How Long Does it Take to Get 501(c)(3) Status?

Applying for 501(c)(3) status is a first step in establishing a nonprofit organization. This status provides tax-exempt benefits and makes the nonprofit eligible for grants and tax-deductible donations.

However, the process can be lengthy, and understanding the timeline can help you plan accordingly. So, how long does it actually take to get 501(c)(3) status?

Understanding the 501(c)(3) Application Process

To apply for 501(c)(3) status, your organization must submit Form 1023 or Form 1023-EZ to the IRS. Form 1023 is the standard, long-form application used by larger or more complex organizations, while Form 1023-EZ is a shorter, streamlined version for smaller nonprofits with projected annual gross receipts of $50,000 or less.

If you’re interested in learning more about setting up your nonprofit organization, I highly recommend reading through our breakdown of the essential costs associated.

Choosing the right form is essential, as each has its own processing times and requirements.

Step #1: Preparation Time (2-6 Weeks)

Before you can file for 501(c)(3) status, you need to complete several preliminary steps, such as incorporating your nonprofit, creating a mission statement, drafting bylaws, and appointing a board of directors. Depending on the complexity of your organization and the help you have, this preparatory phase can take anywhere from a few days to a few weeks.

You may also need to file for an Employer Identification Number (EIN), which can be done quickly through the IRS website.

Estimated Time: 2-6 weeks

Step #2: Completing the Application (1-4 Weeks)

The Form 1023 application is thorough and requires detailed information about your organization’s mission, finances, planned activities, and governance structure. Completing the form can take anywhere from a few days to a few weeks, depending on the complexity of your organization and your familiarity with IRS requirements. 

This step is often faster for simpler nonprofits applying with Form 1023-EZ, as the form is shorter and less detailed.

If you’re working with a consultant or attorney, they can help streamline this process, but it’s still wise to take the time to thoroughly review your application before submitting it to avoid delays.

Estimated Time: 1-4 weeks

Step #3: IRS Processing Time (2-12 Months)

Once your application is submitted, the IRS processing time can vary widely based on the type of form and the current workload at the IRS.

• Form 1023-EZ applications generally have a faster turnaround, with approval times averaging around 2 to 4 weeks. This is because the EZ form is simpler, and the IRS can typically process it more quickly.
• Form 1023 (the long form) usually takes longer, as it requires a more in-depth review. Standard processing times for this form are between 3 and 12 months, depending on the IRS’s backlog and the complexity of your organization’s application. In cases where the IRS needs additional information or clarification, the process can take even longer.

Estimated Time: 2-12 months, depending on the form type and any follow-up requests from the IRS

Step #4: Responding to IRS Requests for Additional Information (Varies)

In some cases, the IRS may contact you to request more information or clarification on certain parts of your application. If this happens, it’s essential to respond promptly and thoroughly, as any delays on your part can extend the overall processing time.

The IRS typically allows 30-45 days for responses to additional information requests, but the sooner you can provide the necessary information, the sooner your application can proceed.

Estimated Time: Varies, depending on the complexity of the request and the response time

Expedited Processing (Rare)

In rare cases, the IRS may offer expedited processing for organizations facing urgent circumstances. However, these requests are granted only in specific situations, such as if your nonprofit is providing disaster relief or is otherwise addressing an urgent need.

Expedited processing is not guaranteed, and the IRS considers these requests on a case-by-case basis.

Total Timeline

The total time to obtain 501(c)(3) status can range widely depending on the application form used and any complications that arise:

• Form 1023-EZ: 2 to 4 weeks, though it may take longer if the IRS requests additional information.
• Form 1023: 3 to 12 months, with some cases taking up to a year or more if there are follow-up requests.

Tips for Speeding Up The 501(c)(3) Application Process

While you can’t control the IRS’s processing speed, there are steps you can take to ensure a smoother process:

1. Complete All Pre-Application Steps: Make sure you have all the necessary documents, such as your EIN, Articles of Incorporation, and bylaws, ready before starting the application.
2. Double-Check Your Application: Ensure your Form 1023 or 1023-EZ is complete, accurate, and includes all required documentation. Incomplete or inaccurate applications are more likely to face delays.
3. Respond Promptly to IRS Requests: If the IRS requests additional information, reply as soon as possible to keep your application moving forward.
4. Work with a Professional: If possible, consult with an attorney or nonprofit expert to help you with the application. Professionals can catch potential issues early on and help ensure that your application is complete and accurate.

What to Know About Obtaining 501(c)(3) Status

While obtaining 501(c)(3) status can be a lengthy process, understanding the timeline and what’s involved can help you better prepare. From the initial preparation steps to waiting for IRS approval, the journey to tax-exempt status may take anywhere from a few weeks to over a year. 

By staying organized, thorough, and proactive, you can help ensure your nonprofit is set up for success and ready to make an impact once your status is approved.

If you’re ready to start the process or need assistance, consider reaching out to a nonprofit consultant or attorney who can guide you through each step, helping you avoid delays and ensuring that your application meets all the IRS requirements.

And when you’re ready for help with your accounting, bookkeeping, or in search of a virtual CFO, come talk with our team today at MOD Ventures!