By Gary Smith
Thinking About Starting a Nonprofit? Here’s What to Know First.
Forming a charitable foundation or nonprofit organization can be incredibly rewarding, but it’s also a legal process with several key steps. Whether your goal is to support a specific cause, launch a community program, or simply give back in a structured way, starting off on the right foot is essential. Here’s a breakdown of what you must do to form a nonprofit corporation in North Carolina—and eventually obtain 501(c)(3) tax-exempt status.
Step 1: Form the Corporation
The first step is to form a nonprofit corporation in North Carolina. You can form it in any state, but I recommend forming it here if you’re based in NC.
To get started, we’ll need:
- Name of the organization
- Registered Agent and address – This person will receive official mail (including junk mail) for the organization.
- Principal office address—This is often the same as the registered agent’s unless the organization has a different operating address.
- Incorporator’s name and address – Only one incorporator is required (I typically serve in this role unless you’d like to recognize a founder). The incorporator signs the Articles of Incorporation and appoints the initial Board.
- Whether the organization will have members – Most new foundations don’t. You can add members later if needed.
Step 2: Identify the Initial Board Members
Next, you’ll decide who will serve on the initial Board of Directors. I recommend holding a virtual or in-person meeting with potential board members to share your plans and confirm their interest. If you’ve already identified your board, this meeting can also cover the next steps and designate leadership roles.
Step 3: Approve Governance Documents and Officers
At the first meeting, the initial Board of Directors will elect officers, including a President and typically a Vice President, Secretary, and Treasurer. One person can hold more than one position.
The Board also needs to adopt Bylaws. Bylaws outline how your organization will be governed, covering board composition, elections, meeting protocols, and key policies such as conflicts of interest.
The Board will also approve filing for 501(c)(3) tax-exempt status. These actions are documented in two records:
- Incorporator Consent – Naming the initial Board
- Board Written Consent – Confirming officer elections and approval of Bylaws
Step 4: Apply for an EIN
The organization’s President will apply for a federal Employer Identification Number (EIN) online. You’ll need this number to open bank accounts, accept donations, and file for tax-exempt status.
Step 5: File for 501(c)(3) Tax-Exempt Status
Now you’ll decide whether to file IRS Form 1023 or 1023-EZ. If you expect to raise $50,000 or more in any of the next three years, you must use the full Form 1023. If not, you can use the simplified 1023-EZ.
Filing the 1023-EZ is done online. The $50,000 threshold is the key question you need to answer.)
*The IRS also offers free courses for new nonprofits at: Virtual Small to Mid-Size Tax-Exempt Organization Workshop | Stay Exempt
Step 6: Begin Operating
Once the IRS approves your 501(c)(3) status, the designation is retroactive to the date you incorporated with the NC Secretary of State. You can begin operating immediately, but many donors will wait to contribute until you receive the formal approval letter.
Getting it Right from the Start
Starting a nonprofit is about more than just good intentions. The legal foundation you lay early on—from choosing board members to applying for tax-exempt status—will affect how your organization operates for years to come. If you’re thinking about launching a foundation or nonprofit, our legal professionals can guide you in the process. Contact us today for more information.
Gary W. Smith has over 20 years of experience providing legal counsel and innovative solutions to business owners and management teams. His focus areas include mergers and acquisitions, succession and exit planning, securities and capital structures, business structures, and tax. He excels at navigating the legal complexities of diverse industries ranging from professional services and IT infrastructure to manufacturing and real estate.
Gary W. Smith has over 20 years of experience providing legal counsel and innovative solutions to business owners and management teams. His focus areas include mergers and acquisitions, succession and exit planning, securities and capital structures, business structures, and tax. He excels at navigating the legal complexities of diverse industries ranging from professional services and IT infrastructure to manufacturing and real estate.