How to Start a Nonprofit Organization in NY Step by Step!

Starting a nonprofit in the state of New York requires some key preparation and steps to become a legal entity. In order to make this process as painless as possible, we’ve written an in-depth guide on exactly what needs to be done and in what order. If you closely follow all the information we’ve provided below, you can create your not-for-profit on your own with minimal costs.

Creating a New York Nonprofit Corporation

If you have an idea and are completely starting a nonproft from scratch, the first thing you need to do is get crystal clear on what you wish to accomplish. What is it your organization will actually do? How will it improve the world? Once you have a clear idea of your purpose, you’ll need to create a Purpose Statement. This is not the same as a mission or vision statement.

Purpose Statement

A purpose statement is a simple document that explains clearly why your organization exists in the context of nonprofit activities as specified by the state of New York as well as the IRS (e.g., charitable, educational, religious, or scientific). This statement is required by the state of New York and must be included in your application. It should be clear and concise without any extra wording and be no longer than a few sentences.

A solid example of a purpose statement for a mental health charity might be:

“The purpose of [Charity Name] is to promote mental health and emotional well-being by providing accessible counseling, education, and support services for individuals and families affected by mental health challenges living in New York State.”

This statement is concise and specific, meeting the requirements for a nonprofit purpose. It clarifies the charity’s focus on mental health support and education and its commitment to making these resources accessible for all within the state. This also aligns with the charitable and educational purposes recognized for nonprofits by both NY and the IRS, which is helpful for compliance and your organization’s potential tax-exempt status.

Name Your Nonprofit Organization 

Now that you are clear on your charity's goals, it’s time to think of a name for your nonprofit. Your name must comply with New York’s naming guidelines as far as the name must ‘distinguish it from the names of corporations of any kind’ and not include any unacceptable words listed here. This is in addition to coming up with a unique and bendable name.

Luckily, charities do not fall under New York’s guideline pertaining to NPCL §§ 301 and 404 which require all other businesses to add a suffix to demonstrate their corporate structure (Incorporated, Corporation, Limited, Inc., Corp., or Ltd. ). So unless you have a significant reason for including a suffix, it’s best to keep your name short and memorable as it will play into your overall marketing and branding.

Once you’ve come up with an appropriate name, you’ll need to run it through New York’s name database that can be found here. Since it is possible the name you want is already taken, it’s best to come up with a few just in case. It’s also wise to also do an internet search to see what other organizations show up as well as checking the U.S. Patent and Trademark Office using their Trademark Electronic Search System to be completely sure someone doesn’t already have legal rights to your proposed name.

Create a Board of Directors

New York is very clear about the requirements for your board of directors and there are many rules regarding the make up and running of your board. For example, NYS requires a minimum of three board members if your a nonprofit, while the IRS only requires one member. You need to be aware of these differences so your not-for-profit stays compliant with both state and federal guidelines. We’ve put together the necessary information below in order to be compliant with both the IRS and New York’s guidelines.

1. Minimum Number of Directors

New York law requires your nonprofit have a minimum of three board members or ‘directors’. These three directors must be over the age of 18 and need to be actual human beings, meaning a corporation or other legal entity can not be a board member.

2. No Related Directors Requirement

In order for your board to avoid conflicts of interest and maintain objectivity, New York requires one third of your board, regardless of size, to be an independent member. This means on a board of three, one person must follow these guidelines in order to qualify as independent:

• Is not employed by the organization or its affiliates.
• Has not received more than $10,000 in direct compensation from the nonprofit in the past three years (excluding reasonable director fees).
• Has no significant financial interest in any entity doing business with the nonprofit.

3. Conflict of Interest Policy

A conflict of interest policy is required by both the IRS and NYS. This policy is typically included in your organization’s bylaws as well and describes your not-for-profit’s procedures to handle situations where a director or board member has a potential conflict of interest making sure your charity and members stay transparent and accountable.

What Should a Conflict of Interest Policy Include?

• Define conflicts of interest and give examples specific to your organization.
• Outline procedures for disclosing conflicts, such as having board members report potential conflicts in writing.
• Establish a process for addressing conflicts, often requiring the individual in question to recuse themselves from related discussions and votes.
• Include regular reviews (e.g., annual signing of the policy by board members).

Furthermore, the State of New York requires this policy to be reviewed and signed by each board member annually. Detailed records of this should be kept at all times. For legal reasons, it’s best if this happens during an official board meeting where minutes are kept.

4. Duties and Fiduciary Responsibilities

Board members must adhere to three primary duties:

• Duty of Care: Act with a reasonable level of care and make informed decisions.
• Duty of Loyalty: Act in the best interests of the organization, avoiding conflicts of interest.
• Duty of Obedience: Ensure the nonprofit is complying with applicable laws and regulations and fulfilling its stated mission.

5. Annual Board Meetings

Although there is no rule for the frequency your board needs to meet in order to stay in compliance with the IRS, New York does require your board hold at least one meeting per year. This annual meeting must be an official one complete with its recorded minutes. Although NYS only requires annual meetings, it’s beneficial to hold at least quarterly meetings or even monthly meetings. Particularly during the early stages of your not-for-profit.

Create Bylaws

New York State does require nonprofits to have bylaws as part of the incorporation process. Bylaws are one of the essential documents for a nonprofit corporation in New York, and they define the internal rules and governance structure of your organization. These bylaws must be in place before you can file your Certificate of Incorporation with the New York Department of State (DOS), but they do not need to be ratified before applying for you articles of incorporation. Bylaws are also required documents when applying for 501(c)(3) tax-exempt status with the IRS. So take your time and create a well thought out set of bylaws.

What Needs to be in your Bylaws

Your bylaws must include specific information in order to be accepted by both NYS and the IRS. Below is our bylaw checklist to get you started:

• Board structure: How many board members are required, their roles (President, Secretary, Treasurer), and their responsibilities.
• Board member terms: Duration of board members' terms, term limits, and procedures for removing or replacing them.
• Board meetings: Frequency of meetings, quorum requirements, and how meetings are called and conducted.
• Voting procedures: How decisions are made, including how votes are cast and how board actions are recorded.
• Officers and duties: Responsibilities of officers and their election process.
• Conflict of interest policy: A statement requiring board members to disclose any potential conflicts of interest. (must be reviewed and signed yearly by all members)
• Amendment procedures: How the bylaws themselves can be amended in the future.

When applying for 501(c)(3) status, the IRS does require you to submit a copy of your bylaws as part of the Form 1023 application. Furthermore, New York state law requires that your bylaws comply with their own specific state regulations, including rules about holding board meetings, electing officers, and the nonprofit’s mission and activities.

Choose a Registered Agent

A registered agent is an individual or business entity designated to receive legal and official documents on behalf of your nonprofit organization. This can be an individual, even yourself, or a company. The only stipulation is the agent must have a physical address within the state of New York, P.O. boxes are not allowed!

The documents an agent could be responsible for receiving may include service of process (legal notices), tax forms, and other official communications from the state or courts. There are commercial registered agent services like these that offer to be an agent for a nominal fee if you are not sure who to designate or don’t have a physical address.

What You Need to Know:

• Designation on the Certificate of Incorporation:
  • You must list the name and address of your registered agent in the Certificate of Incorporation when filing Form DOS-1511.
  • The address must be a physical location in New York State where the agent can be reached.
• Changing Your Registered Agent:
  • If you ever need to change your registered agent, you can do so by filing a Certificate of Change with the New York Department of State. This is a simple form that updates the state's records to reflect the new agent's name and address and there’s a $20 application fee when you submit the form.
• The Registered Agent's Role After Filing:
  • The registered agent’s job is to simply receive any key documents from state and federal agencies and get them to the charity in a timely matter so the organization can stay compliant and is informed of any legal actions against it.

Preparing and Submitting Your Certificate of Incorporation

Once all of the above steps have been completed, it’s time to file your certificate of incorporation with the state of New York. You will need to fill out the Certificate of Incorporation form (Form DOS-1511-f), which you can download from the New York Department of State (DOS) website. There are also some helpful instructions from the same site to help with your filing, although we do go over most of these steps below.

What Information is Needed

• Name of the Corporation: Your nonprofit’s official name.
• Purpose: A statement of the nonprofit's purpose (e.g., charitable, educational, religious). This purpose must be consistent with tax-exempt status under IRS Section 501(c)(3) if you're seeking that status.
• County of the Principal Office: The county where the nonprofit's primary office is located in New York.
• Registered Agent: The name and address of the registered agent who will receive all legal notices on behalf of your nonprofit. This can be a person or a commercial service that provides registered agent services.
• Incorporators: The names and addresses of the incorporators, who are the individuals filing the certificate. You only need one incorporator to sign and file the Certificate of Incorporation and this person does not need to be associated with your organization in any way (an attorney for example).
• Directors: You must have at least three directors (board members) listed on the certificate. (Note: This is a requirement for New York nonprofits.)

Statement for IRS Tax-Exempt Status

If you are applying for 501(c)(3) tax-exempt status (or another IRS tax-exempt status), you must include the following statement in your Certificate of Incorporation:

"This corporation is organized exclusively for charitable, educational, religious, or scientific purposes, and no part of the net earnings of this organization will benefit any private shareholder or individual."

This clause is necessary for tax-exempt status and must reflect the nonprofit's mission and be aligned with IRS compliance regulations.

You should also include a clause that ensures that, in the event of dissolution, the assets will go to another nonprofit or government entity, not to private individuals.

“Upon dissolution of this organization, assets shall be distributed to a charitable organization, as defined under Section 501(c)(3) of the Internal Revenue Code.”

Sign the Certificate

The incorporator (those filing the certificate) must sign it. Remember, the incorporators do not have to be board members, they are simply the individuals completing the filing.

File the Certificate of Incorporation

• Online Filing: At this time regrettably, there is no avenue for online submissions.
• Mail Filing: To submit the completed Certificate of Incorporation by mail, address it as follows:
  • New York Department of State
  • Division of Corporations
  • One Commerce Plaza
  • 99 Washington Avenue
  • Albany, NY 12231-0001
• In-Person: You can also choose to drop off your application in person during regular business hours at the same mailing address.

Pay the Filing Fee

The filing fee for the Certificate of Incorporation is $75 for most nonprofit corporations which is less than the normal $125 fee that for-profits pay. Payment can be made by check or money order, MasterCard, Visa or American Express. Checks and money orders should be made payable to the “Department of State.” Do not send cash through the mail.

Obtain a Copy of Your Certificate

Once your Certificate of Incorporation is approved, you will receive a Certificate of Incorporation from the New York Department of State which will be sent to your registered agent. Keep this document in your nonprofit's records, as it establishes your nonprofit’s legal existence.

Apply to the IRS for an Employer Identification Number (EIN)

Although this step has nothing to do with NYS, it is necessary for your non-profit to get an EIN in order to open bank accounts, hire employees, apply for your 501(c)(3) tax-exempt status with the IRS and to finally accept tax-free donations and grants. It’s basically a social security number for your entity and demonstrates your official tax designation with the IRS.

Luckily to get your EIN is super easy and fast and can all be done online in minutes or by fax, or by mail. And it’s completely free. When you sit down to get your EIN online, make sure you have all the information we outline below ready as you must complete the entire process in one sitting, or you’ll need to start again. You can not pause the process to go to the bathroom! You’ll receive your EIN immediately upon completion.

1. Legal Name of the Nonprofit

The exact name you have chosen for your nonprofit and listed on your Certificate of Incorporation.

2. Mailing Address

The physical mailing address for your nonprofit (typically the address listed on your incorporation documents).

3. Responsible Party Information

You’ll need to provide details about the responsible party, usually one of the nonprofit’s founding members or an officer who has control over the organization. This includes their name, Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or Employer Identification Number (EIN) if it’s a different business.

4. Incorporation Details

The formation date and state of incorporation (New York, in your case). This is the date you officially filed your Certificate of Incorporation or when it was approved.

5. Nonprofit’s Purpose

You’ll need to specify that your organization is a nonprofit and briefly outline its purpose (such as charitable, religious, educational, or scientific). This can be your purpose statement from above and helps classify the organization with the IRS.

6. Contact Information

A phone number where the responsible party or an official of the nonprofit can be reached during normal business hours.

7. Type of Entity

You’ll specify that you’re forming a nonprofit organization or nonprofit corporation.

With all your information in hand, you’ll be prepared to apply for the EIN and get your nonprofit set up for banking, payroll, taxes, and other organizational needs in just a few minutes if you choose to do it all online.

Applying for IRS 501(c)(3) Federal Tax Exempt Status

This step can actually be quite time consuming and detailed depending on which form you decide to use for your charity. So in order to keep this article as specific to New York regulations regarding setting up a nonprofit, we’ll add links to resources that can better provide you with the details necessary to get through this step.

How to Start a Nonprofit – This article goes over everything necessary to apply for your tax-exempt status with the IRS.

Applying for Tax Exempt Status – The guide published by the IRS helps you to determine which type of nonprofit classification will work best for your specific charity including Form 1023, 1023ez and 1024.

Tax-Exempt Status for Your Organization – An in-depth guide by the IRS that explain every step in intricate detail.

Application Process – A step-by-step review of what an organization needs to know and to do in order to apply for recognition by the IRS of tax-exempt status.

New York Filings While You Wait

Now that you have the bulk of the work completed, there will still be some time before you hear back from the IRS about your 501(c)(3) status. Take this time to complete your state and local filings that nonprofit status is not a requirement.

Registering with the Charities Bureau of the Attorney General's Office

You can and should register with the Charities Bureau as soon as possible after incorporating your nonprofit, even if your IRS tax-exempt status is pending. You must register before you solicit donations or conduct fundraising in New York state. The state generally requires that nonprofits register within six months of incorporating, regardless of their federal tax-exempt status.

Filing Annual CHAR 500

Once registered with the Charities Bureau before this step, you’ll then be required to file an annual Form CHAR 500 with the Attorney General’s Office. This annual filing requirement applies to all registered nonprofits in New York that solicit donations, even if they are awaiting federal tax-exempt approval.

Please note that soliciting donations before registering properly in NYS is a crime and there are severe fines and possible jail time for those entities that do not follow the regulations. So take your time and do this step as soon as possible.

New York Filings After IRS Tax-Exempt Approval

These filings can only be completed after you have received your formal 501(c)(3) status from the IRS as you’ll need the information they give you in order for these forms to be filed. It is possible that all of these forms are not required for your organization depending on your specific business plan and status.

New York State Corporate Franchise Tax Exemption (Form CT-247): The New York State Department of Taxation and Finance requires this form for nonprofits seeking exemption from the corporate franchise tax under Tax Law section 1(b)(6). And although the terminology may be confusing (the word franchise), the corporate franchise tax exemption allows your nonprofit to avoid paying state taxes on income typically taxed for corporations.

Sales Tax Exemption (Form ST-119.2): This form saves your nonprofit from needing to pay state tax on merchandise and services normally taxed on by for-profit corporations. You must provide proof of IRS tax-exempt status in order to receive this exemption.

Property Tax Exemptions: If your organization owns property, you can apply for a property tax exemption, this also requires proof of your 501(c)(3) status.

To speed up the process you can download all of the paperwork and begin working on them so when your organization does receive its IRS 501(c)(3) status, all that will need to be done is attaching your letter from the IRS and filing your forms.

Ongoing Reporting and Regulatory Requirements

Keeping your New York nonprofit compliant involves several state and federal requirements that must be perpetually addressed so there are no issues. This is our breakdown of the key annual and ongoing compliance issues that you need to be aware of.

1. Federal Compliance

• IRS Form 990: Every nonprofit must file an IRS Form 990 (990, 990-EZ, or 990-N, depending on annual revenue) to report financial information and activities to the IRS. This form is due by the 15th day of the fifth month after your fiscal year ends. If you fail to file for three consecutive years, you will loose your federal tax-exempt status.
• Unrelated Business Income Tax (UBIT): If your organization earns income from activities unrelated to its exempt purpose (e.g., a nonprofit thrift store or an llc), it may need to file Form 990-T and pay taxes on that income since the funds came from business activities and not through grants or donations.
• Employment Tax Filings: If your nonprofit has employees, you’ll need to file payroll tax forms even though they are working for a nonproft. Nonprofits do pay wage taxes for employees just like any other employer. These include Forms 941 or 944 (for federal income and FICA taxes), and Form 940 (for federal unemployment tax) regularly.

2. New York State Compliance

• Annual Financial Reports:
  • Charities Bureau Registration and Reporting: New York requires nonprofits to register with the Charities Bureau of the New York State Attorney General’s Office and file an annual report each year in order to stay compliant. Depending on your charity's yearly revenue, you may need to file one of the following:
    • CHAR500: This is the basic form that nonprofits file with the Charities Bureau. If required, it can be accompanied by IRS Form 990, audited financial statements, or reviewed financials, depending on the amount of revenue your organization received in the previous year.
    • For organizations with revenue over $1 million, audited financial statements are required.
• Sales Tax Exemption Renewal: If your nonprofit has a sales tax exemption for purchases, you’ll want to ensure this exemption is renewed and remains up-to-date as per New York requirements.
• State Corporate Franchise Tax Exemption: Once you file Form CT-247 for your state tax exemption, ensure you stay compliant with any reporting requirements the New York Department of Taxation and Finance may impose.

3. Local Compliance (New York City and Other Local Jurisdictions)

• Local Business Permits and Licenses: Depending on where your nonprofit operates and its activities (e.g., events, selling merchandise), you may need local permits or licenses, especially in urban areas like NYC. It’s best to assign someone to Regularly verify and renew any necessary permits you may need.

4. General Ongoing Compliance for Nonprofits

• Maintain Accurate Records: Keep detailed records of board meetings, financial statements, and donor contributions, as these may be requested by the IRS, New York State, or potential funders at any time. And according to federal law, they must be presented to anyone who asks for them. Even the general public.
• Board Meetings and Minutes: New York nonprofits must hold annual board meetings as specified in their bylaws and keep minutes of all meetings. This this helps to maintain transparency and accountability when it comes to compliance as well as with the public.
• Solicitation and Fundraising Compliance: If your nonprofit solicits donations outside of New York, check if you need to register in those states as well. Some states require charities to register before soliciting donations (often referred to as “charitable solicitation registration”). Soliciting donations means contacting individuals, it does not mean someone finding your website and making a donation on their own free will.
• Conflict of Interest Policy: Both New York and the IRS require your nonprofit to adopt a conflict of interest policy as part of forming a not-for-profit. This document should be regularly reviewed and updated whenever necessary and document any potential conflicts that arise among board members and key staff to stay transparent.
• Whistleblower Policy: For nonprofits with more than 20 employees and an annual revenue over $1 million, New York law requires a whistleblower policy to protect employees who report any suspected wrongdoing.

5. Employment and Labor Law Compliance

• Worker’s Compensation and Unemployment Insurance: If your nonprofit has employees, you’ll need to comply with New York's workers' compensation and unemployment insurance requirements unless you have special exceptions, you can find a list here.
• Annual State Payroll Reporting: Similar to federal requirements, New York nonprofits that have employees must file regular payroll tax reports at the state level, including NYS-45 (Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return).

By staying on top of these compliance requirements, you can keep your New York nonprofit in good standing and focus on your mission without risk of penalties or losing your tax-exempt status. Many nonprofits post their financials on their websites to show their transparency and if you decide not to make your financials public, be aware anyone including the general public can request your financials at any time. Failing to comply with their request can result in loosing your tax free status.

Wrapping Up

Starting a nonprofit in any state can seem like a daunting experience, but with a step by step process like ours to help guide you along, everything becomes a bit easier. It just takes some time and perseverance to keep the process going. And at the end of it all, having a legal nonprofit comes with so many benefits when you’re trying to change the world for the better. It allows you to solicit donations in the state of New York, offer your donor tax credits for their contributions, and you get to keep more of your funding in order to push your charity even further to become more effective. All in all, it is well worth the work.

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