Wondering how to start a nonprofit in Indiana? Our attorneys have helped start hundreds of nonprofits successfully from Fort Wayne to Evansville. We’ve outlined the process step-by-step below. If you’d like our legal team to complete some (or all) of the process for you, request a free consultation. As an Indiana nonprofit, we’re happy to help our fellow Hoosiers. Whether you’re looking to start a 501c3 in Indiana or another type of nonprofit, this guide will give you the information you need to get the ball rolling.
How to Start a Nonprofit in Indiana Step 1: What to Prepare
The first step to knowing how to start a nonprofit in Indiana legally is to prepare. There are 3 key things to think about before you start the legal process:
- Mission: What’s your cause?
- People: Who is going to help you make this happen?
- Funding: How much funding will you need to get it done?
Mission
First thing’s first: what will the mission of your nonprofit be? You don’t need to start with the perfectly phrased, polished mission statement. You’ll need to know who or what you’ll be serving. For example, it could be homeless veterans, children living below the poverty line, an endangered species of bird or a historical landmark. Next, think about how you’d like to help.
For instance, if I’d like to help stray cats in Muncie, I have a few options. I could do a catch-and-release program that provides spaying and neutering. I could provide medical care to sick, abused or hurt cats. Or I could help those cats find permanent homes within the community. Any of these purposes are charitable, but you’ll need to have a basic idea of what your charitable program(s) will be.
People
Every nonprofit, no matter the size, is required to have a board of directors. When you start a nonprofit in Indiana, the IRS requires at least three board members, the majority of whom are not related by blood or marriage. Put simply, this means your entire board can’t be made up of your family members. The founder is allowed to be on the first board of directors (and often is!).
Your first board doesn’t need to be perfect, but they should be people who care about your cause and are able to handle the commitment of being on a board for a few years. You’ll want a few board members to also be officers– like the Treasurer or Secretary. In Indiana, it is legal for one person to hold more than one office. We typically suggest against that, just in case a board member is sick or unable to perform their duties for a period of time.
Funding
Once you know your mission and who will be helping you along the way, it’s time to think about how the nonprofit will be funded. Even if you’re starting small, there are always costs to starting a nonprofit. Some people fund the nonprofit themselves. Others ask board members, family and friends to each pitch in to help fund the startup costs.
We’ll outline how much it costs to start a nonprofit in Indiana below. But these costs are just the initial legal fees. Take into account what you’ll need to effectively run your specific organization. Here are a few potential costs to consider:
- Cost of materials to run your program
- Cost of administrative supplies like printing costs or any software you might need
- Cost of vendor to help you with startup paperwork (if desired)
- Cost of creating a website or other branded materials
- Cost of any sort of fundraising events
- Cost of any services you or your board or volunteers are not able to provide like accounting
- Cost of hiring qualified staff (if applicable)
How much does it cost to start a nonprofit organization in Indiana?
When it comes to starting a nonprofit, Indiana is one of the least expensive, easiest states. Here are the basic costs that will apply to starting a nonprofit in Indiana:
- Incorporating in Indiana: $30 filing fee with the Indiana Secretary of State
- Charitable Solicitation Registration: $0, Not needed in Indiana (unless you plan on fundraising actively in another state)
- EIN Filing Fee: $0
- State Sales Tax Exemption: $0
- Filing with the IRS for tax exempt status: $275-$600 (see below for details)
Total: $305-$630
If you’re looking to have someone complete the process of starting a nonprofit organization in Indiana for you, please let us know! We are happy to help. Our comprehensive packages start at $1600.
How to Start a Nonprofit in Indiana Step 2: Incorporate
Once you’re ready to start the legal process, it’s time to incorporate. Incorporating a nonprofit in Indiana is a straightforward process. Before you file, double check that no other organization in Indiana is already using the name you’ve selected for your nonprofit. Keep in mind, all nonprofit organizations in Indiana need to have a suffix. That suffix should be Inc., Co., or LTD. or the full spelling of one of those terms. You’ll file Articles of Incorporation with the Indiana Secretary of State. The filing fee for the document is $30 and usually, the approval or denial will come through within 1 business day unless you file by mail. We don’t suggest filing by mail, simply because it’s much slower and raises the filing fee to $50.
What information is in the Indiana Articles of Incorporation for nonprofits?
- Name of the nonprofit
- Nonprofit address (many people use a board member’s to start with)
- Purpose of the organization
- Contact information and mailing information for the person who will be the registered agent (that means the person who will receive official mailings on behalf of the organization)
- If you will have members or not (Note: This is different from having board members. Most nonprofits do not have members.)
- Dissolution language (what happens to the nonprofit’s assets if it were to ever dissolve)
Make sure your “statement of purpose” accurately reflects your nonprofit’s charitable mission. It’s key that the language you use in this document is in-line with what the IRS recognizes as charitable. You’ll need to be specific enough that they know your activities are charitable without being so specific that it would limit you from being able to expand your programs when the time comes.
How to Start a Nonprofit in Indiana Step 3: Create your Bylaws and Other Corporate Documents
Let’s walk through a lesser known step in how to start a nonprofit. Some people try to skip this step, but skipping it can cause issues with your nonprofit being able to accept donations and function legally. In this step, you’ll need bylaws, a conflict of interest policy and an EIN.
EIN
An EIN, also known as employer identification number, is a unique number the IRS attaches to your nonprofit once you file for it. Similarly to how a social security number is attached to an individual for their entire lifespan, the EIN follows the nonprofit around for its entire lifecycle. The EIN is required for the nonprofit to open a bank account or hire employees in the future. There is no fee to obtain an EIN. It’s a filing with the IRS rather than a filing with the state of Indiana. The EIN must be on every donation acknowledgment you send when your nonprofit starts receiving donations.
Bylaws
Nonprofit organizations are governed by an official set of rules called bylaws. Bylaws are legally binding, so it’s key to make them easy to understand and follow. Bylaws are essential because they determine how decisions are made, conflicts are resolved, and risks to the nonprofit are avoided. When it comes to legal concerns, it’s your bylaws that have the final word. Your bylaws should include information about 3 key topics: your board, members (if you have them), and money.
Here are a few examples of questions the bylaws should answer:
- How long will board members serve on the board?
- What happens if the nonprofit were to permanently close?
- When does the nonprofit’s fiscal year start and end?
- What rights and responsibilities do members have?
This list isn’t exhaustive at all. This is just to help get you started in thinking about what should be included in your bylaws.
Conflict of Interest Policy
The conflict of interest policy outlines what a conflict of interest is, how to determine if there is a conflict present, and how to handle it. It should be clear enough in defining the proper terms that you can identify potential conflicts with ease. If a potential conflict is identified, the document will walk through the proper procedure to handle it to ensure the organization’s tax exempt status isn’t being put at risk.
OFAC Compliance Policy
If your organization is going to do any work in another country, you’ll also want an OFAC Compliance policy. OFAC stands for Office of Foreign Assets and Control, and it’s the US government’s way of making sure that any US agencies operating internationally are following their guidelines. You can read more about operating a US-Based nonprofit internationally here.
How to Start a Nonprofit in Indiana Step 4: Apply For Tax Exempt Status
The most well-known step in the process of how to start a nonprofit in Indiana is to apply for tax exempt status. Some people call this 501c3 status. All 501c3 organizations are nonprofits, but not all nonprofits are 501c3 organizations. Regardless of the type of nonprofit you want to start, we are able to help with any of the three forms we’ll detail below. Find out which form you should file when starting a nonprofit in Indiana in the flowchart below. All three forms are filed with the IRS.
Form 1023
One of the most important steps in how to start a nonprofit in Indiana is Form 1023. Form 1023 is varied in length, depending on the type of organization you’re starting. Different types of organizations may be required to fill out different sections. But overall, the form will ask extensive questions about your nonprofit, from the basics down to a detailed projected budget. The IRS charges $600 to file the form. Currently, they take 6-10 months to process Form 1023, but you can always check current processing times here.
Form 1023-EZ
If you’re not starting a hospital, school, church, or non-c3 organization, you might be eligible to file form 1023-EZ. Form 1023-EZ is a shorter version of the 1023 that the IRS created for smaller nonprofits just getting started. They do have a revenue limit. If your organization is expecting more than $50,000 in revenue (including donations, program service revenue, etc.) annually within your first three years, you’ll need to file Form 1023.
But for many people, the EZ form is a cheaper, faster way to gain 501c3 status for your nonprofit. Some vendors will try to scare organizations away from filing the 1023-EZ because it is a less expensive option, but if your nonprofit meets the requirements, there is no real reason to not file this form. The filing fee is $275, rather than $600 for the full form 1023. The processing time on Form 1023-EZ is about 1-2 months, which is about 5-7 months shorter than the full 1023 timeline.
Form 1024
If you’re wondering how to start a nonprofit in Indiana that is a 501c4, or other type of tax exempt entity, you will not file form 1023. Instead, you’ll file form 1024. Form 1024 is for you if you’re starting:
- A social welfare organization (501c4)
- A social club (501c7)
- A business league (501c6)
- A cemetery (501c13)
- A lodge or fraternal organization (501c8 or 501c10)
- Any other type of tax exempt organization that is not a 501c3
Keep in mind, the vast majority of nonprofits are 501c3s. The IRS charges $600 to file Form 1024. The IRS is currently taking 7-10 months to approve Form 1024, but you can always check their processing times here.
How to Start a Nonprofit in Indiana Step 5: Additional Filings
The state of Indiana makes the process of starting a nonprofit simpler than in other states. For example, Indiana does not make nonprofits register to fundraise, which is a requirement in almost every other state. Indiana also does not require an initial filing.
If you want your nonprofit to receive exemption from sales tax in Indiana, you will need to complete a short form and submit it. But there is no fee to file the form and processing times are usually less than 1 week.
Depending on the type of organization, you might want additional policies or agreements. For example, if you have volunteers, you’ll likely want a volunteer agreement in place. Or if you work with children, animals or any other vulnerable population, you’ll likely want solid safety policies in place. Churches also have their own considerations to take into account like statements of faith and facility use agreements. No matter the type of nonprofit you want to start, we are here to help. Our legal team is happy to guide you through how to start a nonprofit in Indiana from start to finish. Indiana is our home state and we’re proud to help hundreds of nonprofits statewide.
