How to Start a Nonprofit in Illinois: Articles, Attorney General Registration and 501(c)(3)
How to Start a Nonprofit in Illinois: Articles, Attorney General Registration and 501(c)(3)
Starting a nonprofit in Illinois requires state incorporation, federal tax exemption, and registration with the state Attorney General. Unlike for-profit businesses, nonprofits must follow specific state and federal rules designed to protect the public and ensure funds serve charitable purposes. This guide walks you through the exact steps, required forms, filing fees, and timelines you'll need.
What You Need Before You Start
Before you file anything, gather these items:
- Nonprofit name: Must be distinguishable from names already on file with the Illinois Secretary of State. The name must end with "NFP" only if it contains a word or phrase implying a purpose other than a not-for-profit one.
- Board of directors: Most nonprofits require at least three directors (check your intended bylaws).
- Directors' names, addresses, and signature authority: You'll need this for the Articles of Incorporation.
- Mission statement: A clear description of your charitable, educational, religious, or scientific purpose (required for federal 501(c)(3) exemption).
- Business address in Illinois: The physical location where your nonprofit will operate or maintain records.
- Initial funds or commitment: Many nonprofits start with founder contributions or grants. You'll need to register with the Attorney General within six months of receiving assets.
- Federal Employer Identification Number (EIN) application: Free from the IRS; you'll need this before registering with the state Attorney General.
- Bylaws: Your organization's internal governance rules. While not filed with the state, bylaws define how your board operates and are required for federal 501(c)(3) status.
Step 1: Verify Your Nonprofit Name
Illinois requires nonprofits to have a unique, distinguishable name on file with the Secretary of State. Before you invest time and money, search the existing database to make sure no other organization is already using your intended name.
How to search: Go to the Illinois Secretary of State business entity search and enter your proposed name. If the name is available, write down the exact legal name you intend to use, this is what goes on your Articles of Incorporation.
Timing: The search is instant. If the name is taken, you'll need to choose a different name and search again.
Step 2: Draft Your Articles of Incorporation
The Articles of Incorporation is a formal document that establishes your nonprofit as a legal entity. Illinois nonprofits file Form NFP 102.10 with the Secretary of State.
What to include:
- Your nonprofit's legal name (as verified in Step 1).
- Purpose statement: a concise description of your charitable, educational, religious, or scientific mission.
- Principal office address in Illinois.
- Registered agent name and Illinois office address (many small nonprofits use one of the founders).
- Names and addresses of initial board directors (usually at least three).
- Statement that the organization is organized on a nonprofit basis and no part of net income will benefit private individuals.
Do not file yet: Before submitting, consult an attorney or nonprofit formation service. While the form itself is straightforward, nonprofit bylaws, board structure, and charitable purpose language carry legal weight and will matter when you apply for 501(c)(3) status.
Step 3: File Articles of Incorporation with the Illinois Secretary of State
Once you've drafted your Articles, file them with the Secretary of State, Department of Business Services.
Filing method: File with the Secretary of State by mail or in person, and check the Department of Business Services for any online filing option. The apps.ilsos.gov/llcarticles application is for LLC Articles of Organization, not NFP articles.
Filing fee: $50 for Articles of Incorporation (Form NFP 102.10).
Processing time: Check current processing times with the Secretary of State.
What you'll receive: A certified copy of your Articles showing the state filing date. Save this document, you'll need it to apply for federal tax exemption and to register with the state Attorney General.
Step 4: Apply for a Federal Employer Identification Number (EIN)
An EIN (Employer Identification Number) is a unique nine-digit identifier issued by the IRS. You need an EIN to open a nonprofit bank account, hire employees, and apply for federal 501(c)(3) tax-exempt status.
Cost: Free.
How to apply: You can apply for an EIN online at the IRS website (www.irs.gov) or by mail. The online application provides your EIN immediately when you finish it.
What you'll need: Your nonprofit's legal name, address, principal activity (charitable, educational, etc.), and the name and Social Security number of the responsible party (usually the executive director or board president).
Timing: Online EIN applications are processed immediately. Keep your confirmation letter.
Step 5: Register with the Illinois Attorney General's Charitable Trust Bureau
Illinois law (760 ILCS 55/6) requires nonprofits to register with the Attorney General's Charitable Trust Bureau within six months of receiving assets. This is a critical step and a common source of confusion, registration is mandatory even if you haven't started soliciting donations yet.
When to register: Within six months of receiving your first donation, grant, or founder contribution.
How to register: Complete the registration form available from the Illinois Attorney General's office and submit it along with:
- Certified copy of your Articles of Incorporation.
- A copy of your bylaws.
- A copy of your IRS Form 1023 (Application for 501(c)(3) Status) or, if you haven't yet applied, a statement of your charitable purpose.
- Names, addresses, and titles of board members and officers.
Registration fee: Check current fees with the Attorney General's office. Registration under the Solicitation for Charity Act carries a $15 fee (see Step 6).
Where to file: Illinois Attorney General, Charitable Trust Bureau. Check the Illinois Attorney General's website for current mailing address and any online filing options.
Step 6: Register to Solicit Charitable Contributions (If Applicable)
If your nonprofit plans to solicit donations from the public, you must register under Illinois' Solicitation for Charity Act (225 ILCS 460/2) before you begin fundraising. This registration is separate from Charitable Trust Bureau registration.
Who must register: Any organization that solicits charitable contributions in Illinois. Exceptions exist for certain religious organizations and organizations that solicit only from members, consult the Attorney General's office for specifics.
Solicitation registration fee: $15.
How to register: Complete the solicitation registration form available from the Illinois Attorney General and submit it with the $15 fee.
Timing: You must register before you send out the first fundraising letter, make the first phone call, or hold the first fundraising event.
Step 7: Apply for Federal 501(c)(3) Tax-Exempt Status
To receive donations that are tax-deductible for donors and to be exempt from federal income tax, you must apply for 501(c)(3) status with the Internal Revenue Service (IRS).
Form to file: IRS Form 1023 (Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code) or Form 1023-EZ (simplified version for smaller organizations).
Filing fee: $600 for Form 1023; $275 for Form 1023-EZ (if eligible).
Processing time: Form 1023 review commonly takes several months, and Form 1023-EZ decisions usually come faster. Check the IRS website for current processing times.
What to include:
- Completed Form 1023 or 1023-EZ.
- Bylaws.
- A narrative describing your nonprofit's purpose, programs, and how you'll serve the public benefit.
- Financial projections and a budget for the first three years.
- Conflict of interest policy, if adopted (Form 1023 asks whether you have one).
- Your EIN.
Where to file: Form 1023 and Form 1023-EZ must be filed electronically through Pay.gov.
Important note: The IRS Form 1023 does not authorize tax-exempt status, it applies for it. Your nonprofit is operating legally at the state level once your Articles are filed with the Secretary of State, but you are not yet tax-exempt under federal law until the IRS issues a determination letter.
Step 8: Apply for Illinois State Sales Tax Exemption
Once your nonprofit is recognized by the IRS as tax-exempt, you can apply for an Illinois sales tax exemption, which allows the nonprofit to purchase goods and services without paying sales tax (currently 6.25% state rate plus any local additions).
What you need: Your IRS determination letter showing 501(c)(3) status.
How to apply: Submit a sales tax exemption request to the Illinois Department of Revenue through MyTax Illinois or by mail. This is a separate request, not part of business registration, and there is no fee to apply. If eligible, the Department issues a sales tax exemption number (E-number). See tax.illinois.gov.
Cost: Free.
Processing time: Up to 90 days, and the exemption is not retroactive.
What to do with your exemption number: Provide it to vendors when making tax-exempt purchases. Keep a record of all exemption certificates.
Step 9: File Your First Annual Report with the Illinois Secretary of State
Nonprofits incorporated in Illinois must file an annual report with the Secretary of State each year. This keeps the state's records current and is required to maintain your nonprofit status.
Form: Not-for-Profit Corporation Annual Report (Form NFP 114.05).
Annual report fee: $10 per year.
Due date: The annual report is due within the 60 days before the first day of your nonprofit's anniversary month (the month you filed your Articles). The Secretary of State sends a report notice to your registered agent ahead of the due date.
How to file: File online through the Secretary of State's portal or by mail.
Late penalty: Failing to file can lead to administrative dissolution. Check with the Secretary of State for any late penalty.
Step 10: File Annual Reports with the Illinois Attorney General
In addition to the state annual report, nonprofits must file annual financial reports with the Illinois Attorney General's Charitable Trust Bureau. These reports provide transparency about how the nonprofit spends money.
What to file: An annual charitable organization report showing receipts, expenses, and fund balances.
Due date: Within six months after the end of your fiscal year (June 30 for calendar-year organizations).
Cost: Check current fees with the Attorney General's office.
Where to file: Check the Illinois Attorney General's website for submission instructions and any forms required.
Materials Summary and Total Initial Costs
| Item | Cost |
|---|---|
| Articles of Incorporation (Form NFP 102.10) filing fee | $50 |
| Federal EIN (IRS) | $0 |
| Solicitation for Charity Act registration (if fundraising) | $15 |
| Form 1023 (501(c)(3) application) | $600 ($275 for Form 1023-EZ) |
| First-year Illinois annual report | $10 |
| Estimated total | $660 to $675 with Form 1023 ($335 to $350 with Form 1023-EZ) |
Note: These are state and federal filing fees only. They do not include attorney consultation, accounting services, domain registration, or initial operational costs, which may be substantial.
Timeline: How Long Does It Take?
- Name verification: Instant online.
- State filing (Articles): 10 business days.
- EIN: Same day (online application).
- Attorney General registration: No published timeline; check with the Attorney General's office.
- 501(c)(3) application (Form 1023): Commonly several months; check the IRS website for current processing times.
- Sales tax exemption: Up to 90 days.
- Total time from start to finish: State steps take weeks, but the full process usually takes several months because of IRS review.
Tips to Avoid Common Mistakes
- Don't delay Attorney General registration: Register within six months of receiving assets, not just when you're ready to fundraise. Missing this deadline can jeopardize your nonprofit status.
- Don't forget the Solicitation for Charity Act registration if you fundraise: This is separate from Charitable Trust Bureau registration and must be done before you ask for donations.
- Don't assume state incorporation means federal tax exemption: You are a legal nonprofit at the state level after the Secretary of State files your Articles, but you are not tax-exempt under federal law until the IRS approves Form 1023.
- Don't miss annual deadlines: Set reminders for your Secretary of State annual report (due by your nonprofit anniversary month) and Attorney General report (due six months after fiscal year end). Missing deadlines results in penalties and possible administrative dissolution.
- Don't forget board governance: Maintain detailed board meeting minutes and financial records. Nonprofits have higher transparency and accountability standards than for-profit businesses.
- Don't overlook conflict-of-interest policies: Form 1023 asks whether you have adopted a written conflict-of-interest policy, so adopt one before you apply.
Expected Results
After completing these steps, you can expect:
- A legally incorporated nonprofit entity recognized by the state of Illinois.
- A federal tax identification number (EIN) that allows you to open a bank account, hire employees, and apply for grants.
- Federal tax-exempt status (501(c)(3)) that allows donors to deduct their contributions and exempts your nonprofit from federal income tax.
- Authorization to solicit charitable contributions in Illinois (if you filed for Solicitation for Charity Act registration).
- Exemption from Illinois state sales tax on purchases made for your nonprofit's exempt purpose.
- Regular compliance obligations: annual reports to the state and federal government, financial transparency to the Attorney General, and adherence to nonprofit governance rules.
Important Disclaimer
This article is informational and does not constitute legal or tax advice. Nonprofit incorporation involves complex legal and financial issues that vary depending on your specific mission, intended activities, and funding sources. Before filing any documents, consult with a qualified attorney licensed in Illinois and a certified public accountant familiar with nonprofit taxation. The Illinois Attorney General's office and the IRS also publish detailed guidance on their websites.
Key resources: