To start a nonprofit in Minnesota and secure 501(c)(3) status, you file Articles of Incorporation with the Minnesota Secretary of State, get a federal Employer Identification Number, apply to the IRS for tax-exempt status, and register with the Minnesota Attorney General before soliciting donations. The Secretary of State charges $70 by mail or $90 online for the incorporation filing, and the IRS charges $275 or $600 depending on which exemption application you qualify for. The steps have to happen in a specific order, and the biggest cost trap is drafting articles that satisfy state law but not the IRS.
Pick a Name and Line Up Your Directors
Your nonprofit’s name has to be distinguishable from every other business entity already on file with the Secretary of State, including for-profit corporations, LLCs, and limited partnerships. Distinguishable doesn’t mean unrelated; it means a reviewer looking at the state’s records wouldn’t confuse the two. Search the Secretary of State’s business database before you commit. Unlike for-profit corporations, Minnesota nonprofits are not required to include “corporation,” “incorporated,” or any equivalent abbreviation in the name.1Minnesota Office of the Revisor of Statutes. Minnesota Statutes 317A.115 – Corporate Name
Minnesota law requires at least three directors on a nonprofit board.2Minnesota Office of the Revisor of Statutes. Minnesota Statutes 317A.111 – Articles of Incorporation Each director’s name and address goes on the public record. You also need a registered agent with a physical Minnesota address; a P.O. box alone won’t work.3Minnesota Secretary of State. Minnesota Business Corporation Forms The registered agent can be one of your directors, another Minnesota resident, or a Minnesota business entity.
Draft Articles That Satisfy Both Minnesota and the IRS
This is where new organizers most often stumble. Minnesota law requires only three things in the Articles of Incorporation: the corporation’s name, the registered office address (with the agent’s name if you name one), and the name and address of each incorporator.2Minnesota Office of the Revisor of Statutes. Minnesota Statutes 317A.111 – Articles of Incorporation If you leave the purpose blank, state law defaults to any lawful activity.
The IRS wants more. To pass its organizational test, your articles must limit the corporation’s purposes to one or more exempt purposes described in Section 501(c)(3), and they must include a dissolution clause permanently dedicating the organization’s assets to another exempt purpose if you ever wind up.4Internal Revenue Service. Organizational Test – IRC 501(c)(3) The IRS suggests dissolution language along these lines: “Upon dissolution, assets shall be distributed for one or more exempt purposes within the meaning of IRC Section 501(c)(3), or to the federal government or a state or local government for a public purpose.”5Internal Revenue Service. Does the Organizing Document Contain the Dissolution Provision Required Under Section 501(c)(3)
File articles that clear the state bar but skip the IRS language, and you’ll have to amend them later before the IRS will process your exemption. That amendment costs another $35 to $55 in state fees on top of the delay. Put both clauses in from the start.
File with the Secretary of State
Submit the articles online through the state’s business portal or by mail. The fee is $70 by mail and $90 online or in person.6Minnesota Secretary of State. Business Filing and Certification Fee Schedule Online filings are typically processed within a few business days; mailed applications take longer. Once approved, you receive a Certificate of Incorporation, which is your proof the nonprofit exists as a Minnesota corporation. From that point the organization can open a bank account, sign contracts, and hold property in its own name. The Secretary of State posts a downloadable articles form on its website.7Office of the Minnesota Secretary of State. Minnesota Nonprofit Corporation – Articles of Incorporation
Adopt Bylaws and a Conflict of Interest Policy
Minnesota law says a nonprofit “may, but need not, have bylaws.”8Minnesota Office of the Revisor of Statutes. Minnesota Statutes 317A.181 – Bylaws In practice, skip them and you’ll regret it. The IRS asks about your bylaws during the exemption application, funders expect to see them, and the board needs written rules for how the organization runs. The incorporators or the first board can adopt the initial bylaws by majority vote.
Bylaws typically cover:
- Board structure: number of directors, qualifications, terms, how vacancies are filled
- Officers: titles, duties, and how officers are elected or appointed
- Meetings: frequency, notice, quorum, and whether remote participation is allowed
- Committees: authority to create them and the powers they hold
- Amendments: how the bylaws themselves can be changed
The IRS strongly encourages a conflict of interest policy, though it doesn’t require one.9Internal Revenue Service. Instructions for Form 1023 A sample policy in the Form 1023 instructions covers disclosure duties, procedures for evaluating conflicts, and how to document board decisions. Keep it as a standalone document rather than folding it into your bylaws so the board can update it without a formal bylaws amendment.
Get an Employer Identification Number
Before you apply for tax-exempt status, get an EIN from the IRS by submitting Form SS-4. Apply online at irs.gov and you receive the number immediately; fax and mail are slower.10Internal Revenue Service. About Form SS-4, Application for Employer Identification Number (EIN) There’s no fee. You need the EIN for your bank account, your exemption application, and your state registrations, so do it early.
Apply for 501(c)(3) Status
Federal tax-exempt status is what lets donors deduct their contributions and exempts the organization from federal income tax. The IRS offers two application forms. Form 1023-EZ is a streamlined version available to organizations that project annual gross receipts of $50,000 or less and hold total assets under $250,000.11Internal Revenue Service. Instructions for Form 1023-EZ (Rev. January 2025) You complete an eligibility worksheet first; a single “yes” answer disqualifies you and pushes you to the full Form 1023. That longer form requires three-year financial projections, narrative descriptions of your planned activities, and information on officer and director compensation.
Both forms are submitted electronically through Pay.gov.12Internal Revenue Service. Applying for Tax Exempt Status The user fee is $275 for Form 1023-EZ and $600 for Form 1023, and the fee is non-refundable whether or not the IRS approves the application.13Internal Revenue Service. Form 1023 and 1023-EZ: Amount of User Fee Once approved, you receive a Determination Letter. That’s the document foundations and state agencies will ask to see.
File within 27 months of your incorporation date and your exempt status is retroactive to formation. Miss that window and the exemption only takes effect on the filing date.11Internal Revenue Service. Instructions for Form 1023-EZ (Rev. January 2025) The gap matters: donations received before the effective date aren’t deductible for the donors, and the organization may owe income tax on revenue earned in that window.
Register with the Attorney General Before You Fundraise
If your nonprofit plans to raise money from the public, you must register with the Minnesota Attorney General’s Office before soliciting any contributions.14Office of Minnesota Attorney General Keith Ellison. Registration and Reporting – Charities and Charitable Trusts File an Initial Registration Form along with copies of your Articles of Incorporation and your IRS Determination Letter, then file annual reports afterward to keep the authorization active. This registration is separate from your Secretary of State filing and your IRS status. Organizations that skip it and fundraise anyway expose themselves to enforcement action.
Apply Separately for Minnesota Sales Tax Exemption
Federal exemption does not carry over to Minnesota sales tax. Apply through the Department of Revenue by filing Form ST16, Application for Nonprofit Exempt Status – Sales Tax, and include your 501(c)(3) documentation.15Minnesota Department of Revenue. Qualifying for Nonprofit Exempt Status Nonprofits routinely forget this step and pay sales tax for months before catching it.
Once approved, you don’t wave a certificate at the register. You give each vendor a completed Form ST3, Certificate of Exemption, which the vendor keeps on file.16Minnesota Department of Revenue. Special Exemptions and Nonprofits The exemption only covers purchases made for the organization’s exempt purposes; using it for anything else carries a $100 penalty per transaction.
Stay in Compliance After You Launch
Every Minnesota nonprofit files a free annual renewal with the Secretary of State by December 31.17Minnesota Secretary of State. Minnesota Nonprofit Corporation – Annual Renewal Miss the deadline and the Secretary of State administratively dissolves the corporation without further notice. Reinstatement is possible, but it creates a gap in your corporate existence that complicates contracts, grants, and banking.
The IRS also requires an annual information return. Organizations with gross receipts of $50,000 or less file the Form 990-N e-Postcard; mid-sized organizations file Form 990-EZ; those with gross receipts of $200,000 or more, or total assets of $500,000 or more, file the full Form 990. Returns are due on the 15th day of the 5th month after your fiscal year ends, which is May 15 for calendar-year filers.18Internal Revenue Service. Exempt Organization Filing Requirements: Form 990 Due Date Skip three consecutive years and the IRS automatically revokes your tax-exempt status.19Internal Revenue Service. Automatic Revocation of Exemption Once revoked, revenue becomes taxable, donations stop being deductible, and you have to reapply from scratch. Organizations registered with the Attorney General also file annual reports with that office.14Office of Minnesota Attorney General Keith Ellison. Registration and Reporting – Charities and Charitable Trusts A compliance calendar tracking all three deadlines is the most useful single thing a new board can build.