How to Start a 501(c)(3) Nonprofit Ministry

By Brette Sember, J.D.

How to Start a 501(c)(3) Nonprofit Ministry

By Brette Sember, J.D.

Most churches include charitable works as part of their mission. Your church may decide to expand its charitable work by creating a nonprofit ministry focused solely on that work. Creating a separate ministry can make it easier both to raise funds and to obtain grants. To create a ministry, you'll need to form a corporation and apply for 501(c)(3) IRS tax-exempt status. To qualify, the ministry will need to do only religious, educational, scientific, or other charitable work as its main purpose.

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Beginning Your Ministry

Most ministries are charitable organizations begun by a church, often a soup kitchen, a homeless shelter, or other community program. The church elders or managers and the people operating the ministry should work together to agree to turn the ministry into a separate entity. You'll need to choose a name, agree on your mission statement, and follow the steps to legally form your ministry under state and federal laws.

You also need to decide whether the organization will be independent of the church or not. If the church will control it, the ministry's board of directors should be the same people who are on the church's board. If it will be independent, then the board can be whomever you choose.

Incorporation

The first step to create your 501(c)(3) ministry is to incorporate within your state. To incorporate, your organization needs to create articles of incorporation for the state. The form for the articles of incorporation differs from state to state, but normally it requires:

  • The names of the people incorporating the organization
  • The name and location of the organization
  • The purpose of the organization

You will need to affirm that the ministry has a charitable, tax-exempt purpose and that its assets are held for that purpose. The articles are filed with the state, often with the Secretary of State, and a filing fee is required.

You will also be required to come up with bylaws, a binding set of rules for how you will run the ministry. And you must elect a board of directors. Each state has different requirements for how many board members you'll need, but generally three are required.

Seek 501(c)(3) Status

For your organization to be tax-exempt, your ministry must file IRS Form 1023, Application for Recognition of Exemption. This form requires:

  • A description of your programs
  • Your plans for fundraising
  • Details about your organization
  • Names and addresses of the board of directors

Once the form is approved and you have tax-exempt status, you can avoid certain taxes and you can also accept deductions that are tax deductible for the people who make them.

Register with the State

You may need to register your ministry with the state before you can accept donations. Check with the Secretary of State's or the attorney general's office to find out what registration is required in addition to your incorporation papers.

Obtain an EIN and Open an Account

Before you can file tax forms, you will need to obtain an employer identification number (EIN) from the IRS. Once you have the EIN, you can open a bank account for your ministry and begin to deposit donations.

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