible?

Yes, if you apply within 27 months of formation. In that case your exemption is retroactive to the date you formed, so you were tax-exempt from day one and earlier gifts are deductible. Apply after 27 months and the exemption starts on your application’s postmark date. Don’t let this one slide.

What does it cost in total?

Doing it yourself runs about $300-$600 with the 1023-EZ, or $625-$900 with the full Form 1023. With legal help, budget $2,000-$10,000+.

Hire a nonprofit attorney or CPA if you’re applying as a school, hospital or supporting organization, if your activities are complex or unusual, or if you’ve been denied before. Legal aid organizations and pro bono lawyer networks can help at low or no cost.

What do you do after approval?

Keep copies of your determination letter. It’s your proof of exempt status, and donors and grantmakers will ask for it. Then apply for state income, sales and property tax exemptions, and register for charitable solicitation, which most states require before you ask residents for money.

Staying exempt takes ongoing work:

• File the annual Form 990 (990-N, 990-EZ or 990, depending on size)
• Keep operating for your exempt purposes
• Stay out of political campaigns entirely
• Keep lobbying limited
• Make sure no insider profits from the organization
• Renew state registrations

Don’t skip the Form 990, even in a quiet year. Three years of not filing results in automatic revocation of your exemption.

Which organizations don’t need to apply?

Churches and certain religious organizations, organizations with gross receipts under $5,000, and subordinates covered by a parent’s group exemption are treated as tax-exempt without applying. Applying anyway still gets you a determination letter and a listing in the IRS database, which makes it much easier for donors to verify you.

Frequently asked questions

Can I fundraise before approval?

Yes, but donors can’t deduct contributions until you’re approved. If you apply within 27 months of formation, approval is retroactive.

What if my application is denied?

You can appeal the decision, or fix the issues and reapply. Common reasons for denial include not meeting the exempt purpose requirements or having prohibited activities.

Do I need a lawyer to apply?

No. Many small organizations file the 1023-EZ themselves. Professional help is worth it for complex situations or if you’re unsure about the requirements.

What’s the difference between 501(c)(3) and 508(c)(1)(A)?

508(c)(1)(A) refers to churches that are automatically exempt without applying. They’re still 501(c)(3) organizations. They just don’t need to file Form 1023.

Before you hit submit

Read your activity description and your financial projections side by side. If the description promises programs the budget can’t pay for, or the budget has money going somewhere the description never mentions, the IRS will notice. Make the two tell the same story, and check that your Articles have all three required clauses. Those two checks head off common causes of delay.