An 11-Step Guide to Starting a Nonprofit in New York
Depending on what state you are in, there are several steps you must take to turn your nonprofit dream into a reality — many of which you must check off your list before you even begin the process of filing your 501c3 application.
However, one thing is for sure: New York is an ideal place to start a nonprofit because it is such an affluent state — one of the three wealthiest in the country, in fact. It is also quite populous. This gives you access to numerous wealthy potential donors. So as you start to look into what it takes to establish your organization in this state, read this guide for valuable insights into how to make it happen!
- Why Start a Nonprofit in New York?
- Before Launching a 501c3 in New York
- How To Start Your New York Nonprofit in 11 Steps
- Final Thoughts
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Why Start a Nonprofit in New York?
Forming a New York nonprofit has its own set of guidelines, rules, and regulations. The process is a bit more competitive in this state, but the potential benefits more than make up for it. The state’s economy is strong. Plus, since New York City is home to over a million millionaires, it is a rich ground — both figuratively and literally — for your nonprofit to work its magic. If you decide to start a nonprofit elsewhere instead, here are some helpful links to find more information:
Before Launching a 501c3 in New York
So, you have decided to start a New York nonprofit. Before you get down to business, take some time to set a foundation by considering these three factors:
Outline Your Purpose
The best way to get the most out of your nonprofit is to have a thoroughly grounded understanding of what you want to do and how you want to do it. For example, say that you know you want your organization to "help underprivileged kids." That is amazing! But how? Do you want to provide them with hot meals to eat or new books to read? Educational opportunities? Mentoring programs? Once you know how you want to help, decide how you want to raise funds and allocate those funds to specific programs.
Tristan is excited to get started forming his nonprofit!
Volunteer at Other Establishments
It is important to get experience on the ground, especially if you are fairly new to the nonprofit world. Find a nonprofit with a similar size and mission to what you plan to create, and offer your services as a volunteer. If you explain what you are doing, some nonprofits may let you volunteer in several roles to give you an idea of how they all work. It never hurts to ask!
Do Your Research
Finally, be sure that you understand the process itself. This guide is an excellent introduction to the basics, but also take a look at some of these other sites to learn about the official guidelines, rules, and regulations that influence nonprofit registration in New York:
Pro Tip: It is never too early to explore how you might cover your financial needs. For example, where will you bank? How will you manage your revenue and expenses? Once you complete the steps below, look into setting up a bank account and a budget.
How To Start Your New York Nonprofit in 11 Steps
Now that you have a strong foundation, it is time to get started! You will find that some of the guidelines for starting a nonprofit in New York are unique to the state. Starting a New York 501c3 does not follow the exact same process as starting a Texas 501c3, a Florida 501c3, a Michigan 501c3, or an Ohio 501c3. Here are 11 steps to follow to get your New York nonprofit off of the ground.
Step #1: Select a Name
This step is deceptively simple. In fact, choosing a name is an extremely important part of the process. The name of your nonprofit is essentially your brand. It informs the public on the nature of your mission, attracting potential donors and beneficiaries. Choose something that makes your mission clear and excites an emotional response.
However, you also have to check your chosen name’s availability. It must be completely original in the state of New York. Visit the NYS Corporation and Business Entity Database to see what names are already taken. Your name must also have the appropriate legal designation, such as "incorporated," "limited," "corporation," or one of their abbreviations. There are a few types of corporations exempt from this, including:
A charitable organization
A religious organization
A bar association
An organization with approval from the Commissioner of Social Services or the Public Health and Health Planning Council
Step #2: Appoint a Board of Directors
Your nonprofit board of directors is the team that guides the large-scale operations of your organization. In the state of New York, you must have at least three directors on the board. In addition, you must have one or more incorporators. This is an individual or corporation that signs off on your articles of incorporation.
Step #3: Appoint an Agent
As a New York nonprofit, you will also need to have a registered agent. This individual is someone who agrees to accept important legal documents on behalf of the corporation. They must be located in the state of New York and be available during normal business hours.
Matt is checking out some registered agent services in New York!
Step #4: Obtain the Agency Approval
In New York, the agency that oversees your organization's intended purpose must approve of it. To obtain this permission, you will have to contact the agency that corresponds to your type of nonprofit and ask for a letter of consent. When you receive this letter, you will attach it to your articles of incorporation.
Step #5: Draft the Articles of Incorporation
A New York nonprofit must obtain official corporation status by filing a Certificate of Incorporation with the Department of State. This document must contain some basic information about your organization, including:
Name of your nonprofit
Purpose of your nonprofit
Statement on whether your corporation is charitable or noncharitable
Names and street addresses of your initial directors
Name of the county where your office is located
Name and street address of your registered agent
The New York Department of State website has a fillable form that you can use to draft your articles. However, while this form conforms to the requirements for the state, you will need to add three clauses to qualify for tax exemption from the IRS:
Statement of purpose that aligns with IRS language
Dissolution clause that states your nonprofit assets will go to the government or another 501c3 should your nonprofit fold
Statements that your organization will not participate in any action that is not related to its purpose nor any activity that is legislative or political
You may add these to Article 9 on the form, which is blank.
Step #6: Draft the Bylaws
You are not required to file your bylaws with the state — rather, they are an essential operating manual for your nonprofit’s procedures. Your corporate bylaws include your protocols for holding meetings, electing officers and directors, and other information on corporate formalities.
Step #7: Approve the Governing Documents and Policies
The initial meeting of your board of directors, often called the organizational meeting, is where you will sit down and approve all of your governing documents and policies. It is also customary to elect your officers, set up your accounting period and tax year, and approve your initial transactions.
Take detailed minutes during this meeting. Place these minutes, along with all of your other important documents, into a corporate records binder in your office. You should also make digital copies of these documents and keep them in a secure online location.
Step #8: Get an Employer Identification Number
Every corporation must obtain an Employer Identification Number, or EIN. The IRS uses this nine-digit number to differentiate your corporation from all others; it acts as an identifier on any number of corporate documents. You can file for an EIN on the IRS website without a fee.
Step #9: File the Biennial Statement
In New York, all corporations must file a Biennial Statement with the Department of State. This document should include the name and business address of your chief executive officer, the branch your nonprofit is located in, and more. Your initial statement is due upon incorporation and then every two years on that same calendar month. You can file this statement online for a fee of $9.
Step #10: Apply for Tax Exemption
Now that you are officially a legal corporation in the state of New York, it is time to file for tax-exempt status with both federal and state governments.
Federal Tax Exemption
You can obtain federal tax-exempt status by filing Form 1023 with the IRS. This form is extremely involved, requiring a lot of information. In fact, a completed 1023 averages about 100 hours of labor and 50-100 pages of paperwork. You will share information on your nonprofit’s history, organizational structure, finances, activities, operations, and more. The Form 1023 has a $600 filing fee.
Salma just paid her 1023 filing fee and is ready to roll!
If you are a smaller nonprofit, you may qualify to fill out the short version of the 1023, the 1023-EZ. You must have less than $250,000 in assets and anticipate making less than $50,000 in annual gross receipts. This truncated version of Form 1023 has a $250 filing fee. However, keep in mind that the EZ form can be controversial. Some nonprofit advocacy groups fear that it can make grant approval difficult because there is a larger potential for fraud associated with it.
Pro Tip: When applying for nonprofit tax exemption, your best bet is to have a professional complete the forms on behalf of your organization. This can be either a tax accountant or tax lawyer with solid experience in working with nonprofits. The application process is so intricate and tedious, with so many changing guidelines, that it is well worth the cost of a professional to ensure your filing is done correctly the first time.
New York State Tax Exemption
After your nonprofit receives its determination letter from the IRS, you are eligible for certain state tax exemptions as well. However, you will have to file forms to receive these exemptions. For corporation franchise taxes, file a Form CT-247 with the New York Department of Taxation and Finance. For state and local sales tax, you must file Form 25-119.2 with this same department.
Step #11: Register with the New York Attorney General
Finally, the New York Attorney General’s office requires some nonprofits to register with it before they commence any fundraising activities. This requirement depends on both your organization’s size and intended activities. To find out whether you must register, visit the official website for the Attorney General.
Launching a nonprofit is no simple task. However, if you approach it the right way, with some deliberation and help, you can establish one without tumult. Take some time to research rules and requirements, and then break down the process into small, workable steps.
Running a nonprofit is one of the most rewarding jobs in the world, so it is worth the work that you put into it. This guide, along with our other suggested research sites, should give you the confidence you need to get your nonprofit vision out into the world.
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💡How do I start a nonprofit in New York?
The first order of business is to create an official corporation in accordance with New York’s statewide regulations. This is a multistep process that includes creating and filing several important legal documents. Once your nonprofit is incorporated, you may then apply for federal tax exemption by filing Form 1023 with the IRS. Finally, you will need to fill out the appropriate applications for state tax exemptions. Find out more.
🔑 How much does it cost to start a nonprofit in New York?
There are a number of costs involved. Filing fees can add up to anywhere from $500 to $800, while operating costs vary widely. Also factor in the cost of hiring a professional to oversee and file important documentation. Find out more.
📝 Why should I start a nonprofit in New York?
New York offers a lot of fundraising opportunities. It is one of the three richest states in the U.S., with New York City having a large population of wealthy philanthropists. Find out more.