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Building Better Charities:Formation Checklist For Not-For-Profit Corporations

Are you interested in starting a not-for-profit organization or planning to fundraise in Illinois? The

following list is a guide to help you understand how to start a not-for-profit organization and the common

requirements. Please note that this list is not comprehensive and additional steps may be required for some

types of organizations. We encourage organizations to consult with an attorney to learn about all legal

obligations applicable to their organization.

Not-for-profits that would like to be recognized as tax exempt by the IRS are required to file documents

with federal and state governments and possibly local agencies. These filings are required both when the

organization is formed and then annually thereafter. Exactly what is required to be filed will depend on,

among other things, the organization’s IRS tax status (for example, if the organization is a 501(c)(3),

whether it has employees, what fundraising methods it uses and the states in which it fundraises, and the

amount of contributions it raises).

To Start a Not-For-Profit Corporation

There are a few very important governance and regulatory steps that you will need to do prior to receiving

charitable status in Illinois.

  1. Determine the Purpose of Your Organization and the Board of Directors

To complete the paperwork to incorporate as an organization, you will need to be able to provide a

name for your organization, the purpose or mission of the organization, and names and addresses of

incorporators.

The Board of Directors manages and controls the organization, including expenditures and funding.

The Board of Directors should be familiar with the organization’s bylaws and their responsibilities

under them.

  1. Complete an Application for Reservation of Name Under the Not-For-Profit Corporation Act

(Optional)

An organization can reserve a name for 90 days by completing Form NFP 104.10 and paying a $25

filing fee per name to the Illinois Secretary of State Business Services Department. The form is

available online at www.cyberdriveillinois.com/publications/pdf_publications/nfp10410.pdf.

  1. File Articles of Incorporation

To become a not-for-profit organization in Illinois, an organization needs to file Form NFP 102.10

with the Illinois Secretary of State’s Office. If your organization is seeking IRS tax-exempt status,

the organization will also need to list “other provisions” on a separate attachment, Article 5 of Form

NFP 102.10. There is a $50 filing fee paid to the Illinois Secretary of State Business Services

Department. The form is available online at

http://www.cyberdriveillinois.com/publications/pdf_publications/nfp10210.pdf.

Attachment to Form NFP 102.10 (if seeking IRS tax-exempt status):

The IRS requires certain provisions regarding purposes of the organization, prohibitions on

private inurement and dissolution. Sample IRS provisions are online at

http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Charity-Required-

Provisions-for-Organizing-Documents

evelop Bylaws for Your Organization

Bylaws regulate how the affairs of an organization are managed, including setting up the Board of
irectors and the rules and procedures of the organization and the board. These bylaws inform the

Board of Directors on how to regulate the organization and must be consistent with Illinois law
elating to not-for-profits (805 ILCS 105-102.25).

old a Directors Meeting

The organization will need to hold the first meeting of the directors or incorporators to approve
the bylaws, elect additional directors, appoint officers and approve additional resolutions such as
pening a bank account.  The organization should take minutes at the meeting and establish records.

btain an FEIN (Federal Employer Identification Number)

To obtain an FEIN for your organization from the IRS, complete IRS Form SS-4. There is no cost to
btain a number. You can file IRS Form SS-4 online or over the phone.  The form is available online
t http://www.irs.gov/Charities-&-Non-Profits/Employer-Identification-Number.

btain an Illinois Department of Revenue Account ID

To obtain an Account ID, complete the Illinois Business Registration Application, Form REG-1. The
form is available online at https://www2.illinois.gov/rev/forms/reg/Pages/reg-1.aspx.

egister with the Illinois Attorney General

ny charities holding or soliciting funds in Illinois must register with the Illinois Attorney
General’s ffice prior to any solicitation of funds.  Please note that organizations may register
prior to

applying for IRS tax exempt status.

To register, an organization must complete Form CO-1 with all necessary attachments, including
either copies of Illinois Form AG990-IL for each year of the organization’s existence OR Form CO- 2
if the organization is less than 1 year old.  These forms are to be submitted with a $15
registration ee payable to “Illinois Charity Bureau Fund.”  Instructions and forms are available
online at ttp://www.illinoisattorneygeneral.gov/charities/register_report.html.

If your organization has not applied for IRS tax-exempt status, please answer “no” to question 18
on the registration form, CO-1.

Contact the Charitable Trust Bureau at 312-814-2595 with any questions.

File IRS Tax-Exempt Status Application for Recognition of Exemption

For more information on 501(c)(3) status for charitable organizations, please visit the IRS’
website t
https://www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-
ection-501c3-organizations.

To apply for tax-exempt status, your organization will need to either complete Form 1023 or Form

024. The forms are available online at https://www.irs.gov/charities-non-profits/applying-for-tax-
exempt-status.

btain Illinois State Sales Tax Exemption

To obtain a state sales tax exemption, the organization will need to contact the Illinois
Department of Revenue on the organization’s letterhead requesting an Exempt (E) number.  There is
no fee to apply

source:illinoisattorneygeneral.gov

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