How to Start a Nonprofit in Illinois

Step 1: Name Your Illinois Nonprofit

Choosing a name for your organization is the first and most important step in starting your nonprofit corporation. Be sure to choose a name that complies with Illinois naming requirements and is easily searchable by potential members and donors.

To learn more, read our How to Name a Nonprofit in Illinois guide.

1. Follow the naming guidelines:

• The name of your organization must adhere to the following guidelines:
  
  • Must include the letters “NFP” at the end of the name if the name of your organization suggests that the organization was designed for any other purpose than laid out in the nonprofit act.
  • Must be distinguishable from other businesses operating in the state of Illinois.
  • Unless permission is obtained from the Secretary of State, the name cannot contain terminology related to an established political party.

Read the Illinois General Assembly's official guidelines for the complete rules on naming an Illinois-based organization.

2. Is the name available in Illinois? Make sure the name you want isn't already taken by doing a name search on the State of Illinois Website.

3. Is the URL available? We recommend that you check to see if your business name is available as a web domain. Even if you don't plan to make a business website today, you may want to buy the URL in order to prevent others from acquiring it.

Step 2: Choose a Registered Agent in Illinois

Your nonprofit is required to nominate a Illinois registered agent for your 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' point of contact with the state.

Who can be a Registered Agent? A registered agent must be a resident of Illinois or a corporation, such as a registered agent service, authorized to transact business in Illinois. You may elect an individual within the company including yourself.

Need help choosing a registered agent? Check out our complete guide on How to Choose a Registered Agent for your Illinois 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 nonprofit who have individual responsibilities and authorities are known as officers. 

The organization structure of your nonprofit in Illinois MUST include:

1. At least 3 directors not related to each other
2. A president
3. A secretary

NOTE: The president and secretary positions cannot be held by the same person.

To learn more about electing an Illinois nonprofit board of directors, read our full guide.

Step 4: Adopt Bylaws & Conflict of Interest Policy

To be eligible to apply for 501(c)(3) status, your nonprofit is required to have the following two documents:

1. Bylaws 
2. Conflict of interest policy.

What are Bylaws? Bylaws are the rules outlining the operating procedures of the nonprofit.

What is a Conflict of Interest Policy? A Conflict of Interest Policy is the collection of rules put in place to ensure that any decisions made by the board of directors or the officers benefits the nonprofit and not individual members. 

NOTE: The bylaws and conflict of interest policy must be adopted by the nonprofit during its first organizational meeting where the directors and officers are officially appointed.

Step 5: File the Illinois Articles of Incorporation

To register your nonprofit, you will need to file Not-for-profit Articles of Incorporation with the State of Illinois.

To ensure that your nonprofit is eligible to apply for 501(c)(3), in the Articles of Incorporation you must explicitly state the following:

1. Purpose:

In order to qualify for 501(c)(3) status, the organization’s purpose must explicitly be limited to one or more of the following:

Charitable, Religious, Scientific, Educational, Literary, Fostering national/international amateur sports competition, Preventing cruelty to animals/children, Testing for public safety

2. Dissolution:

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 501(c)(3) status, the assets of your organization must only ever be used for purposes approved under section 501(c)(3). 

Section 5 of this sample IRS document provides an example of these provisions required for 501(c)(3) 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 501(c)(3) Status

Before a nonprofit can apply for 501(c)(3) status it must, 

1. Elect at least 3 directors not related to each other
2. File the Articles of Incorporation with the required provisions (As covered in Step 5)
3. Adopt the bylaws and conflict of interest policy
4. Have an EIN number

Once these four conditions have been met your nonprofit can apply for 501(c)(3) 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 501(c)(3).