Most of what a small nonprofit gets wrong never surfaces until it costs money.

They are two separate things and most people only have one of them.

• A nonprofit corporation is a state entity. You file articles of incorporation with your Secretary of State. That makes you a nonprofit corporation under state law — and nothing more.
• An EIN is just a federal ID number. Free, instant, and it grants you nothing. Having one does not mean you are tax-exempt.
• 501(c)(3) is federal tax-exempt status. It only exists after you apply to the IRS and receive a determination letter.

You can be a nonprofit corporation with an EIN and have no tax exemption at all. Donations to you are not deductible, and nearly every foundation will decline you, because the determination letter is what they ask for.

If you are not sure which you have, look for the determination letter. No letter, no 501(c)(3).

Because an LLC owned by a person cannot be a 501(c)(3). This is the clearest rule in this whole area and almost nobody knows it.

Under IRS Notice 2021-56, the IRS will recognize an LLC as tax-exempt only if both its articles of organization and its operating agreement require that every member of the LLC is itself a 501(c)(3) organization or a governmental unit.

An individual is neither. So if you own your LLC, there is no version of the paperwork that gets it exempt status. The structure exists for nonprofits creating subsidiary LLCs — not for a founder who set up an LLC and later decided to do charitable work.

Your options are to form a nonprofit corporation and apply properly, or to work under a fiscal sponsor. Anyone selling you "grants for your LLC" is selling you something that does not exist.

The IRS user fee is $600 for Form 1023 and $275 for Form 1023-EZ, paid through Pay.gov when you file. Nonrefundable once review begins.

The EZ form is limited to small organizations: projected gross receipts of $50,000 or less for each of the next three years, total assets under $250,000, and you must pass the eligibility worksheet in the instructions. A single disqualifying answer sends you to the full form.

Processing is uneven. The EZ is largely automated and often comes back in weeks. The full 1023 is reviewed by a person and commonly takes several months.

The deadline nobody mentions: file within 27 months of the end of the month you were formed and your exemption is retroactive to your formation date. Miss that window and exemption generally starts only when you filed — which can leave a gap where donations you already accepted were never deductible.

Sometimes — through a fiscal sponsor, which is a legitimate and widely used arrangement, not a loophole.

A fiscal sponsor is an existing 501(c)(3) that accepts grants and donations on behalf of your project. The money is legally theirs, they are accountable for how it is spent, and they typically keep an administrative fee, often somewhere between 5 and 15 percent. In exchange, donors get their deduction and you can approach funders that require exempt status.

What to check before signing: who controls the funds, what the fee actually is, what happens to unspent money if you leave, and whether they have done this before. A sponsor is taking on real liability for your work — if they seem casual about it, that is a warning, not a convenience.

Plenty of organizations run this way for years. It is a reasonable place to start, not a failure to launch.

Small and new organizations get targeted hard, and the pitches show up inside nonprofit groups where they look like peers. The reliable tells:

• Any fee to receive money. Processing fee, release fee, transfer fee, legal fee. Real grantmakers do not charge you to hand you a grant.
• "Mandates," "provider programs," "project financing," blockchain or offshore transfers. This is advance-fee fraud with new vocabulary.
• Guaranteed funding, or approval before an application. No legitimate funder guarantees an award.
• Paid grant lists. Grants.gov is free. Foundation 990-PF filings are free and public. Before paying anyone for a list, ask what is on it that you could not find free — a fair question that scammers cannot answer.
• Contact only by direct message, from a personal account, with urgency.

One check that costs nothing: a real foundation files a Form 990-PF, and you can look it up. If nothing exists in the public record, neither does the money.

More than one person, and not the same person who keeps the books.

The usual arrangement is two authorized signers — commonly the treasurer and one other officer — with the board approving who they are by resolution and the minutes recording it. Your bank will ask for that resolution, so pass it at the meeting where you open the account.

The control that matters more than signatures: whoever reconciles the statement should not be the person who can move money. If one person records transactions, reconciles the account, and signs the checks, there is no control at all, however trustworthy they are.

This is not paranoia about your people. In the 2026 ACFE study, the median fraud loss at organizations under 100 employees was $126,000, and 43 percent of cases were caught by a tip rather than by any system — because most small organizations have no system.

Real programs exist, and most of them gate on one thing: verified 501(c)(3) status. That is the catch that sends people in circles — the tools everyone recommends are free only once you have the determination letter.

• Google Ad Grants — advertising credit for eligible charities, subject to their eligibility rules and ongoing account requirements.
• TechSoup — discounted and donated software from many vendors; it acts as the eligibility gatekeeper for several of the programs below.
• Microsoft, Google Workspace, Canva, Salesforce, AWS, GitHub, Twilio — all run nonprofit programs with their own qualification rules.

Before you spend a week applying: confirm your exempt status is current and your IRS record is accurate. Verification usually runs against IRS data, so if your record is stale or your status was revoked for missed filings, you will be declined and never told why.

The lookup at the top of this page shows what the IRS currently has on file for you.

Possibly, and you would not know yet. The 1023-EZ is a self-attestation form — you check boxes swearing your articles of incorporation contain the required language, and the IRS approves without ever reading them.

Two clauses have to be in your filed articles: a purpose clause limiting you to 501(c)(3) purposes, and a dissolution clause dedicating your assets to another exempt organization if you close. If either is missing, you are approved anyway — and it stays invisible until a grantmaker or an auditor asks to see the articles.

Pull your filed articles from your state and read them. It takes ten minutes and it is the cheapest problem you will ever fix.

Usually nobody does. No agency audits bylaws — not the IRS, not the state.

It surfaces when a decision gets contested. A director is removed, a director is fired, an election is disputed — and the first thing the other side asks for is the bylaws and the minutes. If the vote lacked a quorum, or notice was not given the way your bylaws require, the decision itself can be void, your organization may be unable to defend the procedure against a third party, and the fight is probably not covered by insurance. Directors who disregarded the rules can face personal liability.

The practical tripwires: a grantmaker doing due diligence asks for bylaws and minutes; a bank or title company wants a board resolution; a D&O carrier declines a claim because the action was not properly authorized; or someone complains to the state Attorney General, who can investigate fiduciary breaches, impose governance procedures, or in bad cases petition to dissolve.

Worth knowing: if you file the 990-N postcard, it asks nothing about governance. Neither does the 990-EZ. Those questions begin on the full Form 990.

Check whether you need one. In many states the required officers are a president and a secretary — treasurer is optional, and a properly designated committee may perform an officer's functions. Texas is explicit about this in Business Organizations Code 22.231. Check your own state's nonprofit corporation act and your bylaws.

If that holds where you are, a three-person finance committee splits the work, removes the "I would be personally responsible" objection, and gives you separation of duties for free. Whoever keeps the books should not also be the one reviewing them.

The real blocker is usually liability, not interest. Charitable immunity statutes generally cover injury and property damage — not financial mismanagement or employment claims. Get directors and officers coverage and say so in the ask. It is a few hundred dollars a year at a small org and it removes the biggest objection.

And define the job in hours. "Two hours a month, one-year term as finance committee chair" gets a yes. "Treasurer wanted" does not.

No. If you are a public charity, the names and addresses of your individual donors are redacted from the version of your Form 990 that anyone can see. Schedule B contributor identities are not public information.

The exception runs the other way: private foundations filing Form 990-PF must disclose in full — every grant they made, the recipient, the amount, the stated purpose, and their trustees. Nothing is redacted.

That asymmetry is why foundation research works and donor-list research does not. Anyone claiming they can sell you a list of another charity's individual donors is describing something that does not exist.

It follows your gross receipts, and the IRS already has an answer on record for you — the lookup above shows it.

• Form 990-N — gross receipts normally $50,000 or less. Eight data points, filed electronically. Not a tax return.
• Form 990-EZ — the short form, for organizations above the 990-N threshold but below the full-990 line.
• Form 990 — the full return, including the governance section.
• Form 990-PF — private foundations, regardless of size.

The one that ends organizations: miss three consecutive years of any of these and exemption is revoked automatically. Between 2010 and 2017 the IRS revoked more than 760,000 organizations that way. Reinstatement costs money and time.