Connecticut Nonprofit FAQ — Formation, Exemption, and Compliance

What exactly do I file to start a nonprofit in Connecticut?

You file a Certificate of Incorporation for a nonstock corporation with the Connecticut Secretary of the State, through the Business One Stop portal at business.ct.gov. Connecticut organizes nonprofits under the Revised Nonstock Corporation Act — "nonstock" because a nonprofit issues no shares and has no owners. The certificate names the corporation, declares it nonstock, states whether it has members, and lists the registered agent and incorporator.

Is a nonprofit the same as being tax-exempt?

No — and this is the single most important thing to understand. Incorporating creates the corporation at the state level. Tax exemption is a separate federal status you apply for with the IRS, usually under Section 501(c)(3). You can be a validly formed Connecticut nonprofit and still not be tax-exempt until the IRS approves your application. Donations aren't deductible until that determination letter arrives.

Do I need a lawyer to form a Connecticut nonprofit?

Not strictly. Many founders form the corporation themselves or through a filing service and use a nonprofit attorney or CPA specifically for the trickier parts — drafting the IRS-required certificate language, the bylaws, and the Form 1023 exemption application. We handle the state filing; the legal and tax judgment calls belong with a professional.

How many directors does a Connecticut nonprofit need?

Connecticut requires a board, and while its statutory floor is modest, the practical answer is at least three unrelated directors. The IRS effectively expects three or more for a 501(c)(3), and grantmakers want a board not controlled by one person or a single family. Your bylaws set the exact number.

Can family members serve on the board together?

They can, but a board dominated by one family raises red flags for the IRS and funders, who look for independence as a sign the organization serves a public rather than a private interest. Aim for a majority of unrelated directors.

What are bylaws, and do I file them?

Bylaws are the corporation's internal rulebook — how the board is structured, how officers are elected, how meetings and voting work. You do not file them with the state; they're an internal document adopted by the board at the organizational meeting. The IRS does review them when you apply for exemption, so they need to be complete even though Connecticut never sees them.

Do we need a conflict-of-interest policy?

You should have one. The IRS specifically asks about it on the exemption application and looks for it in your governance. A conflict-of-interest policy sets out how directors and officers handle situations where they have a personal stake in a decision. It's a core part of showing the organization is run for the mission, not for insiders.

What's the difference between Form 1023 and Form 1023-EZ?

Form 1023-EZ is the streamlined exemption application for smaller organizations that pass the IRS eligibility worksheet — shorter and faster. Form 1023 is the full application for larger or more complex organizations, requiring detailed narratives, a multi-year budget, and your governing documents. Which one fits depends on your projected size and activities.

How long does 501(c)(3) approval take?

It varies. Form 1023-EZ is often approved in a matter of weeks. The full Form 1023 frequently takes several months. Plan your fundraising and grant timelines around the possibility of a wait, and file promptly after incorporating.

Is there a deadline to apply for exemption?

There's a meaningful one from the IRS: file within 27 months of incorporation and your exemption generally applies retroactively to your formation date. Wait longer and it may only apply from the application date forward. Most founders apply promptly to preserve that retroactive coverage.

Does Connecticut give us tax exemptions too?

Generally, once you have federal 501(c)(3) status, you can pursue Connecticut's exemptions — from the state corporation business tax and, for qualifying charities, from sales tax (which requires a separate application to the Connecticut Department of Revenue Services). State exemptions usually follow the federal one rather than replacing it.

What annual filings does a Connecticut nonprofit have?

Two main ones on two different tracks. With the state, you file an annual report with the Secretary of the State, due around the anniversary of formation, and it must be filed online. With the IRS, you file an annual return in the Form 990 series — from the 990-N postcard for the smallest organizations up to the full 990. They're separate obligations with separate deadlines.

What happens if we miss the Form 990 for a few years?

Missing the Form 990 (or 990-N) for three consecutive years triggers automatic revocation of your federal tax-exempt status. Getting reinstated is possible but is extra work and cost. Don't let the 990 slide — even the smallest nonprofit filing the 990-N postcard has to file every year.

Do we have to register to fundraise in Connecticut?

Often, yes. Nonprofits that solicit charitable contributions from the Connecticut public generally register with the Department of Consumer Protection's Public Charities Unit and renew periodically. This is separate from both incorporation and federal exemption. Check whether your fundraising plans trigger it before you start soliciting.

What keeps us in good standing?

File the state annual report on time, keep a valid registered agent on file, file your Form 990 every year, and keep charitable registration current if you fundraise. Miss these and the state can put the corporation out of good standing, which complicates banking, grants, and contracts.