How to Start a Nonprofit Corporation in Illinois (2024 Guide)


Steve Bennett
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Start a Nonprofit Corporation in Illinois

If you would like to form a corporation in Illinois, you should also consider starting a nonprofit corporation since it plays a crucial role in our society, addressing a wide range of community needs and positively impacting countless lives. Starting a nonprofit corporation in Illinois can be rewarding, but it requires careful planning, dedication, and a thorough understanding of the various legal and financial requirements.

This comprehensive guide will walk you through Starting a Nonprofit Corporation in Illinois, from initial planning to ongoing compliance, so that you can make a meaningful difference in your community.

If you want to know more about nonprofit corporations, you may read the whole article until the end, which the Webinarcare Editorial Team had thorough research. Before starting a nonprofit corporation in Illinois, you must cross-check all the factors and be guided by the steps.

What is a Nonprofit Corporation?

A nonprofit corporation is a legal entity formed under a given state’s specific laws and regulations in the United States. It is created to serve a public or mutual benefit rather than generating profits for its owners or shareholders. Nonprofit corporations typically operate in education, healthcare, social services, arts and culture, and environmental conservation.

In a nonprofit corporation, any surplus income the organization generates is reinvested into its programs and services rather than distributed to shareholders or members. This allows nonprofits to focus on fulfilling their mission and addressing community needs without the pressure to maximize profits.

An example of a nonprofit corporation in Illinois is Greater Chicago Food Depository – Provides food to those in need while striving to end hunger in the community..

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Steps on How to Start a Nonprofit Corporation in Illinois

To start a nonprofit corporation in Illinois, you must follow the below steps that, include research and planning, choosing a corporate name, appointing directors, filing for Articles of Incorporation, creating corporate bylaws, holding the initial board of directors, issuing stock, obtaining required licenses and permits, registering with state tax agencies, Annual reporting and ongoing compliance. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Research and Planning

Before starting your nonprofit corporation in Illinois, you must research and plan. This stage is critical to the success of your nonprofit, as it will help you refine your mission, identify potential supporters, and avoid pitfalls. By conducting thorough research and developing a well-informed plan, you can establish a nonprofit corporation that makes a real difference in the lives of those you serve.

Step 2: Choose a Name for the Nonprofit

Once you have a clear vision for your Illinois nonprofit corporation, it’s time to choose a name. Your organization’s name should be unique, memorable, and reflective of your mission and purpose. Follow these steps to choose and register your nonprofit’s name in Illinois:

Consider the Mission and Purpose when Choosing the Name

Your nonprofit’s name should be closely tied to its mission and purpose, making it clear to potential supporters what your organization is about. Choose a name that is meaningful and easy to remember, as this will help with marketing and fundraising efforts.

Check for Name Availability with the Illinois Secretary of State

Before registering your nonprofit’s name, you must ensure another organization still needs to use it in Illinois. You can do this by checking the Illinois Secretary of State ‘s online database or contacting their office directly.

Register the Name

Depending on your Illinois ‘s requirements, you may need to register your nonprofit’s name with the Secretary of State. This typically involves completing a name reservation of 90 days or registration form and paying an online reservation fee of Not available, and mail reservation fee of $300. Be sure to follow your state’s specific guidelines and procedures for name registration.

To check the availability of your desired corporate name, you can search the Illinois Secretary of State’s business name database and Illinois Business Name Search.

If your nonprofit corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done by three methods, online, by mail, and in person filing., which costs around $50. In addition, the DBA’s validity in Illinois is Indefinite, which you can file in Illinois Secretary of State.

You can check out How to File a DBA in Illinois for clearer understanding.

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Step 3: Hire a Registered Agent

Hiring a Registered Agent is essential in starting a nonprofit corporation. Registered Agent is a person or company responsible for receiving important legal documents, tax notices, and other correspondence for your nonprofit corporation. They ensure that your nonprofit corporation remains compliant with state regulations and requirements. There are Illinois Registered Agent Services to check in forming Illinois Nonprofit Corporation.

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Step 4: Establish Governance and Bylaws

With your nonprofit’s name in place, it’s time to establish your organization’s governance structure and create bylaws. These important documents will outline how your nonprofit will be run, including the roles and responsibilities of board members, the decision-making process, and the procedures for managing finances and record-keeping.

  • Choose the Initial Board of Directors: Your nonprofit’s board of directors will guide your organization’s activities and ensure its long-term success. Choose individuals passionate about your mission, bring diverse skills and expertise to the table, and are willing to commit the time and effort needed to fulfill their responsibilities as board members. In Illinois, you need to have at least Three directors for you to operate a nonprofit corporation.
  • Create Bylaws: Your bylaws are the governing document for your nonprofit, outlining the roles and responsibilities of board members, the decision-making process, and the procedures for managing finances and record-keeping. Be sure to cover board meetings, voting, committees, officer positions, conflicts of interest, and amendment procedures. Your bylaws should be tailored to your organization’s needs and requirements and developed in consultation with an attorney experienced in nonprofit law.
  • Hold the First Board Meeting: Once your bylaws have been drafted, hold your first board meeting to review and approve them. This meeting should also include the election of officers, such as the president, vice president, secretary, and treasurer. Be sure to document the meeting’s discussions and decisions in meeting minutes, as these records will be important for maintaining your nonprofit’s legal compliance.

Step 5: Incorporate the Nonprofit

The next step in starting your Illinois nonprofit corporation is to formally incorporate your organization with the Illinois Secretary of State. Incorporation establishes your nonprofit as a separate legal entity and provides limited liability protection for its board members and officers. To incorporate your nonprofit, follow these steps:

Prepare the Articles of Incorporation

The Articles of Incorporation is the legal document formally establishing your nonprofit corporation. This document should include your organization’s name, purpose, Registered Agent, and principal office address. Be sure to follow your state’s specific requirements for the content and format of the Articles of Incorporation.

File the Articles of Incorporation

Once your Articles of Incorporation is complete, please submit them to the Illinois Secretary of State’s office, along with any required filing fees. The filing process may vary depending on your state, but it typically involves mailing or submitting the documents online. Keep a copy of the filed Articles of Incorporation for your records.

Filing Articles of Incorporation in Illinois may be done with two ways, online and by mail. The Articles of Incorporation fee may vary from different state. However, in Illinois, it costs $150 for filing in-person and by mail.

  • Online Filing: Create an account/Log in to the SOS site, get the online form, fill it, and submit online
  • Offline filing: Send the form by mail to Department of Business Services, Limited Liability Division, 501 S. Second St., Rm. 351, Springfield, IL 62746

Step 6: Apply for State and Federal Tax Exemptions

Your organization may be eligible for state and federal tax exemptions as a nonprofit corporation. Obtaining tax-exempt status can save your nonprofit money and make it more attractive to potential donors. To apply for tax exemptions, follow these steps:

Obtain an Employer Identification Number (EIN)

An EIN in Illinois is a unique number the Internal Revenue Service (IRS) assigns to your organization. You’ll need this number to apply for tax-exempt status and open a bank account for your nonprofit. You can obtain an EIN by completing the online application on the IRS website or submitting Form SS-4 by mail or fax.

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Apply for Federal Tax-Exempt Status (501(c)(3))

To apply for federal tax-exempt status, you’ll need to complete and submit Form 1023 or Form 1023-EZ, depending on the size and complexity of your organization. This application requires detailed information about your nonprofit’s finances, governance, and programs. Be prepared to provide supporting documentation, including your bylaws, Articles of Incorporation, and financial projections. You’ll also need to pay a filing fee, which varies depending on the size of your organization and the form you submit.

Apply for Illinois Tax-Exempt Status

In addition to federal tax-exempt status, your nonprofit may be eligible for state tax exemptions. The process for applying for state tax-exempt status varies by state, so research your specific state’s requirements and procedures. This may involve submitting additional forms, documentation, and fees to the Illinois Department of Revenue.

Step 7: Obtain the Necessary Licenses and Permits

Depending on your nonprofit’s activities and location, you may need to obtain various licenses and permits to operate legally—research local, state, and federal requirements and apply for any necessary licenses and permits. Be sure to maintain compliance by renewing licenses and permits as needed and staying up-to-date on any regulation changes.

Step 8: Develop a Fundraising Plan and Strategy

Fundraising is critical to the success of your Illinois nonprofit corporation, providing the financial resources needed to carry out your mission and programs. Develop a comprehensive fundraising plan that outlines your goals, strategies, and timelines for raising funds. This plan should include various funding sources, such as grants, donations, and special events. Create marketing materials and strategies to promote your nonprofit’s fundraising efforts and engage potential supporters.

Step 9: Open a Bank Account for the Nonprofit

With your legal and financial foundations in place, it’s time to open a bank account for your nonprofit corporation. Choose a bank that offers services tailored to nonprofits and provides the features and support your organization needs. To open an account, you’ll typically need to provide your EIN, Articles of Incorporation, bylaws, and a resolution authorizing the account opening. Establish proper financial controls and procedures to ensure responsible management of the organization’s funds.

You can check out the Illinois Best Banks to know which bank will suit your nonprofit corporation.

Step 10: Establish Record-Keeping Systems

Effective record-keeping and reporting are essential for maintaining your nonprofit’s legal and financial compliance and demonstrating transparency and accountability to your supporters. Set up systems for tracking financial transactions, maintaining records of your organization’s activities, and reporting to the IRS, state, and other relevant agencies. Stay up-to-date on reporting requirements and deadlines to ensure your nonprofit remains in good standing. Hiring a CPA in Illinois for this reporting system is best.

Step 11: Launch and Promote the Nonprofit

With your Illinois nonprofit corporation officially established and your financial and legal foundations in place, it’s time to launch your organization and begin making a difference in your community. Develop a marketing plan to promote your nonprofit’s mission and services, including creating a website, social media presence, and other marketing materials. Network with other nonprofits, community organizations, and stakeholders to build partnerships and collaborations to strengthen your organization’s impact.

Step 12: Ongoing Compliance and Management

Starting a nonprofit corporation is just the beginning – maintaining your organization’s legal and financial compliance is an ongoing responsibility. Stay informed about changes in nonprofit laws and regulations, file required Annual Reports and financial statements, and regularly review and update your bylaws, policies, and procedures as needed. Foster positive relationships with board members, volunteers, and supporters to ensure your nonprofit’s continued success.

Cost of Forming a Nonprofit Corporation in Illinois

In forming a nonprofit corporation in Illinois, the filing and Annual fees must be paid. Without it, your nonprofit corporation won’t operate. In Illinois, the nonprofit costs $150 for filing in-person and by mail, and should file an Annual Report. You should ensure you comply with all the necessary fees and costs so your Illinois nonprofit corporation will run successfully and smoothly.

Is Forming a Nonprofit Corporation in Illinois Worth It?

Forming a nonprofit corporation in Illinois can be worth it if you are dedicated to a specific cause and prepared to meet the challenges and responsibilities of running a nonprofit organization. It is essential to carefully consider your goals and resources and consult with a Business Attorney in Illinois or other professionals experienced in nonprofit formation and management to ensure that you are making the best decision for your situation.

FAQs

What are the legal steps for starting a non-profit corporation in Illinois?
The legal steps for starting a non-profit corporation in Illinois include filing articles of incorporation with the state, obtaining an Employer Identification Number (EIN) from the IRS, and applying for tax-exempt status with the state and federal government.
How long does it take to incorporate a non-profit in Illinois?
It can take anywhere from 1-4 weeks to incorporate a non-profit in Illinois, depending on factors such as the completeness of the application, the complexity of the organization’s activities, and the backlog at the Illinois Secretary of State’s office.
Do non-profit corporations have to pay taxes in Illinois?
While non-profit corporations are exempt from paying federal income tax, they are typically required to pay Illinois state income and sales tax.
How many board members are required for a non-profit corporation in Illinois?
Illinois requires non-profit corporations to have at least three directors on their board.
How do I name my non-profit corporation in Illinois?
Non-profit corporations in Illinois must select a name that is not already taken and that meets the Illinois Secretary of State’s guidelines for corporate naming.
What forms are needed to start a non-profit corporation in Illinois?
To start a non-profit corporation in Illinois, you will need to file articles of incorporation with the Illinois Secretary of State’s office.
What are the fees associated with incorporating a non-profit in Illinois?
The fees associated with incorporating a non-profit in Illinois will depend on factors such as the level of service you require and the filing fee for articles of incorporation with the Secretary of State.
Do non-profits need to register with the Attorney General’s office in Illinois?
Yes, non-profit corporations in Illinois must register with the Attorney General’s office before soliciting funds.
What are the benefits of incorporating a non-profit corporation in Illinois?
Benefits of incorporating a non-profit corporation in Illinois include obtaining tax-exempt status, limited financial liability for directors, and the ability to apply for grants and other types of funding.
Can an individual be a non-profit corporation’s only director?
Yes, but Illinois law requires non-profit corporations to have at least three directors.
What is the Illinois Not-for-Profit Corporation Act?
The Illinois Not-for-Profit Corporation Act is a set of laws that govern the formation, operation, and dissolution of non-profit corporations in Illinois.
Is it necessary to have a lawyer to incorporate a non-profit in Illinois?
While it is not required to have a lawyer to incorporate a non-profit in Illinois, it is recommended to ensure compliance with state and federal laws, especially when it comes to applying for tax-exempt status.
Can a non-profit corporation make a profit in Illinois?
Non-profit corporations can make a profit in Illinois, but any surplus funds generated by the organization must be reinvested in the organization’s activities rather than being distributed to its directors or members.
Can non-profit corporations pay their employees in Illinois?
Yes, non-profit corporations in Illinois can pay their employees salaries, provided that they comply with applicable state and federal wage and hour laws.
Can non-profit corporations engage in political activities in Illinois?
Non-profit corporations in Illinois can engage in limited political activities, but are subject to certain restrictions on their permissible behavior.
How long does it take to obtain tax-exempt status for a non-profit in Illinois?
The process of obtaining tax-exempt status for a non-profit corporation in Illinois can take anywhere from a few months to a year or more, depending on factors such as the completeness of the application and the backlog of the IRS or Illinois Department of Revenue.
Who can serve as a director of a non-profit corporation in Illinois?
Anyone over the age of 18 can serve as a director of a non-profit corporation in Illinois, provided they are legally eligible to do so.
Can a non-profit corporation operate outside of Illinois?
Yes, a non-profit corporation incorporated in Illinois can operate anywhere in the United States, provided it complies with the laws of the state(s) where it is operating.
What are the annual reporting requirements for non-profit corporations in Illinois?
Non-profit corporations in Illinois are required to file an annual report with the Secretary of State’s office, disclosing basic information about the organization’s activities and finances.
How can I dissolve a non-profit corporation in Illinois?
To dissolve a non-profit corporation in Illinois, the organization must formally adopt a plan of dissolution, notify any creditors, and file articles of dissolution with the Secretary of State’s office.
Can non-profit corporations in Illinois own property?
Yes, non-profit corporations in Illinois can own property, either through direct purchase or through gifts or bequests.
Do non-profit corporations in Illinois have to hold annual meetings?
Non-profit corporations in Illinois are required to hold annual meetings of directors and members, where they can discuss the organization’s activities and elect directors.
Can non-profit corporations take out loans in Illinois?
Yes, non-profit corporations in Illinois can take out loans, but they must ensure that any borrowing is in compliance with applicable regulations and that they are able to pay back the loan under the terms of the agreement.
Can non-profit corporations in Illinois issue stock?
No, non-profit corporations in Illinois are not permitted to issue stock or pay dividends to their owners or members.
What happens to a non-profit corporation’s assets if it dissolves in Illinois?
If a non-profit corporation dissolves in Illinois, its remaining assets must be distributed to another non-profit organization or a charity with a similar mission, as specified in the organization’s articles of incorporation or bylaws.
Can I convert my for-profit business to a non-profit corporation in Illinois?
Yes, it is possible to convert a for-profit business to a non-profit corporation in Illinois, but the process can be complex and requires specific legal and tax expertise.
How can I ensure that my non-profit in Illinois remains compliant with state and federal laws?
To ensure that your non-profit corporation in Illinois remains compliant with state and federal laws, it is recommended that you obtain legal and accounting advice, maintain up-to-date policies and procedures, and regularly review your organization’s state and federal filings.
What is the difference between a charity and a non-profit corporation in Illinois?
While they share some similarities, charities are more narrowly defined as organizations that exist solely for the purpose of promoting charitable purposes, such as relieving poverty or advancing education or religion. A non-profit corporation can have a broader organizational purpose, so long as it meets the criteria set forth in the Illinois Not-for-Profit Corporation Act.
What is a non-profit corporation in Illinois?
A non-profit corporation in Illinois is an organization that operates for a charitable purpose.
How do I form a non-profit corporation in Illinois?
To form a non-profit corporation in Illinois, you need to file articles of incorporation with the Illinois Secretary of State.
What is the Illinois Uniform Unincorporated Nonprofit Association Act?
The Illinois Uniform Unincorporated Nonprofit Association Act is a law that governs the formation and operation of non-profit associations in Illinois.
What is the difference between a non-profit corporation and a for-profit corporation in Illinois?
The primary difference between a non-profit corporation and a for-profit corporation in Illinois is their purpose. Non-profit corporations operate for charitable purposes, while for-profit corporations operate to make a profit for their shareholders.
Do I need to file for tax-exempt status for my non-profit corporation in Illinois?
Yes, in order to be recognized as tax-exempt by the IRS, your non-profit corporation in Illinois will need to file for tax-exempt status.
How do I file for tax-exempt status for my non-profit corporation in Illinois?
You can file for tax-exempt status for your non-profit corporation in Illinois by submitting Form 1023 with the IRS.
How long does it take to form a non-profit corporation in Illinois?
It typically takes between 2 and 4 weeks to form a non-profit corporation in Illinois.
Is there a minimum number of directors required for a non-profit corporation in Illinois?
Yes, Illinois requires that a non-profit corporation have at least three directors.
Do I need a lawyer to form a non-profit corporation in Illinois?
While you are not required to have a lawyer, it is recommended that you consult with one to ensure that you follow all necessary legal requirements.
How much does it cost to form a non-profit corporation in Illinois?
The cost to form a non-profit corporation in Illinois is generally between $60 and $200.
What documents are required to form a non-profit corporation in Illinois?
To form a non-profit corporation in Illinois, you will need to file articles of incorporation, a registered agent consent form, and pay the required filing fee.
Can a non-profit corporation be dissolved in Illinois?
Yes, a non-profit corporation can be dissolved in Illinois. The process involves filing dissolution paperwork with the Illinois Secretary of State.
Can I change the name of my non-profit corporation in Illinois?
Yes, you can change the name of your non-profit corporation in Illinois by filing a certificate of amendment with the Illinois Secretary of State.
What is a registered agent?
A registered agent is a person or company that is designated to receive legal documents on behalf of the corporation.
Can I change the registered agent of my non-profit corporation in Illinois?
Yes, you can change the registered agent of your non-profit corporation in Illinois by filing a statement of change of registered agent and/or registered office with the Illinois Secretary of State.
Who appoints the board of directors for a non-profit corporation in Illinois?
The board of directors for a non-profit corporation in Illinois is typically appointed by the organization’s incorporator.
Can I be a board member and an employee of a non-profit corporation in Illinois?
Yes, it is possible to be both a board member and an employee of a non-profit corporation in Illinois, but it is important to avoid conflicts of interest.
How are officers elected for a non-profit corporation in Illinois?
Officers for a non-profit corporation in Illinois are elected by the board of directors.
Do non-profit corporations in Illinois pay taxes?
Non-profit corporations in Illinois may still be required to pay certain taxes, such as property taxes, but they are generally exempt from federal and state income taxes.
Can I receive a salary from my non-profit corporation in Illinois?
Yes, employees and officers of non-profit corporations in Illinois can receive a salary, but it must be reasonable in relation to the work performed.
Can a non-profit corporation in Illinois own property or intellectual property?
Yes, non-profit corporations in Illinois can own and hold property, including intellectual property.
Can a non-profit corporation in Illinois engage in fundraising activities?
Yes, non-profit corporations in Illinois can engage in fundraising activities, as long as they comply with federal and state laws regulating charities and solicitations.
Is a non-profit corporation in Illinois required to hold annual meetings?
Yes, non-profit corporations in Illinois are required to hold an annual meeting of the board of directors and members, if any.
Can I start a non-profit corporation in Illinois if I am located in a different state?
Yes, you can start a non-profit corporation in Illinois, even if you are located in a different state. However, you will likely need to have a registered agent who is located in Illinois.
Can a non-profit corporation in Illinois donate to political candidates or parties?
No, non-profit corporations in Illinois are prohibited from donating to political candidates or parties.
Are names of directors and officers required on the Form 1023 to the IRS?
Yes, the names of the directors and officers of the non-profit corporation are required on the Form 1023 submitted to the IRS.
Is an Illinois non-profit corporation required to have bylaws?
Yes, an Illinois non-profit corporation is required to have bylaws that outline how it is managed, governed and operated.
How often is an Illinois non-profit corporation required to file a tax return?
An Illinois non-profit corporation may need to file various tax returns depending on the size of the income it earns and sources of the income.

Also Read

Why You Should Start Illinois Nonprofit

One of the main reasons why you should consider starting a nonprofit in Illinois is the opportunity it provides to make a real difference in the lives of others. Nonprofits are often created to address a particular societal issue or support a specific community, and by starting your own nonprofit, you have the chance to directly impact the lives of those in need. Whether your organization focuses on providing education, healthcare, food assistance, or any other type of support, the work you do can have a significant and lasting impact on individuals and communities in Illinois.

In addition to the opportunity to make a difference, starting a nonprofit in Illinois can also provide you with a sense of purpose and fulfillment. When you are passionate about a cause and dedicated to making a difference, the work you do through your nonprofit can be incredibly meaningful and rewarding. Knowing that you are working towards a positive goal and actively improving the lives of others can give you a sense of purpose and fulfillment that is hard to find in other types of work.

Furthermore, starting a nonprofit in Illinois can also allow you to connect with like-minded individuals and build a strong network of supporters and volunteers. Nonprofits rely heavily on the support of volunteers, donors, and other community members, and by starting your own organization, you have the opportunity to build relationships with individuals who share your passion and commitment to a particular cause. These connections can not only help you to grow and sustain your nonprofit but can also provide you with a strong support system as you work towards your goals.

Additionally, starting a nonprofit in Illinois can provide you with the opportunity to develop valuable skills and experience that can benefit you both personally and professionally. Running a nonprofit requires a diverse set of skills, including financial management, marketing, strategic planning, and leadership, and by creating and leading your own organization, you can hone these skills and gain valuable experience that can help you in other areas of your life and career.

Overall, starting a nonprofit in Illinois can be a rewarding and impactful endeavor that allows you to make a real difference in the world, find purpose and fulfillment, connect with like-minded individuals, and develop valuable skills and experience. If you have a passion for helping others and want to create positive change in your community, starting a nonprofit may be the right path for you. By taking the plunge and starting your own organization, you can make a real difference in the world and create a brighter future for those in need.

Conclusion

Starting a nonprofit corporation is a rewarding and challenging endeavor that requires careful planning, dedication, and a thorough understanding of the various legal and financial requirements. By following the steps outlined in this comprehensive guide, you’ll be well on your way to creating a nonprofit that makes a meaningful difference in your community. As you embark on this journey, remember to stay focused on your mission and your organization’s impact on the lives of those you serve. Never underestimate the power of a passionate, committed team working together to improve the world.

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