How to Start a Nonprofit in Rhode Island

Important: The Department of State provides a standardized articles of incorporation form that meets Rhode Island requirements for incorporation, but it doesn’t necessarily meet IRS requirements for 501(c)(3) status. LegalZoom can help you file your nonprofit articles in a way that meets both state and federal requirements. 

Step 5: Hold your organizational meeting and adopt bylaws

The organizational meeting is where your board of directors formally adopts bylaws and elects any additional officers or members. Bylaws are your organization's internal operating rules. Your board of directors must adopt bylaws under Rhode Island nonprofit corporation law.

Rhode Island nonprofit bylaws can include any provisions that relate to how you regulate and manage your organization, but it's wise to at least address the following:

• The nonprofit’s name and purpose
• The board of director’s composition, terms, and removal procedures
• Director roles and responsibilities
• Officer titles and duties
• Meeting frequency 
• Quorum requirements (the minimum number of directors who must be present for a meeting to take place or for its actions to be binding)
• Voting procedures
• Conflict of interest policy (a policy to ensure directors, officers, and key persons address any conflicts of interest, including procedures for how to navigate the conflict)
• Amendment procedures (methods for adding to or adjusting bylaws)
• Dissolution procedures (rules on how to dissolve the nonprofit, including a clause on distributing assets for charitable purposes)

You can also work with a business attorney or use an online legal service to help ensure your bylaws cover all the important points. Your bylaws will often act as a supporting document when registering with state and federal agencies, so it's important to create a comprehensive document that adds credibility to your mission. 

Step 6: Get an federal tax ID for your Rhode Island nonprofit

A federal employer identification number (EIN) is a nine-digit ID that the IRS assigns businesses to identify them for tax purposes. You’ll need an EIN to file for tax-exempt status, hire employees, and apply for grants. Some banks may also require an EIN to open a bank account. 

It’s free to obtain an EIN through the IRS website. You can also use LegalZoom’s EIN filing service if you want someone to handle it for you.

Step 7: Apply for federal 501(c)(3) tax-exempt status

This is the next major step in setting up your nonprofit. 501(c)(3) status can make donations tax-deductible and exempt your organization from federal income tax. The IRS grants 501(c)(3) status through one of two main forms.

Form 1023 is the more complex application. 

• Who qualifies: Larger exempt organizations that don’t qualify for the simpler form 
• Filling fee: $600
• How to file: Submit the completed form online through www.pay.gov
• How long it will take: Generally, around six months
• Required supporting documents: Articles of incorporation and bylaws 

Form 1023-EZ is a simplified version of the 1023 for smaller organizations. 

• Who qualifies: U.S. exempt organizations whose current or projected gross receipts don’t exceed $50,000/year and total assets value at $250,000 or less
• Filling fee: $275
• How to file: Submit the completed form online through www.pay.gov
• How long it will take: Generally, about a month
• Required supporting documents: Articles of incorporation for a nonprofit

After the IRS reviews your application, you’ll receive a determination letter approving your status, a request for additional information, or a rejection letter. If you’d like help filing the application, LegalZoom’s 501(c)(3) application service can guide you through the process. 

Step 8: Register for Rhode Island state tax exemption

501(c)(3) status doesn't automatically exempt your nonprofit from Rhode Island state taxes. You’ll have to apply separately with the Rhode Island Division of Taxation to qualify for state exemptions.

Here are some tax exemptions or obligations for Rhode Island nonprofits:

• Corporate tax exemption. Most nonprofits are automatically exempt from Rhode Island corporate income tax. 
• Unrelated business income. You’ll need to report any profits from business unrelated to your exempt purpose(s) that exceed $1,000. Use Form RI-1120C to report this income. 
• Sales and use tax exemption. Apply for a Sales Tax Exemption Certificate by filing Form EXO-SUE with the RI Division of Taxation.
• Employer taxes. If your nonprofit has employees, register with the Rhode Island Department of Labor and Training for employment security, temporary disability insurance, and job development fund taxes.

It’s wise to consult with a business attorney or tax professional for an in-depth understanding of the tax obligations and/or exemptions that apply to your specific organization. 

Step 9: Register for charitable solicitation in Rhode Island

Rhode Island nonprofits that receive more than $25,000 a year in donations will need to register with the the Department of Business Regulation’s Securities and Charities Division. Make sure to register within 30 days of meeting the $25,000 threshold. 

The registration fee is $90 and you can register online through the Department of Business Regulation’s filing portal. Here’s what you’ll need:

• EIN
• Office address or name and address of person in charge of the organization’s financial records
• States where the organization is licensed or is registered
• Percentage of contributions received during the previous fundraising year (estimate if unknown)
• A copy of your IRS 990 form (unless your nonprofit is new and hasn’t completed a fiscal year)
• An audited financial statement prepared by an independent certified accountant (if your nonprofit’s annual income is $1,000,000 or more)
• The name(s) and address(es) of all professional fundraisers who will or are acting on behalf of your nonprofit within Rhode Island
• A copy of the contract made with the professional fundraiser (if your organization utilizes professional fundraisers)