Exactly what to do
- Before anyone drives to a branch, get the packet together: pick a nonprofit-friendly bank (community banks and credit unions usually waive fees), and pull the four documents every bank asks for, all in your vault already: stamped articles, EIN letter (CP 575), adopted bylaws, and the minutes naming authorized signers. Signers bring government ID.
- With the packet in hand, open two accounts and name them clearly: “[Org] Operating” and “[Org] \u00a725F Scholarship Account”. From the first qualified contribution onward, \u00a725F money only ever touches the segregated account; serve multiple states later and it’s one segregated account per state.
- Federal 501(c)(3) status doesn't automatically exempt you from every state tax. Search “[your state] department of revenue nonprofit exemption”; the page says whether your IRS determination letter is enough (many states) or a short one-time form is required (California's FTB 3500 series, Texas AP-204). Sales-tax exemption on your purchases is frequently its own form and worth the paperwork. If anything you file renews periodically, put the date wherever your organization keeps deadlines (your dashboard calendar tracks the big federal ones; renewals like this live in your own records book and stage 5 walks the annual cycle).
- Aim for your organization name (or a clean shortening) on .org, the nonprofit default donors trust; if the exact .org is taken, adjust the name rather than settling for a look-alike TLD. Register at a reputable registrar (Cloudflare, Porkbun, Namecheap) with WHOIS privacy, auto-renew, and registrar lock on. Then put email on the domain, Google Workspace or Microsoft 365 (after the 501(c)(3) letter, Google for Nonprofits makes Workspace free), create role addresses (info@, donations@), and use this address everywhere official from now on.
What trips people up
- Registering the domain under a founder's personal account and losing it when they move on. Register it under the organization's account with a role email as the contact, and record the credentials in the records book.
Questions people actually ask
What controls should we set before money arrives?
Dual approval over a threshold, monthly reconciliation by someone who isn't a signer, and board review of statements. Your future annual audit starts life much easier this way. Bank-shopping checklist: no/low fees, online banking with two-signer controls, and the ability to add accounts under the same relationship later.
Can donations run through my personal account until the org account opens?
No, not even briefly. Mixing organization money with personal money (“commingling”) is the single fastest way to wreck your books, your audit, and an examiner's trust, and \u00a725F specifically requires qualified contributions to sit in the organization's own separate accounts. If someone hands you a check before the account exists, hold the check; deposit it the day the account opens.
Why two bank accounts instead of one?
The statute requires \u00a725F contributions to be held in one or more accounts used exclusively for them, never mixed with other funds, and Treasury previewed a segregated-account safe harbor for the 90/10 test built on exactly this. So: one operating account for everything else, one dedicated \u00a725F account from day one, and the 90/10 math stays provable by bank statement.
Does the org-domain email really matter this early?
Yes, concretely: our SGO directory verifies listing ownership by your email domain matching your website, and donors' spam filters and states' vetting teams make the same judgment informally. A gmail address running a scholarship fund reads as a red flag you don't need.
Do we need insurance?
Nothing federal requires it, but directors-and-officers (D&O) coverage is what lets careful outside board members say yes to serving, and you just recruited unrelated people to govern money. Get D&O quotes once the bank account opens (nonprofit packages are a modest annual premium), add general liability if you'll run in-person events, and revisit limits when real scholarship volume arrives in 2027.
