There are more than 60,000 nonprofit organizations in Illinois alone. They employ nearly 600,000 people and hold assets totaling almost 300 billion dollars.
One of the reasons why there are so many organizations is because it is easy to launch a nonprofit in Illinois. But you can’t just sign a paper and have your organization approved. You need to get some things done first.
Understand what those things are and you can get started today. Here is your guide on starting a nonprofit in Illinois.
1. Learn About What You Can Do
Your nonprofit should meet a specific need. It can be in your local community, your state, or your country.
To meet that need, you should adopt a strategy that is specific to your organization. Many nonprofits provide food for the hungry or homes to the homeless. You should perform actions that other organizations are not performing.
Spend some time researching the issue. Read the works of academics, especially from local schools. Talk to activists, community leaders, and people in nearby neighborhoods.
Think about the resources already at your disposal. You may have a large sum of money. Consider strategies that work with your resources, like making scholarships to underprivileged children.
Combine big projects with short-term initiatives. While you are funding children to go to college, you can run a Thanksgiving food drive. Set goals for your organization before you even think about applying to the state.
2. Break Down the Different Types of Nonprofits
For your organization to be tax-exempt, you have to meet some requirements. According to the IRS, the exempt purposes of your organization must be “charitable, religious, educational, scientific, literary, [etc.].” To be charitable, you must provide some public service, like relief to the poor.
Two different kinds of organizations meet these definitions. A nonprofit organization provides goods and services to the public.
Not-for-profit organizations are corporations or organizations that operate for exempt purposes. They include civic leagues, labor unions, and social clubs. Many companies donate to not-for-profit groups in order to provide manpower for major causes.
You can start one or the other, or you can start both. Consider what would work best for the needs and strategies you have previously identified. If you want the backing of a major organization, you can start a not-for-profit group and associate with them.
3. Name Your Organization
Selecting a good name is important for several reasons. It is a necessity for your organization to incorporate with the state. It indicates the purpose of your group, encouraging people to work with you.
In the state of Illinois, your nonprofit must have a distinct name. Conduct a name search of nonprofits and select one that hasn’t been taken.
Pick a name that is eye-catching yet reflective of your mission. A generic name like “Food for Chicagoans” isn’t appealing. Use rhyming, alliteration, and/or allusions to capture people’s attention.
4. Recruit an Initial Team
At this early stage, you need at least one incorporator. This is someone who will sign articles of incorporation for your non-profit. They can be an eventual member of your board of directors.
You should have more than one person for your board of directors. You can divvy up responsibilities. Consider having a Chief Executive Officer, Chief Financial Officer, and Chief Communications Officer.
Your directors should be stakeholders in your organization. They should invest time, if not money and resources, into your nonprofit. These people should be unrelated to each other and they should meet age and residency requirements for tax reasons.
You can consider additional personnel. It is a good idea to think over who you want to run accounting, marketing, and human resources. But you don’t need these people at this stage.
5. Appoint an Agent for Service of Process
An agent for service of process receives legal notices on behalf of your nonprofit. They must have a residence or office within the state. Their office must remain open during normal business hours.
Your agent will receive your organization’s legal documents. They can give access to your documents, and they can give you legal advice. They will be your legal advisor during this initial phase, but they can remain long-term.
Don’t hire the first person you think of. Interview several individuals and see which one is right for you.
6. File Your Articles of Incorporation
Your articles of incorporation detail your corporate name, the board of directors, and the purposes of your organization. If you don’t have a mission statement yet, you should prepare one. You can write in a brief description of what issues you will tackle and what strategies you will use.
The documents themselves are short. But you will need to pay a filing fee for them. Prepare this sum of money and pay it as you file.
There are other documents you may need. The application for reservation of name lets you preserve a name for 90 days. If you are looking to create a subgroup, this gives you time to do market research on it.
After you file your articles of incorporation, you should prepare an initial report. This will summarize the first steps you’ve taken to start your nonprofit. It will also include contact information so the state can reach you.
7. Get a Federal Employment Identification Number
A Federal Employment Identification Number (EIN) is for the IRS. It is a unique number that they use to identify your organization for tax reasons. You need one, even if you don’t plan to hire anyone.
Wait until your articles of incorporation have been filed. Once you have received notification that your articles are complete, you can apply for your EIN. You can submit the form for one through the IRS’s website.
If you need a bank account, you can use your EIN and articles of incorporation. It is a good idea to open a business account to receive benefits and seem more legitimate.
8. Establish Internal Procedures
Have a place to store all of your records. You should have physical copies and some way to access them electronically. Make sure you can add additional documents to your electronic portal.
Create bylaws to run your organization. You should establish the roles and election procedures for your board of directors and various officers. You should describe how they will receive compensation.
You should also describe what membership in your organization is like. You can include a brief description of how your bylaws can be amended.
You should create a conflict of interest policy. This takes place when someone has competing interests in your line of work or with another organization. All directors and elected officers should disclose their conflicts as soon as they assume work with your group.
9. Hold a Meeting With the Board of Directors
Fill in the remaining positions on your board. Consider adding a chairperson who will preside over the meetings with your board. You can also include a treasurer who will look over the bank accounts.
Hold a meeting with all members present. Approve the bylaws, adopt any additional policies, and appoint officers. One person should take notes and distribute them to the other members of the nonprofit.
10. Get Your Federal Tax Exemptions
Applying for 501(c) tax exemptions provides federal exemptions to your non-profit. Donors will be able to deduct contributions to your group on their tax returns. You will be exempt from paying income taxes for your members.
If you anticipate less than 50,000 dollars in annual revenue for three years, you can file the 1023-EZ form. You must meet other requirements, like remaining neutral in political campaigns.
If you don’t meet these requirements, you will file the 1023 form. This takes many hours to complete. You will need to describe the activities of your organization in great detail.
Take all the time you need to be thorough. Turn to your financial and legal advisors for assistance. Once you have filled out all sections, check them over to make sure everything is perfect.
Do not provide information that you are uncertain about. Do not “guess” the right answers. The IRS will deny you if they feel you are being uncertain or manipulative.
The IRS takes months to determine your tax exemptions. Be patient. Assume that you will not receive exemptions so you prepare your organization for the worst.
11. Get Your State Tax Exemptions
If you receive federal tax exemptions, you do not need to apply for state exemptions. Keep in mind that you could lose your exemptions. You should familiarize yourself with state policies.
You can apply for exemptions from sales taxes. The form is smaller than the IRS ones, but you will need to provide several documents. These include your by-laws and brochures explaining your organization.
You can also register for fundraising. You need to sign up with the Attorney General in order to solicit donations from the public. If you plan to expand across state lines, you may need to register with other states.
12. Obtain Your Permits
You may need to obtain a range of permits. If you plan on erecting a new building, you will need a permit for that. If you want to run a store, you will need a permit.
Do your research alongside your legal advisors. Find sites for your office and storefronts. Go to the municipal governments and ask them what you need to do.
Keep in mind that your permits are temporary. You will need to apply for their renewals at some point.
13. Market Your Organization
If you don’t have a website for your nonprofit already, you should start one. It does not have to be elaborate, but it should detail your group’s activities.
On your landing page, include a brief description of what you do. Share a couple of photographs of the nonprofit’s workers.
Have one page that provides more details about your activities. Describe clear steps you have taken to meet your goals. Feel free to touch upon your personal history with the issues you are tackling.
You should also include a contact page. Share links to your social media and email accounts.
You should maintain Facebook, Instagram, and Twitter accounts. Post on Twitter at least once per day.
Do not promote your organization too much. The best thing you can do is share informative content about your industry. This lets the public see you as a compassionate, knowledgeable activist.
Have a volunteer or staffer look over these accounts. Consider running a blog as well. Post at least one 1,000-word article every week about what your nonprofit is doing.
14. Recruit Volunteers
Bring in volunteers from the communities you serve. You can run events and give short-term jobs for each of them. You can also engage them in long-term initiatives, like tutoring and gardening.
Be as diverse as possible. Reach out to BIPOC, LGBTQ, and lower-income communities. Conduct implicit bias training so your staffers can work productively with people of different backgrounds.
Provide your volunteers with free items that they can use every day. A shirt, tote bag, or travel mug will remind them of your nonprofit whenever they use it.
Include a page on your website about being a volunteer. Give potential volunteers options on how they want to contribute. Ask for their contact information so you can reach them when an opportunity surfaces.
15. Run Your Nonprofit
Once you’ve got all your paperwork squared away, you can finally run your nonprofit. Follow your by-laws and the descriptions in your forms as much as possible. If you need to adjust them, do so alongside your board of directors.
Examine the strategy of your group every month. If you aren’t happy with how things are going, change things up.
Talk to everyone you can, including volunteers. Get their ideas on how to improve.
Starting a Nonprofit in Illinois
Starting a nonprofit in Illinois is a long process, but it is worthwhile to make an impact in your community.
Give back however you can. If you’re interested in working with a nonprofit, or want an example of a nonprofit functioning well in the community, The Cantave Foundation provides hot meals to low-income Chicagoans. Contact us today.
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