Montana Nonprofit Association

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Starting a 501(c)(3) in Montana

This webpage is not a definitive list of rules and requirements; it is intended to provide you with an overview of how to start a 501(c)(3) organization in Montana.

Introduction
A nonprofit is a business incorporated to operate in Montana and required to comply appropriate laws. Running any business takes time, money, effort, and strong organizational skills to be successful. In the case of a nonprofit organization, the founder or founders will not own the nonprofit, it becomes a public corporation stewarded by a board of directors. Neither will they own the tools (computers, etc) purchased by the nonprofit, nor the ideas or products generated while working for the nonprofit. To best familiarize yourself with the requirements of starting or managing a nonprofit organization, visit StayExempt.org, a website created and maintained by the IRS.

You should also visit the Principles and Practices for Nonprofit Excellence in Montana section of our website to learn about managing a nonprofit organization in Montana.

Consider the Following Questions:

Have you asked others to evaluate the idea for your proposed organization?
Is there a demonstrated need for this service/project that is not being fulfilled elsewhere?
Is there anyone else that is doing this locally? ...in Montana? …the region? …nationally?
Have you carefully considered a collaboration or partnership with an existing organization rather than starting a new one?
Can you articulate your mission in two to three sentences?
Do you want to be a membership organization or non-member organization?
What interests or constituencies should be on the Board of Directors?
Have you developed a two-year draft budget for the organization?
Will you rely on contributed funds or earned income (program/service fees, etc.)? Both?
Do you have a plan for financial sustainability?
Do you and your supporters have the needed skills to start and maintain the new organization?

Funding for Nonprofits:
Here are some things to keep in mind regarding funding for nonprofits:

Sustainable funding is difficult to find - it will take great effort and time to raise funds for your organization every year.
Some foundations will only fund organizations that already have a track-record spanning several years.
Grants can be restricted to a narrowly defined purpose and often may not be used to administrative expenses such as rent, utilities, or office supplies.
IRS Form 990 asks you to report the time and money your organization spent doing fund-raising.

Steps to Incorporating your Nonprofit Organization:
This list is NOT comprehensive – but it does provide a general overview of the requirements to become a 501(c)(3) charitable organization in Montana.

Choose a name for the organization. Check availability for your proposed name by visiting the US Department of Patents and Trademarks website as well as the Montana Secretary of State’s Office (MT-SOS). If you want to reserve a particular name for near-future use, you can file an application for Reservation of Business Name through the MT-SOS.
File Articles of Incorporation/ and a copy of your organization's bylaws with MT-SOS
File IRS form SS-4, Application for Employer Identification Number.
Prepare IRS form 1023, Application for Recognition of Exemption under Section 501(c)(3)--this is not a quick process, and you may need assistance. Expect the approval to take at least several months, probably more.
Review Form 1023 and attachments with an attorney or CPA well versed in the nonprofit realm.
Send Form 1023 to IRS and enclose the (up to) $750 filing fee
Upon receipt of your Approval from the IRS you must contact the Montana Corporation Tax Auditor Montana at the Department of Revenue. He or she will need copies of your by-laws, articles of incorporation, Form 1023, and Secretary of State ruling along with a filing fee to begin the final State process for recognition as a charitable nonprofit organization.

Ongoing requirements for 501(c)(3) nonprofit organizations
Each year you will be required to file a report with the IRS. IRS Form 990 has several different formats depending on several factors including gross reciepts. Your organizations Form 990, Form 1023, and all documents accompanying these filings will be open to public inspection. See the IRS FAQ about Public Disclosure requirements.

Annual

Annual Report with MT Secretary of State - due during anniversary month of incorporation
W-3 to State and IRS
Form IRS 990 – unless your organization is a religious institution (i.e. a church)
Properly acknowledge donors for receipt of donations according to IRS rules
Some organizations will need to hire a CPA to perform an annual Audit or Financial Review

Quarterly