How to Start a Nonprofit in Alabama
To start a nonprofit in Alabama and get 501c3 status, follow these steps:
Step 1: Name Your Alabama Nonprofit
Step 2: Choose Your Registered Agent
Step 3: Select Your Board Members & Officers
Step 4: Adopt Bylaws & Conflict of Interest Policy
Step 5: File the Certificate of Formation
Step 6: Get an EIN
Step 7: Apply for 501c3
Or Simply use a professional service:
Northwest ($29 + State Fees)
Starting a 501c3 Nonprofit in Alabama Is Easy
As of April 2023, there are 24,430 different nonprofit organizations registered in Alabama. Nonprofits are an important part of the community, providing upwards of 125,127 jobs for people throughout the state.
Most of these organizations employ anywhere from one to 10 people. In total, approximately 1,300 organizations employ up to 10 people. Another 450 organizations employ between 11 and 25 people, and 430 organizations employ between 26 and 100. 194 organizations are home to between 101 and 1,000 employees, and 18 organizations have over 1,000 employees. Altogether, they’re providing thousands of jobs that help stimulate the local economy.
While some nonprofits are small, there are large nonprofits that you might recognize in the state. Some of the bigger names include:
- Southeastern Conference (SEC)
- The Children’s Hospital of Alabama
- Powersouth Energy Cooperative
- University of Alabama Health Services Foundation
The majority of the $15 billion in revenue brought into the state by nonprofits is through big names like these, but organizations with under $1 million in revenue accounted for around 7.2% of the remaining revenue. That’s still a good chunk of profits for smaller organizations.
Some of the more common kinds of nonprofit organizations in Alabama include:
- Arts, culture, and humanities nonprofits (1,314)
- Business and community development organizations (1,706)
- Religious organizations (4,459)
- Educational institutions (3,389)
- Youth development organizations (684)
- Human service organizations (2,108)
- Foundations (2,203)
No matter what kind of nonprofit you’re interested in starting, you will need to abide by the state’s rules and qualify based on the IRS’s requirements.
To start a 501c3 tax-exempt nonprofit organization in Alabama, you must first start a nonprofit in Alabama according to the rules of the state and then apply for 501c3 status with the IRS.
Learn more about 501c3 eligibility in our What is a 501c3 guide.
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Step 1: Name Your Alabama Nonprofit
The first part of starting your nonprofit is naming it. You need to select a name that complies with Alabama’s requirements. You also need a name that is easy to remember, so your potential members and donors can search for it easily.
To learn more about naming your nonprofit, read our How to Name a Nonprofit in Alabama guide.
1. Follow the naming guidelines:
- The name of your nonprofit organization must:
- Be distinguishable and different from the other businesses in your state.
- The name should not contrast with the purpose of the organization. It shouldn’t be contrary to the reason that the nonprofit corporation was formed. Check your Certificate of Formation.
Read the Alabama Business and Nonprofit Entities Code to learn more about the rules that are in place for naming your Alabama-based organization.
2. Is the name available in Alabama right now? Perform a name search on the State of Alabama website to see if it is available or already taken.
3. Is the URL available? You may want your business name as a web domain. Even if you don’t have a website, consider buying the URL now to preserve it for later use.
Find a Domain Now
After verifying that your name and URL are available, you can choose a professional service to finish the Alabama nonprofit formation process for you. We recommend:
Northwest ($29 + State Fees)
4. Reserve your business name with the state. As a nonprofit in Alabama, you are required to submit a Certificate of Name Reservation.
Alabama Certificate of Name Reservation
OPTION 1: File Online With the State of AlabamaFile Online
- OR -
OPTION 2: File by MailDownload Form
Filing Fee: $25
Office of the Secretrary of State
P.O. Box 5616
Montgomery, AL 36103
NOTE: If you decide to file this form by mail, submit your reservation at least two weeks before you file the Certificate of Formation. If you decide to file online, you can reserve your name when you file.
Step 2: Choose a Registered Agent in Alabama
You must nominate an Alabama registered agent for your nonprofit organization.
What is a registered agent? A registered agent is an individual or business entity responsible for receiving important legal documents on behalf of your business. Think of your registered agent as your business's point of contact with the state.
Who can be a registered agent? To be a registered agent, the person must live in Alabama or be represented as a corporation, such as a registered agent service. Registered agents must be authorized to transact business in Alabama. You or another individual in your nonprofit may be the registered agent.
Need help selecting a registered agent for your organization? Read through our guide to choosing a registered agent for your Alabama nonprofit.
Step 3: Select your Directors & Officers
The directors of an organization come together to form a board of directors. This board of directors is responsible for overseeing the operations of the nonprofit.
The president, secretary, and other members of the nonprofit who have individual responsibilities and authorities are known as officers.
While Alabama only requires nonprofit corporations to have at least one board member, the IRS requires nonprofits to have at least three directors to be eligible for 501c3 status. The majority of directors should not be related to each other.
Alabama also requires that the nonprofit's officers include:
- A president
- At least one vice president
- A secretary
- A treasurer
Officers can hold multiple titles if the bylaws allow for it.
To learn more about electing an Alabama nonprofit board of directors, read our full guide.
Step 4: Adopt Your Bylaws and Develop a Conflict of Interest Policy
To guarantee eligibility for your 501c3 status, your nonprofit must have these two documents:
- Conflict of Interest Policy
Bylaws go over the rules and procedures for operating the nonprofit, while a conflict of interest policy is a set of rules that makes sure the board of directors only makes decisions that benefit the nonprofit as a whole.
NOTE: These policies have to be adopted into practice during the first organizational meeting of your nonprofit. During this meeting, directors and officers must also be appointed.
Step 5: File the Alabama Certificate of Formation
To register the nonprofit, you will need to file a Certificate of Formation with the State of Alabama.
File the Alabama Nonprofit Certificate of Formation
OPTION 1: File Online With Alabama InteractiveFile Online
- OR -
OPTION 2: File the Certificate of Formation by MailDownload Form
Fee: $208 online, $200 by mail
Note: Mail-in filings must submit their Certificate of Name Reservation at least two weeks prior to registration.
To ensure that your nonprofit is eligible to apply for 501c3, in the Certificate of Formation, you must explicitly state the following:
In order to qualify for 501c3 status, the organization’s purpose must explicitly be limited to one or more of the following:
- Fostering national/international amateur sports competition
- Preventing cruelty to animals/children
- Testing for public safety
You must explicitly state what the assets of the organization will be used for, and what will happen to the assets if the organization is dissolved.
To be eligible for 501c3 status, the assets of your organization must only ever be used for purposes approved under section 501c3.
Section 5 of this sample IRS document provides an example of these provisions required for 501c3 eligibility.
Step 6: Get an EIN
What is an EIN? An Employer Identification Number (EIN), or Federal Tax Identification Number (FTIN), is used by the federal government to identify a business entity. It is essentially a social security number for the company.
Why do I need an EIN? An EIN is required for the following:
- To open a business bank account for the company
- For Federal and State tax purposes
- To hire employees for the company
How do I get an EIN? An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail. Check out our EIN Lookup guide for more information.
Step 7: Apply for 501c3 Status
Before a nonprofit can apply for 501c3 status it must,
- Elect at least 3 directors not related to each other
- File the Certificate of Formation with the required provisions (as covered in Step 5)
- Adopt the bylaws and conflict of interest policy
- Have an EIN number
Once these four conditions have been met your nonprofit can apply for 501c3 tax-exempt status by filing Form-1023 online.
If your application is approved, the IRS will send you a determination letter stating that your organization is exempt from federal taxes under section 501c3.
FAQ: Starting Your Nonprofit
Form 1023 must be filed within 27 months from the end of the first month your organization was created.
Soon after sending your application you should receive an acknowledgment of receipt of your application.
If your application is simple and complete, IRS will send your determination letter within 180 days for Form 1023.
If you have not heard from them by that time you can call (877) 829-5500 to inquire about your application.
State of Alabama Quick Links
- IRS - Information for Charities & Nonprofits
- IRS - Required Provisions for Organizing Documents
- IRS - 990 Series for Tax-Exempt Organizations
- IRS - Applying for Tax-Exempt Status
- IRS - 501c3 Compliance Guide
- Alabama Secretary of State - Online Services Portal
- Alabama Secretary of State - Business forms in PDF
- Alabama Business and Nonprofit Entities Code - Nonprofit Corporations