When a new nonprofit applies for 501(c)(3) status, there are two ways to apply — and choosing the wrong one is an easy way to lose time.
The short way is Form 1023-EZ. It is a simple online application meant for small, straightforward organizations. To use it, your nonprofit must expect to bring in $50,000 or less a year — for the past three years and the next three years — and hold $250,000 or less in total assets. If you fit inside those lines, the EZ is usually the faster road.
The full Form 1023 is the long way. It asks for much more: a clear story of what your organization does and plans to do, your budget, your bylaws, and your filed Articles of Incorporation. It takes more work to prepare, but for many organizations it is the only option the IRS allows.
Some organizations can never use the short form, no matter how small they are. Houses of worship, schools, and hospitals must file the full application. So must an LLC, a supporting organization, an organization that sponsors donor-advised funds, and a private operating foundation.
Here is the part that matters most: filing the EZ when you do not qualify does not save you anything. The IRS can reject the application, and you lose the fee and the months you waited. And if an approval was based on wrong information, it can be taken away later — after donors have already relied on it.
So do not choose by which application looks easier. Choose by which one your organization actually qualifies for. Look at your expected income, what you own, and what kind of work you will do. Get that one decision right at the start, and the rest of your paperwork moves much more smoothly.
— 501c3 Expert
We handle all your 501(c)(3) paperwork — nonprofits set up from start to finish, and Form 990s prepared every year.
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