A public charity isn’t always the way to go. For some donors, generally families or businesses that have a philanthropic goal, a private foundation is the preferable nonprofit charitable entity. It can be funded over time but is often created with a single endowment.

Although a tax-exempt organization is, as the name suggests, exempt from paying taxes, most nonprofits are still required to file an annual informational return (Form 990). This form generally must be filed electronically.

Every 501(c)(3) organization is categorized as either a public charity or a private foundation. This is referred to as a “foundation classification” and the determination itself is called a 509(a) ruling.

Once you have filed your organizational documents with your state and obtained your EIN number, you are ready to apply for tax exempt status with the IRS. A nonprofit organized under Section 501(c)(3) of the Internal Revenue Code, is one that is organized for charitable, religious, or educational purposes.

The tax-exemption process begins with the filing of IRS Form 1023 or the streamlined version, 1023-EZ which is generally available to smaller nonprofits with assets of $250,000 or less and gross receipts of $50,000 or less.

Starting a nonprofit? Before applying for tax-exempt status, you’ll need a federal EIN. This guide walks you through the purpose of a TIN, how to fill out Form SS-4, and what to expect from the IRS.

Ready to start a nonprofit? Learn how to file Articles of Incorporation, meet IRS 501(c)(3) requirements, choose a board, and avoid common legal pitfalls. Step-by-step guidance with state-specific tips.