Starting a 501(c)(3) nonprofit in Minnesota is easy, just follow these easy steps:
If you’ve been thinking about starting a 501(c)(3) nonprofit in Minnesota, you have come to the right place. We have developed this comprehensive guide to help you not only start a nonprofit in Minnesota but also make it successful.
Step 1: Name Your Minnesota Nonprofit
The name you select for your nonprofit will establish its brand. It is the first thing most people will learn about your organization. It is important to pick a name that both aligns with your mission and follows the rules for naming in your state.
Minnesota Nonprofit Naming Guidelines
The name of you pick for your organization must:
- Be distinguishable from other businesses operating in the state of Minnesota.
Be written in English letters or characters.
- The name need not include an organizational designation, such as “Inc.”, “Ltd.”, “Incorporated”, or “Company”
You can read the Minnesota Statutes for the official rules on naming a Minnesota-based organization.
To learn more, read our How to Name a Nonprofit in Minnesota guide.
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You may want to buy any URLs you are interested in, to make sure they are available when you are ready to finalize and create your website.
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Step 2: Appoint a Minnesota Registered Agent
A nonprofit corporation in Minnesota is required to have a registered agent with a Minnesota address.
What is a Registered Agent? A registered agent is an individual or business entity responsible for receiving important legal documents on behalf of your business. Think of your registered agent as your business' point of contact with the state.
Incfile provides the first year of registered agent service free with nonprofit formation ($49 + State Fees)
To learn more, read our Minnesota Registered Agent guide.
Step 3: Select Your Board Members and Officers
The directors of a nonprofit are responsible for overseeing the operations of the organization. The directors come together to form a board.
The officers of a nonprofit (such as the president or the secretary) are individuals with responsibilities, and the authority to execute based on their job descriptions.
Together, the officers and the board will come together to make up the organizational structure of your nonprofit.
The organization structure of your 501(c)(3) nonprofit in Minnesota MUST include:
- At least 3 directors not related to each other
- A president
- A secretary
- A treasurer
To learn more, read our guide on How to Select Board Members for Your Minnesota Nonprofit
Step 4: Minnesota Articles of Incorporation
To become a nonprofit corporation in Minnesota you must file Articles of Incorporation with the Minnesota Secretary of State.
Since you will be applying for 501(c)(3) status with the IRS, you cannot use the form listed on their website. The Minnesota Secretary of State offers a template for writing your Articles of Incorporation.
In order to qualify for 501(c)(3) status, the organization’s purpose must explicitly be limited to one or more of the following:
- Testing for public safety
- Fostering national/international amateur sports competition
- Preventing cruelty to animals/children
There are three ways to submit your Articles of Incorporation: online, by mail, or in-person
The filing fee is $70 for mailed forms and $90 for online and in-person filings.
- Checks must be made payable to the "MN Secretary of State"
- Accepted credit cards for online filings include Visa, MasterCard, Discover, American Express
To learn more, read our Minnesota Articles of Incorporation guide.
Step 5: Draft Bylaws and Conflict of Interest Policy
There are two documents that will be central to the running of your nonprofit:
Bylaws: These are the rules that determine how your organization will be governed and run.
Conflict of Interest Policy: These are the rules set to ensure that decisions being made for the nonprofit are based on what is best for the organization, and not being motivated by what is best for individuals.
Step 6: Conduct an Organizational Meeting
An organizational meeting is the first official meeting of your nonprofit! Some of the things that are discussed in a typical organizational meeting:
- Taking attendance to show you have a quorum (minimum number needed)
- Appointing temporary officers, chairmen, secretaries, etc.
- Adoption of the bylaws
- Adoption of conflict of interest policy
Don’t forget to record “minutes” of the meeting and have it signed by all attending directors. Here are some corporate minutes templates to help you get the ball rolling.
Step 7: Get an EIN
An EIN or Employment Identification Number (also called a Federal Tax Identification Number or Federal Employment Identification Number), is used to uniquely identify a business entity. You can think of the EIN as a social security number for your nonprofit.
The EIN is required for your organization whether or not it will have any employees.
To learn more, read our guide on how to get your EIN.
Step 8: Applying for Exemption from State and Federal Taxes (501(c)(3) status)
Applying for Exemption from Federal Taxes:
A nonprofit may be eligible for 501(c)(3) status only if its purpose is limited to one or more of the following:
Charitable, Religious, Scientific, Educational, Literary, Fostering national/international amateur sports competition, Preventing cruelty to animals/children, Testing for public safety
Before a nonprofit can apply for 501(c)(3) status it must:
- Elect at least 3 directors not related to each other
- Register as a nonprofit with the state
- Adopt the bylaws and conflict of interest policy
- Have an EIN number
Once these four conditions have been met your nonprofit can apply for 501(c)(3) tax-exempt status by filing Form-1023 online.
If your application is approved, the IRS will send you a determination letter stating that your organization is exempt from federal taxes under section 501(c)(3).
To learn more, read our guide on How to File Form 1023-EZ.
Applying for Exemption from State Taxes:
Once you have received your 501(c)(3) determination letter from the IRS, your organization will automatically be exempt from Minnesota corporate income taxes.
To file to obtain sales tax exemption fill out Form ST16, Application for Nonprofit Exempt Status – Sales Tax.
This form can be mailed to the address below:
Mail Station 6330
St. Paul, MN 55146-6330
For more information, you can call the Department of Revenue at (651) 296-6181 or visit them at their website.
NOTE: To learn more about Minnesota taxes and nonprofits, read the Nonprofit Organizations Industry Guide.
Once you have formed your Minnesota nonprofit, we recommend you read our guide on How To Protect your Minnesota Nonprofit and Keep It Compliant.
Step 9: Open a Nonprofit Bank Account
After you acquire an EIN and a federal tax exemption for your nonprofit, you can open a 501(c)(3) bank account to begin soliciting donations or paying vendors and employees of the organization.
Opening a bank account for your nonprofit is the first step towards creating a paper trail of all income and expenses to show the IRS that your nonprofit is legitimate, honest, and legal.
There are several rules and exceptions that differentiate a 501(c)(3) bank account from a traditional business account. To find the best bank for your organization's financial needs read our review of the best banks for small business.
Step 10: Get Insurance for your Nonprofit
A nonprofit has assets and can be the subject of legal action or suffer financial damages from accidents, just like a regular business.
We recommend Commercial Insurance to protect your organization from lawsuits and damages.