How To Form a 501(c)(3) Nonprofit In Iowa

How to Use this Guide

Use the guide below to form a 501(c)(3) nonprofit in Iowa. Keep in mind that the process requires forming a nonprofit corporation and getting tax-exempt status with the IRS.

Since the overall process is extremely complex, we highly recommend consulting with an attorney or using a service like Harbor Compliance for personalized top-to-bottom nonprofit formation and obtaining IRS 501(c)(3) status.

Step 1) Secure Your Nonprofit Name

Choose a Business NameSecuring your nonprofit’s name is a critical first step and there’s basically three things you need to know, for everything else please refer to the Iowa Nonprofit Act section 504.401 concerning corporate names.

  1. The name must be unique so be sure to conduct Business Entity Searches through the state.
  2. The name must be aligned with your purpose or mission statement.
  3. No formal corporate suffixes or their abbreviations are required in Iowa.

And finally, If needed, once you know your name is acceptable you can file an Application for Reservation of Name form for only $10 and keep it protected until it’s filed for the public record.

Quick Note: Before you commit 100% to a name, you may also want to check that there’s a decent URL available for your business. Use WEEBLY to search your options. If there’s a quality domain name for purchase, we advise buying it right away. Even if launching a business website isn’t on your radar right now, it’s going to be soon, and you might as well nail down a domain name that’ll make it easy for customers to find you!

Step 2) Designate A Registered Agent

Choose a Registered Agent

Forming a nonprofit corporation requires a qualified Iowa Registered Agent to receive and help you officially process important documents, for example state-level paperwork or legal notices. Do keep in mind this agent must be an Iowa resident/citizen or authorized Iowa business entity with a physical street address that’s always available during regular M-F business hours.

In terms of pricing you can either hire on outside professional yourself and expect to pay up to $160/yr, or get a qualified registered agent for free when you incorporate your nonprofit through Harbor Compliance (see details).

Step 3) Select Incorporators & Directors

Choose the Initial DirectorsFirst of all Iowa only requires a single incorporator and initial director. The incorporator (there can be more than one) is going to be named as such, and while they won’t need to deliver any Articles to the state physically they will be a part of the founding of your nonprofit. Your initial director will help oversee things until official directors are voted on in Step 7.

Bookmark the Iowa Principles & Practices for Nonprofit Excellence PDF because it has some of the finer details and links to more resources, but to be frank, working with an attorney or incorporation provider really comes in handy during this foundational step because there are definitely corporate formalities to learn.

Step 4) Draft Nonprofit Bylaws

Register an LLC

Your bylaws define your nonprofit – structure, management, and governance. Common nonprofit bylaws include:

  • Detailed info on principle and registered agent offices.
  • Management, procedures, and responsibilities of the board.
  • Details on each office – Pres., Secretary, Treasurer, etc.
  • How to go about Adding/Amending bylaws,
  • How to handle other corporate/nonprofit formalities required in Iowa.

To get started, check out a savvy Corporate Bylaws Template with an example that you can customize yourself and get an idea for what they look and sound like. These will be voted on and adopted or amended in your initial meeting in Step 7.

Step 5) File Articles Of Incorporation

Business LicensesIowa doesn’t currently offer an Articles of Incorporation form or template you can fill out, print and submit by mail. Instead it’s much more efficient to file through their Business Entity Filings process online. Also, be sure to read through Section 504.502 in the statutes to get all the very specific information on what’s entailed and required.

Once you file you’ll receive a Certificate of Acknowledgment from the state which should promptly be added to your records book which we’re going to discuss briefly in the next step.

Filing Fee: $20

Step 6) Start A Corporate Records Book

File Annual Reports & Publication RequirementsThis is a long-standing formality of being a for-profit or nonprofit corporation that goes along with digitally keeping track of your important paperwork/data. It’s an organized physical book, or binder, that contains hard copies of the most critical paperwork –  state filing documents, licenses & permits, meeting minutes, tax returns, important contracts, etc.

You can find them at nearby office supply stores or on Amazon, but we’re huge fans of Corporate Kits which include gorgeous records books/binders, blank certificated, and you can brand them for as little as $99.

Step 7) Conduct Initial Meeting

Hold a Meeting with Your Board of Directors

Okay, this is your first official meeting and the kickoff of your newly formed nonprofit. That said, let’s take a look at three critical governance mistakes nonprofit boards make to give you some perspective here.

  • Failing to understand their fiduciary (trustee) duties.
  • Failing to provide effective oversight to the nonprofit.
  • Directors deferring to many responsibilities to executive committee, board chair or the founders.

You can learn more in this Nonprofit Law Article and section 504.841 has info you should know as well. Keep in mind you’ll need to record everything that happens and have it signed. Here’s a Minutes Template you can customize and use to get the ball rolling.

Step 8) Get An EIN

Get an EIN for Your LLC

An EIN, or FEIN, is a Federal Employer Identification Number and your nonprofit entity is required to have one whether it has paid employees in the beginning or not. In other words, it’s like a social security number for your organization except it’s there to track financial activity to help maintain exempt status. You also need one to open up an official bank account in Step 10.

Almost every transaction your nonprofit engages in will require an EIN. That said, you can get one quickly and free of charge by applying online through the IRS Website.

Step 9) Handle Licensing & Exemptions

Small Business Taxes

After all the big steps above your nonprofit should be ready to obtain the proper licensing/permits as well as tax-exempt status to become 100% compliant on the local, state, and federal levels.

  1. File a Form 1023 federal tax exemption application with the IRS.
  2. Or Form 1023-EZ – streamlined form but must be under $50k annual gross receipts and $250k in assets.
  3. Bookmark the IA Dept. of Revenue and Economic Dev Center to get more information.
  4. If you need help, check out Business License Research packages that take care of some legwork.

Two other resources it would be a good idea to add to your nonprofit bookmarks would be the Des Moines district office of the Small Business Administration and IA Source Link’s page because there’s plenty of financial resources and ways to connect with the small business community.

Step 10) Setup A Business Bank Account

Best Business Bank Account

If the business-side of banking is unfamiliar to you and you don’t yet have a Chief Financial Officer (CFO), bookmark this brief breakdown of Nonprofit Accounts compiled in mid-2016 by Investopedia. You need financial utility, services and solutions that are engineered for nonprofits vs. conventional companies.

Look at their checking options, and while you may have minimal activity to begin with, don’t forget to project forward. Look at interest rates and overall fee structures. Take some time to research before choosing any local, state, or national bank or credit union because this is a critical step. Sure, you can change institutions at any time, but this is a foundational choice at conception.

Need Help?

How To Form a 501(c)(3) NonprofitIf you’d like help forming a 501(c)(3) Nonprofit In Iowa, we highly recommend looking into Harbor Compliance for personalized top-to-bottom nonprofit formation and obtaining IRS 501(c)(3) status.

They handle everything on your behalf and be on-call for questions you have. If you’d like more info, visit their website or read our review.