How to start a nonprofit in Michigan in 9 steps [2024]

Starting a nonprofit in Michigan is an incredible way to create long-lasting change in the community and beyond. But, it can be challenging to figure out how to get started.

In this blog, we’ll cover everything you need to know about starting a nonprofit organization in Michigan. From creating bylaws to remaining compliant year after year, we’ll cover all the details.

9 Steps to start a nonprofit in Michigan

• Step 1: Choose a name 
• Step 2: Appoint a registered agent 
• Step 3: Recruit an Incorporator and Board of Directors
• Step 4: Draft bylaws
• Step 5: Obtain an EIN
• Step 6: Incorporate your nonprofit 
• Step 7: Apply for tax-exempt status
• Step 8: Apply for other necessary licenses
• Step 9: Start fundraising 

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Step 1. Choose a name 

One of the most fundamental steps in starting a nonprofit in most states is picking a name. Not only is the name of your organization crucial to all of your future success, but it’s essential for abiding by state and federal regulations, too.

When considering what to name your nonprofit, think about how it does or doesn’t reflect your mission and values and how the public and your target audience will perceive it. Branding is essential to nonprofit success, so be sure to choose something that resonates both with your team and the public.

Once you’ve chosen your name, ensure it’s not already in use by another organization by visiting the Michigan Department of Licensing and Regulatory Affairs (LARA) website.

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Step 2. Appoint a registered agent

Like most states, Michigan requires nonprofits to appoint a registered agent. This registered agent can be thought of as a representative of your organization who will receive your organization's legal documents.

When selecting your registered agent, be sure that the individual or entity has a physical address in Michigan where documents can be sent during regular business hours. Also, whether your registered agent is an organization employee or a volunteer, be sure that whoever you choose is reliable and trustworthy. 

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Step 3. Recruit a Board of Directors and an Incorporator 

Michigan requires that nonprofits have at least one Incorporator — the person who will sign the Articles of Incorporation — as well as three directors.  

There is no residency or membership requirement for selecting board members. But it’s crucial to recruit individuals you trust and who bring a valued opinion to your nonprofit. They’ll help guide strategic decision-making at your organization.

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Step 4. Draft bylaws

Once you’ve established your Incorporator and your Board of Directors, it’s time to host a meeting.

At this leadership meeting, you’ll develop bylaws that outline the internal rules and procedures that govern your nonprofit's operations. Though these differ from organization to organization, they often outline officer descriptions and roles, conflict of interest policies, and more. 

In essence, these rules will serve as the foundation for how your nonprofit will function.

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Step 5. Obtain an Employer Identification Number (EIN)

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Like in most states, you'll need to apply for an EIN number or an Employee Identification Number. This number will allow your nonprofit to open a bank account, file taxes, and remain compliant over the years. 

To apply for your EIN number, the process is simple: visit the IRS website and fill out Form SS-4.

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Step 6. Incorporate your nonprofit

Like most states, Michigan requires nonprofits to incorporate their nonprofit, which establishes your organization as a legal entity. To do this, file Articles of Incorporation with LARA  

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Step 7. Apply for tax-exempt status

Next, you'll need to apply for tax-exempt status at both the state and federal levels. Each has different required forms and rules.

• Federal tax exemption: To apply for federal tax-exempt status under section 501(c)(3) of the Internal Revenue Code, you must submit Form 1023 or Form 1023-EZ to the IRS. This form requires you to provide information about your nonprofit's activities, governance, finances, and proposed programs. Once approved, your nonprofit will be eligible to receive tax-deductible donations.
  

• State tax exemption: Once your nonprofit has received federal tax exemption, you are automatically exempt from Michigan state sales tax as well. There is no further filing that needs to be done. 

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Step 8. Apply for other business licenses

If your nonprofit anticipates hosting raffles, lotteries, or other games of chance as part of its fundraising efforts, you’ll have to abide by several other rules and apply for other licensing.

To review qualification requirements and necessary permits, visit Michigan.gov’s website 

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Step 9. Start fundraising

Once you’ve completed all of the necessary paperwork and applied for the correct permitting, it’s time to get to making an impact!

Be sure to create a comprehensive fundraising plan that identifies potential funding sources, such as grants, donations, sponsorships, and fundraising events. Once you’re ready to get started, select software that allows you to raise money, connect with donors, and organize everything in one place.

With Zeffy, nonprofits can begin their fundraising journey with free ticketing and event management and custom donation forms, and connect with donors at the same time — for free. From hosting lotteries and raffles to creating custom donation forms with unique branding, Zeffy doesn't charge nonprofits any hidden fees or upfront costs. Powerful and easy to use, Zeffy is the perfect free solution when starting your nonprofit.

Learn how this Michigan nonprofit raised over $200,000 with Zeffy 

42 Strong, a Michigan nonprofit dedicated to empowering students through peer-to-peer mentoring, is a beloved organization that honors the late Tate Myre, a local teen athlete. 

Like many nonprofits, the organization relies heavily on fundraising events, such as its annual gala, to support its programs and initiatives. It also relies on consistent contributions from its local community to help fund its ​​monthly trainings in trauma recovery, social/emotional skills programs, and more. 

However, like many nonprofits, the organization found it challenging to find a nonprofit-first event and donation platform that would let them spread the word about their cause, sell tickets, and make an impact — all for free. When donors give, 42 Strong wanted to ensure that all of the donations were going straight to the cause, and nowhere else.

In their search, 42 Strong found Zeffy, one of the leading event ticketing and donation platforms for nonprofits. Unlike other platforms, Zeffy offered two key solutions: the ability to sell custom tickets online and collect donations through a branded, easy-to-share donation form — for free.

With Zeffy, 42 Strong was able to sell custom tickets to their gala, including raffle tickets, on a custom ticketing form. Plus, they were able to create a custom, branded donation page that accepted various payment methods, like credit cards and Apple and Google Pay. 

Since partnering with Zeffy, 42 Strong has sold over 70,000 tickets and raised over $148,000 through its donation form. The best part? The organization has ensured that every donation goes directly to its mission, saving over $10,000 in fees.

Frequently Asked Questions

Can the founder of a Michigan nonprofit receive a salary?

Yes, the founder of a Michigan nonprofit can receive a salary if approved by the organization's board of directors. However, compensation decisions should be made transparently and in accordance with the nonprofit's bylaws. 

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Do Michigan nonprofits need to file for a business license?

Michigan nonprofits generally do not need to obtain a traditional business license. However, they must register with the Michigan Department of Attorney General's Charitable Trust Section and comply with state and federal tax laws and regulations.

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How long does it take to start a nonprofit in Michigan?

The timeline for starting a nonprofit in Michigan can vary depending on various factors. But, on average, it may take several months. It’s recommended that nonprofits budget for a bit extra time when starting their nonprofit in order to account for any potential delays or issues in the filing process.

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How much does it cost to start a Michigan nonprofit?

The costs associated with starting a nonprofit in Michigan can vary. However, there are a few common costs to be aware of:

• Incorporation fees: Filing the Articles of Incorporation with the Michigan Department of Licensing and Regulatory Affairs (LARA) costs anywhere from $20 to $50, depending on the filing method.
  
• Legal assistance: While not required, some nonprofits hire legal assistance to draft bylaws, review incorporation documents, and ensure compliance with state and federal regulations. These fees can vary, ranging from a few hundred to a few thousand dollars.
  
• Filing for tax-exempt status: Applying for federal tax-exempt status under section 501(c)(3) of the Internal Revenue Code costs anywhere from $275 to $600.

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How do I start a nonprofit with little money?

Starting a nonprofit with no money requires careful planning, but it’s not impossible. Consider leveraging low-cost resources like volunteers, in-kind donations, grants, and partnerships with local businesses.

Most importantly, be sure to use completely free tools like Zeffy — a simple and powerful all-in-one fundraising and donation management platform. With Zeffy, nonprofits don’t have to pay any upfront costs, hidden fees, or processing fees. They can collect donations, run events, communicate with donors, and even launch an online store without having to pay a cent. 

How many directors do you need for a nonprofit in Michigan?

Michigan law requires a minimum of three directors for a nonprofit corporation. However, many organizations choose to have more directors to bring diverse perspectives and expertise to the board. Directors are a great resource for helping to steer your nonprofit in the right direction.

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Is it worth it to start a nonprofit?

Starting a nonprofit can be well worth it if you're passionate about a cause! However, starting an organization from scratch often requires significant time, effort, and resources. 

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Start fundraising for free with Zeffy 

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Whether you’re a brand new nonprofit looking to get your fundraising up and running, or an established one looking for new tools and features to make even more impact, Zeffy is one of the best all-in-one solutions for all of your nonprofit needs.

From event tracking and management to marketing and engagement tools, custom donation forms, and even the ability to create an online shop or nonprofit membership association, Zeffy offers everything you need without charging a single fee.

Simple and powerful — and packed with free support whenever you need it — Zeffy ensures that your donor’s gifts are going right to the cause, and nowhere else.