How to Start a Nonprofit in Arizona

Introduction

Starting a nonprofit is a challenging process, but it can be done by following the steps below.

Step 1 – Form a Nonprofit Corporation

When you form a nonprofit corporation, you have the option of using one of two types:

• A 501(c)(3) nonprofit corporation is recognized by the IRS as a tax-exempt organization. This means that the organization can receive donations from individuals, businesses, and other organizations. These donations are tax-deductible for those who make them.
• A 501(c)(4) nonprofit corporation is not recognized by the IRS as a tax-exempt organization. This is because it doesn’t meet certain requirements set out by law. However, these types of nonprofits can receive donations that aren’t tax deductible but are still valuable to their operations.

Step 2 – Appoint Directors

A board of directors is the governing body of an organization. They are responsible for overseeing the organization’s mission, vision, and strategic plan. The board can consist of any number of people who have been selected by their peers or elected to serve by the membership. These individuals must be committed to serving in this role on a regular basis (typically at least four times per year).

A diverse group of people from different backgrounds and experiences should make up your nonprofit’s board. It may be helpful to think about who would benefit from this experience and get involved with your mission-driven cause if they knew more about what it takes to run a nonprofit organization effectively.

Step 3 – Adopt Bylaws

The third step to starting a nonprofit in Arizona is to adopt bylaws. Bylaws are the rules that govern the organization and can be adopted by the Board of Directors. The board has the final say over whether or not to adopt them, so it’s important for you as an aspiring nonprofit founder to make sure they’re legally compliant.

Step 4 – Hold an Organizational Meeting

This is the final step in starting a nonprofit, and it’s a big one. According to the IRS, “a board of directors is a group of individuals elected by members to oversee the activities and finances of an organization.” In this sense, it’s important to remember that a board does not have to be made up entirely of people who are involved with your nonprofit. It can consist mostly or entirely of volunteers who have no vested interest in overseeing financial decisions.

The first step in organizing your board is determining who will make up its membership—that means identifying who will serve on it for now and for how long. It may sound counterintuitive at first blush, but we recommend taking time here: get everyone together (either in person or via conference call), talk about what each person wants from their role as director and why they want that role—and then see where it goes from there!

Step 5 – Obtain Tax-Exempt Status From the IRS

Next, you must obtain tax-exempt status from the IRS. The applicable tax-exempt status for most nonprofits is 501(c)(3). To qualify for this designation, your nonprofit must be organized and operated exclusively for exempt purposes (a list of which can be found here) that are charitable, religious, educational, or scientific in nature.

The process of obtaining tax-exempt status can be a daunting one. It involves completing Form 1023 and submitting it to the IRS in person. Form 1023 is a lengthy and complex document. It asks questions about everything from financial statements to the organization’s intended activities. In addition to completing Form 1023 yourself, you will also need to provide supplemental documentation. These include articles of incorporation or bylaws; minutes from board meetings; budgets; records of any grants made by your organization; any employment contracts signed by staff members; and more!

Step 6 – Apply for State Tax Exemption With the Arizona Department of Revenue (ADOR)

After you have filed the Form 1023 with the IRS, you will receive a determination letter from them. If they determine that your nonprofit meets all of the legal requirements to be classified as tax-exempt, they will issue an EO Letter and send it to you.

The Arizona Department of Revenue (ADOR) requires nonprofits to file a Form ST-100 Application for State Tax Exemption form. This is done in order for it to consider whether or not your organization should be considered tax-exempt under state law.

Optional – File Articles of Amendment

If you need to amend your articles of incorporation, you can file articles of amendment with the Arizona Corporation Commission. The commission will need a copy of the articles of incorporation and the new articles they are amending. You can file these documents online at azcc.gov.

Conclusion

Once you have completed this process, you are ready to run your nonprofit organization. We hope the information in this article has been helpful and informative! Please feel free to contact us if there are any questions or concerns about starting a non-profit in Arizona.