How to Form a Delaware Nonprofit Corporation

Most nonprofits are 501(c)(3) organizations, which means they're formed for religious, charitable, scientific, literary, or educational purposes and are eligible for federal and state tax exemptions. To create a 501(c)(3) tax-exempt organization in Delaware, you need to first form a Delaware nonprofit corporation and second apply for tax-exempt status from the IRS and the state of Delaware.

Unlike most states, Delaware doesn't have laws for nonprofit corporations. Instead, Delaware's General Corporation Law (DGCL) applies to both profit and nonprofit entities. Under the DGCL, a nonprofit corporation is organized as a nonstock corporation—called an "exempt corporation."

You can follow the steps below to form your Delaware nonprofit. If you'd like a helping hand with the registration process, you can use our online nonprofit formation service to set up your nonprofit.

1. Choose a Name for Your Delaware Nonprofit Corporation

The first step to forming your organization is choosing a name for your nonprofit. Delaware, like other states, has name requirements and restrictions for corporations, including nonprofits.

Nonprofit name must be distinguishable. The name of your nonprofit corporation can't be the same as the name of any other business or trust on file with the Delaware Division of Corporations (DOC), a division of the Delaware Department of State (DOS). You can see whether your proposed name is available by searching Delaware's online name database. (Del. Code tit. 8, § 102 (2024).)

Nonprofit name must include an entity designator. Your nonprofit corporation name must include at least one of the following words or their abbreviations:

• "Association"
• "Company"
• "Corporation"
• "Club"
• "Foundation"
• "Fund"
• "Incorporated"
• "Institute"
• "Society"
• "Union"
• "Syndicate," or
• "Limited."

(Del. Code tit. 8, § 102 (2024).)

Name reservation. You can reserve an available name for 120 days by filing an Application for Reservation of a Corporate Name with the DOS. You can reserve your nonprofit name online with the DOS. You can renew the name reservation. As of 2024, the fee to reserve a corporate name is $75. (Del. Code tit. 8, § 102 (2024).)

Using a trade name. When you do business, you don't have to use your nonprofit's legal name registered on your certificate of incorporation. Instead, you can use a different name for your nonprofit—sometimes called a "trade name," "DBA," (short for doing business as), "assumed name," or "fictitious business name." If your nonprofit uses a trade name, you must register that name with the Office of the Prothonotary for each county where you'll do business. To register your nonprofit's trade name, you must file a notarized registration certificate form and pay a $25 fee (as of 2024) with each county. See the trade, business, and fictitious names page on the Delaware Superior Court website for more details on the registration process. (Del. Code tit. 6, §§ 3101 and following (2024).)

2. Appoint the Initial Directors for Your Corporation

In Delaware, you must have a board of directors for your nonprofit unless your certificate of incorporation explicitly says otherwise. Every board must have at least one director. You should aim to have an odd number of directors to avoid any voting ties. (Del. Code tit. 8, § 141 (2024).)

Your corporation's certificate of incorporation or bylaws can outline specifics for directors, such as:

• the number of directors (it can be a set number or a range)
• the rights, duties, and powers of directors
• the term of directors
• the qualifications for directors
• the election, designation, and appointment of directors, and
• the meetings of the board of directors.

Make sure your nonprofit's formation documents follow Delaware's laws for nonstock corporations.

3. File a Delaware Nonprofit Certificate of Incorporation

You create your nonprofit corporation by filing a Certificate of Incorporation for an Exempt Corporation with the DOS. Your certificate of incorporation must include the following information:

• the name of your nonprofit
• the name and street address of the nonprofit's registered agent in Delaware
• the nature or purpose of your nonprofit's business
• a statement that the nonprofit isn't authorized to issue stock
• the conditions of membership (if any) unless these conditions will be laid out in the nonprofit's bylaws
• the name and mailing address of the incorporator, and
• the name and address of each initial director (if the power of the incorporators will expire when the certificate is filed).

(Del. Code tit. 8, § 102 (2024).)

Include IRS-Specific Nonprofit Language in Your Articles of Incorporation

In addition to the above requirements, you'll need to have specific language in your articles to receive 501(c)(3) tax-exempt status from the IRS, including:

• a statement of purpose that meets IRS requirements
• statements that your nonprofit will not engage in activities unrelated to its exempt purposes or in prohibited political or legislative activity, and
• a dissolution clause dedicating the corporation's assets to another 501(c)(3) organization or to the government upon your nonprofit's dissolution.

The DOS has a fillable certificate form for an exempt corporation on its website that can be used to form a nonprofit corporation. The form is called a "Certificate of Incorporation, A Non-Stock Corporation." The provided certificate form doesn't contain the tax-exempt language required by the IRS. You should use the form as a guideline to create your own Certificate of Incorporation and insert the required clauses.

For guidance on 501(c)(3) language, check out the IRS's publication on the suggested language for corporations to use in their articles of incorporation. You can also find sample language to use approved by the IRS in the Instructions for IRS Form 1023-EZ, (see Part II).

How to File Your Certificate of Incorporation With the DOS

You can upload your completed certificate of incorporation online to the DOC's Document Filing and Certificate Request Service. Alternatively, you can file your certificate by mail.

As of 2024, the filing fee for a nonprofit certificate of incorporation is $109 for a one-page document. If you need to add more pages to your certificate, you must pay an additional $9 for each page.

4. Prepare Bylaws for Your Delaware Nonprofit Corporation

After you file your incorporation documents, it's time to draft your nonprofit's bylaws. Delaware doesn't require nonprofits to adopt bylaws. But it's highly recommended that your nonprofit create this essential organizational document. (Del. Code tit. 8, § 109 (2024).)

Your bylaws contain the rules and procedures your corporation will follow for:

• holding meetings
• electing officers and directors
• adopting, amending, and repealing the bylaws, and
• taking care of other corporate formalities.

Nonprofit corporations are exempt from obtaining a Delaware state business license. So, unlike most other businesses, your nonprofit doesn't need to register for the general business license or pay the associated licensing fee.

However, depending on your nonprofit's activities and location, your nonprofit might need to obtain other local and state business licenses or permits. For local licenses, check the county, city, and town licensing and permits page of the state's Business First Steps website. On this page, you'll find links to local business license applications and other helpful resources for Delaware's cities and three counties.

Read our article on how to get a small business license in Delaware for more details about licensing and permitting requirements in the state.

8. Get Your Federal and State Tax Exemptions

Now that you have created your nonprofit corporation, you can obtain your federal and Delaware state tax exemptions. Here are the steps you must take to obtain your tax-exempt status.

File Your Form 1023 Federal Tax Exemption Application

To get your federal tax-exempt status from the IRS, you'll need to complete and file IRS IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. This long and detailed form asks for a lot of information about your organization, including its history, finances, organizational structure, governance policies, operations, activities, and more.

Smaller nonprofits might be eligible to file Form 1023-EZ, Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code. This application is a much simpler, shorter form that's filed online. Only smaller nonprofits—those with projected annual gross receipts of less than $50,000 and total assets of less than $250,000—are eligible to use the streamlined 1023-EZ application.

See the IRS website for more information on the Form 1023 and Form 1023-EZ filing requirements.

Delaware State Tax Exemptions

Once a corporation receives its 501(c)(3) determination letter from the IRS granting it 501(c)(3) tax-exempt status, the nonprofit is automatically exempt from Delaware corporate income tax. In addition, nonprofits are exempt from the gross receipts tax on the sale of most goods and services. However, your nonprofit might still need to pay taxes on some services such as leasing tangible property or providing accommodations.

Nonprofits are also exempt from various state and local property taxes and business license fees. You should contact local taxing authorities for exemptions from local sales and property taxes.

See the nonprofit corporations section of the Division of Revenue (DOR) website for more on state tax exemptions.

Other State Reporting and Registration Requirements

Delaware doesn't require nonprofits to register to fundraise in the state so there are no fundraising registration requirements. However, you'll need to make certain disclosures for the solicitation of donations. Specifically, your nonprofit must comply with the following disclosure requirements when soliciting donations:

• The solicitor must identify themselves and the agency for which the funds are solicited, and
• the donors are entitled to question how the funds will be allocated between administrative costs and actual charitable use.

(Del. Code tit. 6, § 2595 (2024).)

Moreover, Delaware nonprofits that solicit or receive donations in other states might have fundraising registration and reporting obligations in those states.

For more information about fundraising registration requirements, check out the Nonprofit Fundraising Registration Digital Guide, by Ronald J. Barrett and Stephen Fishman (Nolo).

9. File Your Nonprofit's Annual Report With the DOC

All Delaware exempt (nonprofit) corporations must file an annual report with the DOC. The report is due no later than March 1 of each year. You can file the report online and pay the associated fee.

As of 2024, the filing fee for an annual report for an exempt corporation is $25. Delaware doesn't require nonprofits to pay the associated tax along with their annual report.

Additional Guidance About Your Delaware Nonprofit

Creating and running a nonprofit corporation is no simple task. You must follow the appropriate procedure to set up your nonprofit with the state and federal government and complete the required tasks to maintain your nonprofit. Apart from protecting your nonprofit's required legal status, you'll want to set up a nonprofit that people feel comfortable donating their time and money to. Read through our sections on starting a nonprofit corporation and managing a nonprofit for help with your nonprofit.

If you want to further educate yourself on nonprofit matters, check out How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo). This book has line-by-line instructions on how to complete Form 1023, how to create your nonprofit's bylaws, and more.

If you're looking for more personalized legal help, consider consulting a Delaware attorney who has experience advising nonprofits. An experienced lawyer can help you properly manage your tax exemptions, meet your filing deadlines, and advise you on federal, state, and local laws for nonprofits.