How to start a nonprofit in Illinois: 10 simple steps

We’ve been through this process ourselves and helped others do it, too. That means we know where people get stuck, what paperwork trips them up, and how to move forward without getting overwhelmed. We’ll walk you through everything you need, from picking a name and forming your board, to getting tax-exempt status and staying compliant down the road.

And we’ll do it all one clear step at a time.

Need extra support or tools to make things easier? Harness was built to help you grow your nonprofit the smart way, with technology that works, expert advice when you need it, and a team that gets it.

What a nonprofit organization is

Before diving into forms and filings, let’s make sure we’re clear on what a nonprofit actually is. At its core, a nonprofit is an organization built to serve a mission, not to make a profit. That mission could be helping your local community, protecting the environment, supporting education, whatever cause matters most to you.

Nonprofits operate under special rules. For example, any money the organization makes needs to go back into the work, not into anyone’s pocket. That’s one of the main reasons they can qualify for something called tax-exempt status from the IRS. That means they don’t pay federal income tax, and donations made to them can be tax-deductible for donors.

There are different types of nonprofits under federal law, but most people who start one for charitable reasons go after something called 501(c)(3) status. That’s the part of the law that covers charities, schools, religious groups, and similar causes.

Also, in Illinois, there are rules about how these organizations are set up and run. You’ll need to follow both state and federal requirements, and while that may sound like a lot, don’t worry, we’re here to break it down in plain language.

1. Choose a name and define your mission

Let’s start with the fun part, naming your organization. Picking a name is more than just being creative. You’ll want a name that reflects what you’re about and that’s easy for people to remember. It also needs to be unique in Illinois. The Secretary of State won’t allow two nonprofits with the same (or super similar) name, so you’ll need to do a quick search in their database to make sure yours is available.

Once you’ve got your name, it’s time to think about your mission. This is the heart of your nonprofit. Your mission should explain why you exist and who you’re trying to help. Try to keep it short, clear, and focused. If someone asked you what your nonprofit does in one sentence, your mission should be the answer.

A strong mission will guide everything else, your programs, your fundraising, even your tax-exempt application. It’s also what donors and volunteers will connect with. So take your time here. It’s okay if it’s not perfect right away, but make sure it speaks to what you really care about.

2. Appoint a board of directors and registered agent

Every nonprofit in Illinois needs a board of directors. Think of this group as your leadership team, the folks who help you make big decisions, stay on track with your mission, and stay legally compliant. To get started, you’ll need at least three directors. These should be people you trust, who care about your cause, and who bring different skills to the table.

Your board will meet regularly to vote on important things like budgets, goals, and policies. These meetings don’t have to be fancy, but they do need to be documented. Keeping clear records (called minutes) is a big part of staying in good standing with the state and the IRS.

You’ll also need to choose a registered agent. This is a person or company with a physical address in Illinois who can receive legal documents on behalf of your nonprofit. It doesn’t have to be someone on your board, but it should be someone reliable, this isn’t a role to skip over.

The people you choose early on can make a huge difference. You don’t need to have everything figured out right away, but starting with a thoughtful team helps set your nonprofit up for success.

3. Prepare and file your articles of incorporation

Now it’s time to make your nonprofit official. Filing your articles of incorporation is how you legally create your organization in Illinois. It’s a required step, and the state won’t recognize your nonprofit until this form is submitted and approved.

You’ll file these articles with the Illinois Secretary of State. The form is pretty straightforward, but there are a few key details to get right. You’ll need to include your nonprofit’s name, purpose, and the names and addresses of your board members. Be sure to clearly state your charitable purpose, this is important later when you apply for tax-exempt status.

There’s also a spot for a conflict of interest clause, which shows that your board members won’t use the organization for personal gain. Including this helps prove your nonprofit is focused on public good, not private benefit. The IRS looks for that when you apply for 501(c)(3) status.

And don’t forget the filing fee. As of now, it’s $50 in Illinois, but double-check the Secretary of State’s site before you send it in, just in case it’s changed.

Once your articles are filed and accepted, congrats, your nonprofit now officially exists in the eyes of the state!

4. Create your corporate bylaws and governance policies

Bylaws are basically the rulebook for how your nonprofit runs. They lay out how decisions are made, how the board functions, and what happens when there’s a change in leadership. You won’t file these with the state, but you do need them, both to stay organized and to meet IRS requirements when applying for tax-exempt status.

At a minimum, your bylaws should cover:

• How board members are elected and how long they serve
• How and when board meetings happen
• What counts as a “quorum” (the number of board members needed to make a decision)
• Roles and responsibilities of officers like president, treasurer, and secretary
• What happens if there’s a conflict of interest
• Steps for changing the bylaws later on

You should also write up a conflict of interest policy as its own document. This helps show that decisions are being made for the good of the organization, not for personal benefit. It’s another thing the IRS looks for in your 501(c)(3) application.

After your bylaws are drafted, your board should hold an official first meeting. This is where you approve the bylaws, assign officer roles, and record everything in your meeting minutes. It may not feel super exciting, but trust us, it’s a big step forward.

5. Obtain your federal employer identification number (EIN)

Once your nonprofit is officially formed, the next step is getting an Employer Identification Number (EIN) from the IRS. Think of your EIN like a Social Security number, but for your organization. You’ll need it to open a bank account, apply for tax-exempt status, and handle payroll if you ever have employees.

The good news? It’s free and easy to get. You can apply online through the IRS website and get your EIN almost instantly. You’ll just need your articles of incorporation and a few basic details about your organization.

Even if you’re not planning to hire staff right away, you still need an EIN. It’s required for nearly every financial or legal form your nonprofit will fill out moving forward.

If you’ve made it this far, you’re doing great. This step moves you even closer to unlocking the tools that help nonprofits grow and stay compliant.

6. Apply for federal tax exempt status

Now comes one of the most important steps, getting your federal tax exempt status. This is what officially tells the IRS that your nonprofit doesn’t have to pay federal income taxes. It also lets your donors make tax-deductible contributions, which can really help with fundraising.

To apply, you’ll need to fill out Form 1023 or Form 1023-EZ. The EZ version is shorter and less expensive, but not every organization qualifies for it. Smaller nonprofits with less than $50,000 in expected revenue and under $250,000 in assets usually do. Everyone else will need to use the full version.

Either way, you’ll need to share info like:

• Your mission and programs
• Your board structure and bylaws
• Financial projections
• Your conflict of interest policy

It sounds like a lot, and it is, but if you’ve followed the steps up to this point, you’ve already gathered most of what you need. Just take your time, read the instructions carefully, and don’t rush. Once approved, you’ll get a determination letter from the IRS confirming your 501(c)(3) status.

That letter? It’s gold. It opens doors to grants, discounts, and a lot of credibility.

7. Register with the Illinois Attorney General’s office

Even after you’ve formed your nonprofit and received tax-exempt status from the IRS, Illinois has a few more requirements. Most nonprofits in the state need to register as a charitable organization with the Illinois Attorney General’s office. This step makes sure your nonprofit is legally allowed to fundraise in Illinois.

You’ll need to complete a form called the Charitable Organization Registration Statement, and you’ll submit it with:

• A copy of your IRS determination letter
• Your articles of incorporation and bylaws
• A recent financial statement or budget
• A filing fee (usually around $15)

There are a few exceptions, very small organizations might be exempt, but it’s better to assume you need to register unless you’re told otherwise. The state takes fundraising compliance seriously.

Once you're registered, you'll also need to file an annual report to keep your status active. It’s one more item to manage, but it helps keep your organization transparent and accountable.

8. Apply for Illinois state income and sales tax exemptions

Now that you're federally tax-exempt, you can also apply for state tax exemptions in Illinois. These include both state income tax and sales tax exemptions, and while they’re separate from your IRS approval, they’re just as important for keeping your nonprofit’s money focused on its mission.

To apply for state income tax exemption, you’ll submit a request to the Illinois Department of Revenue. This usually involves sending them a copy of your IRS determination letter along with a short letter asking to be recognized as tax-exempt at the state level. It’s pretty straightforward, but double-check the current process on their website.

Next is the sales tax exemption, which lets you avoid paying sales tax on purchases for your nonprofit. You’ll apply for this using Form STAX-1. Once approved, the state gives you a certificate that you can show vendors when making qualifying purchases.

These exemptions might not seem huge at first, but they can really add up, especially when you’re buying supplies, materials, or equipment. Every dollar you save on taxes is a dollar you can put back into your programs.

9. Comply with ongoing reporting and governance requirements

Getting your nonprofit set up is a big deal, but staying in good standing is just as important. That means keeping up with a few ongoing requirements every year, both for the state of Illinois and the IRS.

Start with the annual report you’ll file with the Illinois Secretary of State. This report confirms your organization is still active and lists your current board members and contact information. It’s simple but mandatory, missing it can lead to late fees or even losing your nonprofit status.

At the federal level, you’ll also need to file an IRS Form 990 every year. The version you use depends on your organization’s income. This form shows the IRS (and the public) how your nonprofit is operating financially. It’s a key part of staying transparent and protecting your tax-exempt status.

Don’t forget your charitable registration renewal with the Illinois Attorney General. This goes along with your annual report and includes updates on your fundraising and financials.

Beyond filings, make sure your board continues to meet, follows your bylaws, and documents its decisions. Keeping solid records of meetings and finances isn’t just smart, it’s required.

10. Launch and scale your nonprofit operations

You’ve filed the forms, checked the boxes, and now your nonprofit is official. This is where the real work, and real impact, begins. It’s time to bring your mission to life and start making a difference in your community.

First, take care of the basics. Open a bank account in your nonprofit’s name using your EIN and incorporation documents. Set up a simple system to track donations, expenses, and other financials, this will save you tons of time (and headaches) later.

Next, think about how you’ll share your mission. Whether it’s a website, a social media page, or just getting out in your local community, start telling your story. People want to help causes they believe in, but they need to know you exist first.

You’ll also want to build a plan for fundraising. That might mean applying for grants, hosting events, or setting up monthly giving options. The key is to start simple, stay consistent, and build trust with your supporters.

And as your nonprofit grows, consider using tools that help you stay organized and connected. That’s where platforms like Harness come in, offering easy ways to manage donors, track giving, and grow your impact without burning out your team.

Let’s get started

Starting a nonprofit in Illinois might seem like a lot, and truthfully, it is. But when you break it down step by step, it’s doable. And more than that, it’s meaningful. You’re not just filling out forms or checking boxes. You’re building something that can bring real change to your community.

The road ahead will take patience, good people, and a bit of paperwork, but you’ve got this. And you’re not alone. There are tools, guides, and people who want to see you succeed.

Need a partner to help you grow faster, stay organized, and raise more? Harness offers all-in-one support to help nonprofits like yours focus on what really matters: your mission.