How to Start a Nonprofit in Illinois: A Step-by-Step Guide

What your articles of incorporation must include:

1. Corporate name
2. Registered agent and Illinois street address
3. Names and addresses of initial directors (minimum three required)
4. Dissolution clause stating that upon dissolution, assets will be distributed to another 501(c)(3) organization or to a federal, state, or local government entity for a public purpose
5. Charitable purpose clause stating the specific purpose of the organization (charitable, educational, religious, or scientific)
6. Incorporator name and signature

Draft the purpose and dissolution clauses carefully and consider working with an attorney before you file. Remember: The government puts a lot of scrutiny on nonprofits that seek tax-exempt status.

Step 5: Draft nonprofit bylaws and hold the first board meeting

Bylaws are your nonprofit's internal governance rules—how your board operates, how decisions get made, and what happens when disputes arise. Illinois does not require you to file bylaws with the state, but the IRS requires a copy with Form 1023. 

Your bylaws should include the following.

• Organization name and principal office address.
• Statement of purpose aligned with the articles of incorporation.
• Board composition and director terms. Specify the number of directors, how they are elected or appointed, the length of their terms, and how vacancies are filled. 
• Officer titles and duties. Identify each required officer position (president, secretary, and treasurer), describe their responsibilities, and state who has authority to appoint or remove them.
• Meeting frequency and quorum requirements. A quorum is a majority of directors in office immediately before the meeting begins, unless the articles or bylaws specify otherwise.
• Membership provisions (if applicable). If the nonprofit has members, bylaws must define their rights, admission and removal processes.
• Amendment procedures. Typically a majority or supermajority vote of the board, with proper notice.
• Conflict of interest policy. Establishes rules preventing board members and officers from using their positions for personal gain. The IRS reviews this policy as part of the 501(c)(3) application and will flag its absence.

The board formally adopts the bylaws at the first board meeting—the same meeting at which officers are elected, the employer identification number (EIN) application is authorized, and the bank account is approved. Every action should be recorded in written minutes, which become the legal record of how your organization was formed.

Step 6: Get an EIN for your nonprofit

An employer identification number is a federal tax ID issued by the IRS. It’s the equivalent of a Social Security number for your organization. You can apply online at no cost, and the IRS issues your number immediately.

You need the EIN before you can open a bank account, hire employees, or file your 501(c)(3) application.

Step 7: Apply for 501(c)(3) status: Form 1023 vs. Form 1023-EZ

This is a federal process filed with the IRS. Your articles of incorporation must already be approved before you submit either application. Both forms are filed electronically through www.pay.gov.

• Form 1023-EZ (streamlined application) is available to organizations that project gross receipts of $50,000 or less in each of the next three years, have total assets of $250,000 or less, and meet additional criteria on the IRS Form 1023-EZ eligibility worksheet. The user fee is $275.
• Form 1023 (full application) is required for all other organizations. The user fee is $600.