U.S. Nonprofit Startup Resources

Are you considering starting a nonprofit organization in the U.S.? Are you already incorporated as a nonprofit and now considering whether to apply for tax-exempt status? Or perhaps you're an organization that has applied for tax-exempt status but has not yet received your determination letter from the IRS.

The resources here are intended to assist anyone in these categories. While access to most TechSoup product donations in the U.S. requires evidence of a currently valid IRS determination letter, there are still a wealth of educational resources available to new organizations or organizations in the process of being formed.

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I have an idea, but not an entity. Should I incorporate a nonprofit?

There are multiple benefits to incorporating a nonprofit organization, particularly if you already have potential donors lined up or assets that you would like to dedicate to a nonprofit cause. However, legal incorporation also carries significant obligations, including regular filing requirements and associated fees, as well as public filings and supervision by various government agencies. Below are a few good resources to help you determine whether incorporation as a nonprofit organization is the best next step for your good idea.

Is Starting a Nonprofit Right for You? (Candid). This free online course introduces you to the legal and logistical elements necessary to start a successful nonprofit. Take advantage of Candid's on-demand, one-hour free resource that will help you determine if you're ready to launch an organization. You'll also discover possible alternatives to starting your own nonprofit.
Fiscal Sponsorship: An Alternative to Forming a Nonprofit 501(c)(3) Corporation (Public Counsel). Fiscal sponsorship may be a good choice for an individual or committee wishing to carry out charitable programs and test a new idea with fewer administrative burdens by receiving support from an existing tax-exempt "sponsor."
What Are the Advantages/Disadvantages of Becoming a Nonprofit Organization? (Candid). Here you'll find a concise summary of the primary pros and cons.
Nonprofit Startup Resources (Candid). This is another excellent, free assessment tool.

I've incorporated my nonprofit. Should I apply for 501(c)(3) status?

Most nonprofit organizations with charitable purposes will choose to apply for tax-exempt status under section 501(c)(3). These are the two primary benefits:

The organization will be exempt from federal income taxes (and typically from state income taxes as well) upon application.
Donors will normally be able to claim charitable contribution tax deductions for donations to the organization.

The following resources walk you through the pros and cons of operating as a 501(c)(3), as well as the steps for completing an exemption application.

I've applied for 501(c)(3) status but am waiting to receive my determination letter. Can I do anything while I wait?

First, it's important to know that, once you receive your tax-exemption letter, your exempt status will be retroactive to the date of incorporation. What this means is that, once your letter is received, donors may still claim tax deductions for their contributions if the contribution was made after the date of incorporation. As the IRS explains:

When the IRS approves a timely filed exemption application, exempt status is recognized back to the date the organization was created. Thus, while an application is pending, the organization can treat itself as exempt from federal income tax under section 501(c)(3). For example, it must file Form 990 (instead of an income tax return) while its application is pending. However, contributors to the organization do not have advance assurance of deductibility because the organization's exemption is pending. If the organization ultimately qualifies for exemption for the period in which the contribution is made, the contribution will be tax-deductible by the donor. Alternatively, if the organization ultimately does not qualify for exemption, then the contribution will not be tax-deductible.

Please note that, generally speaking, you must file your exemption application within 27 months of your date of incorporation.

Second, funders can still fund your organization before you have a 501(c)(3) letter. More commonly, initial funding will come from individual supporters who have confidence that the organization will receive a positive determination letter. However, there are several other options available to you. Here are a few good resources to consider while you wait to receive your 501(c)(3) letter.

Can I get funding for my nonprofit while I am in the process of incorporating or getting tax-exempt status? (Candid). This article provides some good actions for building a donor base and exploring funding options available to you before your 501(c)(3) letter is in hand.
U.S. Government Grant Eligibility (Grants.gov). Some government grants are available to nonprofit organizations without 501(c)(3) determination letters, as well as to certain for-profit entities.

If you have a funder who is ready to fund you but requires a 501(c)(3) letter, you have two possible paths forward to receive those funds now:

Request expedited treatment of your application with the IRS, under the "pending grant" compelling reason.
Work with a fiscal sponsor. Below are some helpful resources to do that.
- How to Find a Fiscal Sponsor (NEO Law Group)
- What Is Fiscal Sponsorship? How Do I Find a Fiscal Sponsor? (Candid)
- FiscalSponsorDirectory.org: search by name, location, or issue area

If you do have a fiscal sponsor, we may be able to support you through a pilot project. Contact us at PilotPrograms@TechSoup.org so that we can work with you to identify possible opportunities.

Finally, TechSoup offers educational content, forums, and toolkits for all organizations, most at no cost, on our website:

Free Events and Webinars: Our events help nonprofits build the skills they need to succeed. Events are designed specifically for staff at organizations like yours. Learn from experts who have deep experience in the sector and understand your unique needs.
Courses: Our learning content is designed specifically for staff at organizations like yours. Learn from experts who have deep experience in the sector and understand your unique needs.
Forums: Join our nonprofit community, where experts discuss a range of topics, or start your own.
Articles and How-tos: Browse our articles to help make better decisions about technology.
Blog: Check out the latest tips, tricks, and updates about technology in the nonprofit sector.
Resource pages, such as this Disaster Planning and Recovery Guide.
Nonprofit Tech Tips Videos (along with lots of other helpful content on our YouTube page).

I've just received my 501(c)(3) determination letter! What next?

Congratulations! With a current IRS determination letter, you will have more access to resources and funding opportunities since many funders require a determination letter as a prerequisite to receiving grants. Below are a few good resources to help you hit the ground running.

Register at TechSoup to access our thousands of donated and discounted technology offerings.
Some Thoughts for First-Year Nonprofits (NEO Law Group). This superb article gives you a rundown of obligations and considerations upon your first year in operation. Sign up for NEO Law's Nonprofit Law Blog to access more expert content like this.
Annual Filing and Forms (IRS). Failure to file your annual Form 990 with the IRS for three years in a row leads to automatic revocation of tax-exempt status. Make sure you know what to file and when.
State Filing Requirements for Nonprofits (National Council of Nonprofits). Every state is different! Some states automatically allow for exemption from state income taxes once an organization receives its 501(c)(3) letter; many others require completion of a separate state form. Most states also have two to three different regulatory agencies that supervise charities: the secretary of state commonly governs corporations (both nonprofit and for-profit); the attorney general commonly governs charitable operations (meaning any nonprofit soliciting donations from the public); and the state revenue department governs state income tax exemptions.
Publication 526 (2021), Charitable Contributions (IRS). This IRS brochure spells out all of the requirements for substantiation of charitable contributions. Protect your organization and your donors by learning these basic rules.
Fundraising Tools and Resources for Nonprofits (TechSoup). Peruse curated resources to help you navigate relevant TechSoup courses, products, and blog posts on fundraising.

Maintaining 501(c)(3) Tax-Exempt Status Course (IRS). This free IRS course discusses what charitable volunteers and employees must do to maintain exemption and which actions can result in revocation of exempt status.

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