Maybe you have already established a nonprofit corporation, or you are considering creating one to serve a purpose—a Mission—to improve the world in some significant way. There are two initial steps to the creation of a charity. The first step is to identify the Mission and to incorporate under your state’s nonprofit corporation law. Every state has one. It usually involves preparing and filing Articles of Incorporation with the Secretary of State or other appropriate state agency.

One common misconception is that incorporating under state law makes the nonprofit tax exempt under federal tax law.

It does NOT. The second step to obtain that status requires the filing of a lengthy and detailed form with the IRS to request a "favorable determination" that the nonprofit is tax exempt. In some cases, the IRS has a shorter form that the organization can file, but there may be advantages to filing the longer one even if the organization qualifies to file the shorter form, especially if the organization plans to seek funding from government, for-profit corporations, or other charitable organizations.