Start a Tennessee Nonprofit: 501(c)(3) Setup and Compliance
To launch a Tennessee charitable nonprofit, you will: form a nonprofit corporation with the Tennessee Secretary of State, obtain an EIN, apply for IRS 501(c)(3) recognition, complete Tennessee charitable solicitation registration (if required), and meet ongoing federal and state filing obligations.
Key references: Tennessee Secretary of State; TN Division of Charitable Solicitations and Gaming; IRS 501(c)(3) Requirements; IRS Form 1023; IRS Form 990; TN Dept. of Revenue Exemptions.
Overview
Forming a Tennessee nonprofit and obtaining 501(c)(3) status involves state corporate formation, federal tax exemption, and state charitable solicitation compliance. This guide outlines the typical steps, highlights key filings, and flags ongoing requirements for organizations operating or fundraising in Tennessee.
1) Choose a compliant nonprofit name
Select a name that is distinguishable on the records of the Tennessee Secretary of State. You can search availability using the Secretary of State’s tools and business search, and reserve a name if needed. See: TN Secretary of State — Business Services.
2) Appoint an initial board and a registered agent
Identify initial directors and designate a registered agent with a physical address in Tennessee to receive legal notices. Confirm any internal qualifications for directors in your bylaws.
3) Draft a charitable purpose and dissolution clause aligned with 501(c)(3)
To qualify for IRS recognition under section 501(c)(3), your organizing document must limit purposes to those described in 501(c)(3) and dedicate assets to another 501(c)(3) or a governmental unit upon dissolution. Incorporating these clauses in the charter streamlines IRS review. Source: IRS — Exemption Requirements.
4) File the Tennessee nonprofit charter
File a nonprofit corporation charter with the Tennessee Secretary of State (public benefit/charitable, mutual benefit, or religious). Include the required principal office and registered agent information, and ensure your purpose and dissolution clauses meet IRS standards. Pay the required state filing fee. Source: TN Secretary of State — Business Services.
5) Obtain an EIN
After formation, apply for an Employer Identification Number (EIN) with the IRS. You will need an EIN for banking, payroll (if applicable), and your IRS exemption application. Source: IRS — Employer ID Numbers (EIN).
6) Prepare bylaws and hold the organizational meeting
Adopt bylaws, elect directors and officers (if not named in the charter), approve banking resolutions, set the fiscal year, and adopt key governance policies (e.g., conflict of interest). Keep minutes and maintain a corporate records book.
7) Apply for federal 501(c)(3) status
Most charitable Tennessee nonprofits seek IRS recognition using Form 1023 or, if eligible, Form 1023-EZ. Ensure your charter and bylaws satisfy the IRS organizational and operational tests. Retain the IRS determination letter. Sources: IRS — About Form 1023; IRS — 501(c)(3) Requirements.
8) Register for Tennessee charitable solicitation before fundraising
Organizations that solicit charitable contributions in Tennessee generally must register with the Division of Charitable Solicitations and Gaming unless an exemption applies. Review exemption categories and file the appropriate initial registration or exemption. Certain documents (governing documents, financial statements) may be required. Source: TN Division of Charitable Solicitations and Gaming.
9) Tennessee and local tax considerations
Federal 501(c)(3) status does not automatically confer state tax exemptions. Tennessee provides sales and use tax exemptions for certain qualified nonprofits; apply if eligible. Consider whether local business licenses or tax registrations are needed based on activities. Source: TN Dept. of Revenue — Nonprofit Sales and Use Tax Exemptions.
10) Ongoing corporate compliance
Maintain good standing by keeping a current registered agent and office, following bylaws, holding regular board meetings, recording minutes, and filing required reports with the Tennessee Secretary of State (e.g., annual reports, if applicable). Source: TN Secretary of State — Business Services.
11) Ongoing charitable solicitation compliance
If registered (or claiming exemption) to solicit in Tennessee, timely submit required renewals and financial reports. Thresholds and document requirements can vary by organization type and revenue. If you solicit in other states, check those states’ rules as well. Source: TN Division of Charitable Solicitations and Gaming.
12) IRS annual returns and UBIT
Most organizations recognized as tax-exempt must file an annual IRS Form 990-series return (Form 990, 990-EZ, or 990-N), unless excepted (e.g., churches and certain church-affiliated organizations). If you regularly conduct activities unrelated to your exempt purpose, you may owe unrelated business income tax (UBIT) and need to file Form 990-T. Sources: IRS — About Form 990; IRS — About Form 990-T.
13) Governance and fundraising best practices
Adopt and follow policies for conflicts of interest, whistleblower protection, document retention, and gift acceptance. For solicitations, comply with disclosure and accounting requirements, and supervise any professional fundraisers or fundraising counsel engaged by the organization (which may have their own registration requirements in Tennessee).
Checklist: Key filings and agencies
- Tennessee Secretary of State: Nonprofit charter filing; ongoing entity filings (source)
- IRS: EIN; Form 1023/1023-EZ for 501(c)(3); annual Form 990-series; Form 990-T if applicable (EIN; Form 1023; Form 990; Form 990-T)
- Tennessee Division of Charitable Solicitations and Gaming: Initial charitable solicitation registration or exemption; renewals and financial reports (source)
- Tennessee Department of Revenue: Sales and use tax exemption applications (if eligible); other state tax accounts as applicable (source)
- Local authorities: Business licenses or permits as required by locality and activities
Practical tips for smoother filings
- Use IRS sample language for purpose and dissolution to avoid Form 1023 delays.
- Organize financials early; Tennessee renewals often require statements or 990 copies.
- If eligible for Form 1023-EZ, verify criteria carefully to prevent rejection.
- Track renewal calendars for the 990, TN solicitation registration, and any local licenses.
FAQ
Do we need 501(c)(3) status before registering to solicit in Tennessee?
No. You may register to solicit while your IRS application is pending, but follow the Division’s instructions on how to report pending status and provide required documents.
Which IRS 990 form do we file?
It depends on gross receipts and assets: 990-N for the smallest filers, 990-EZ or full 990 for larger organizations. Review current IRS thresholds before filing.
Are donations tax-deductible before we receive our IRS determination letter?
If you apply within 27 months of formation and are ultimately recognized, deductibility can relate back to formation. Donors should consult their tax advisors.
Does federal exemption automatically grant Tennessee sales tax exemption?
No. You must separately apply with the Tennessee Department of Revenue for any available nonprofit sales and use tax exemptions.
Do churches need to register to solicit in Tennessee?
Certain organizations, including some religious entities, may qualify for exemptions. Review Tennessee exemption categories and file the applicable exemption claim if eligible.
Need help?
Questions about starting or maintaining a Tennessee nonprofit? Contact our team.
Disclaimer (Tennessee): This article provides general information on Tennessee and U.S. federal nonprofit compliance as of the date above and is not legal advice. Laws change and outcomes depend on specific facts. Consult a qualified attorney about your situation.