How to Write Your Form 1023 Activities: Past, Present & Planned Activities

The Activities section of the IRS Form 1023 is the most important part of your 501c3 501(c)(3) application. The Narrative Description of Activities in Part IV of Form 1023 is the complete story of your organization, from its inception to a projection of what it will do in the future. Like every good story, you have to start at the beginning and not leave it open-ended.

If you fail to write a convincing narrative description of activities, you can certainly kiss your Form 1023 application fee goodbye and watch your nonprofit organization's dreams shatter. If you fail after reading this page, you were going to fail anyway. The IRS didn't beat you. Reality did.

What is the Narrative of Activities on the Form 1023

In Form 1023 Part IV (4), the IRS asks you to describe your past, present, and planned activities in a narrative form. The Narrative of Activities is the first section of Part IV, and the trickiest one as well. The IRS is very specific about the narrative of your activities, and when the IRS asks you to be specific, take them at their word.

To write a compelling (and IRS-proof) Narrative Description of Activities, answer the following questions in detail. The IRS isn't guessing what you might do; they want to see exactly what you're doing and how you're doing it.

1.  What is the activity?
2.  Who conducts the activity?
3.  Where is the activity conducted?
4.  What percentage of the organization's total time is allocated to each activity?
5.  How is the activity funded?
6. How does the activity further the organization's exempt purposes?

The IRS examiner will look at the activities section of your Form 1023, and will want to know anything and everything about your organization. Don't let him guess.

Regulated and High Risk Activities

What's explained on this page will relate to 99% of public charities out there; however, some organizations are subject to additional operational rules because their activities are regulated or require licensure under federal, state, or local law. These requirements apply regardless of charitable intent and impose limits on how programs may be structured, delivered, or supervised. These highly regulated and scrutinized organizations include:

• Private Schools, Charter Schools, and Daycares
• Animal Rescue and Sanctuary Organizations
• Hospitals, Health, and Medical Clinics
• Low Income Housing Organizations
• Volunteer Fire Departments
• Homeless and Shelter Services
• Food Banks, Pantries, and Emergency Food Programs
• Disaster Relief Organizations

If your organization operates in a regulated or licensed area, your activity description must clearly explain how your operations comply with those requirements. This includes describing required approvals, oversight, credentials, and any activities you don't conduct because the rules prohibit them. Your narrative must demonstrate compliance affirmatively, not assume it. Follow the links above as each type has its own nuance for its narrative description.

Rules of Writing a Narrative Description of Activities for the Form 1023

1. Rule number one: Don't repeat yourself. If you have something to say in your narrative, say it only once in your entire application, and if you have to say it again, just refer to that section.
2. Rule number two: Be concise, to the point, and stay away from being cute or, worse, meaningless convictions. For example:
   • If your nonprofit organization is a ministry (applying for 501c3 501(c)(3) as a religious organization), you should say that Jesus Christ compelled you to help the poor and feed the hungry. If you didn't, that would be weird.
   • However, if your organization's mission is to clean up the oceans (applying for 501c3 501(c)(3) as an environmental organization), there's absolutely no reason to tell the examiner that you talk to Jesus on a two-way radio. It's meaningless, unnecessarily lengthens your narrative, and raises eyebrows.
3. Rule number three: Don't be vague. Your narrative should be at least 3 to 4 pages long. Don't use the box provided in Form 1023 Part IV to describe your activities; it gives you only a few thousand characters to work with. You cannot adequately explain your past, present, and future activities in that space. If you use the box, you will receive a letter from the IRS requesting additional information. In Part IV, simply write "please see attachment" and include your narrative as an attachment.
4. Rule number four: Don't shy away from stating your real mission. Don't politicize your Form 1023. Don't water it down. And above all, be honest.
5. Rule number five: Beware of Bathrooms. (Just making sure you're still reading.)

How to Write a Narrative Description of Activities for the Form 1023

A narrative description of activities should be self-explanatory, but apparently it's not. A narrative is not a question and answer; it's a story, from the beginning to the end. It's the story of your organization in a narrative format covering the why and how of your existence. It's a controlled description of what you do, who does it, where, with what money, and how much of your time it eats.

The narrative of activities shouldn't be answering the IRS questions verbatim, by listing the question and answering it a, b, c..., the narrative should be written to answer those questions in a natural form.

1. Start with an overview. Say short and sweet what the organization's history and goals are. If the IRS can't understand why you're doing it, they won't understand how you're going to solve the problem that you don't even mention.
2. Walk the examiner through your operations with facts and evidence, and don't make him regret his life choices reading your "masterpiece".
3. Don't beat around the bush, list your activities, say the facts, once, and move on.
4. Don't overpromise or underreport. Don't write about your hopes of building a community center in 15 years; write a narrative about your activities now and the next three years.
5. And most importantly, tie your narrative to your financial data. Your activity narrative doesn't live in a vacuum, it's the explanation of your budget. That's its only job, and if you treat it as a feel-good story, you will fail the exemption.

Now that you understand how to write the narrative of activities, we'll break down the meaning of the questions the IRS is asking you on the Form 1023.

What is the Exempt Activity?

The "what" question is about what the organization actually does, not what it believes in. The IRS is testing whether your activities fall within the charitable purposes allowed under Section 501c3 501(c)(3), not whether the cause sounds charitable.

An exempt activity is a specific, repeatable action carried out by the organization that directly advances a recognized charitable purpose. Feeding meals, providing shelter, operating a clinic, running classes, rescuing animals, conducting research. Those are activities. "Raising awareness," "supporting the community," or "changing the system" are not, unless you tie them to concrete actions.

Each activity should stand on its own. Use plain narrative language. State exactly what is done, who receives the benefit, and what form that benefit takes. Don't bundle multiple programs together or rely on umbrella descriptions. If you operate three programs, you describe three activities. The IRS is applying the organizational test and the operational test by asking a simple question:

If the mission statement is stripped away, do the things you do qualify as charitable under the Code? If the answer is yes, they move to the next question.

If your organization operates in a regulated or licensed area, the exempt activity description must stay within those legal boundaries. Don't describe activities you're not authorized to perform. If licensure limits what you can do, say so explicitly and describe the permitted scope.

Who Conducts the Activity?

The "who" question is about control, board independence, and private benefit. The IRS wants to know who actually carries out each activity and under whose authority. That includes employees, volunteers, officers, directors, contractors, or affiliated organizations. You need to be specific about who performs the work and the relationship that role has to the organization.

Say whether the activity is conducted by paid staff, unpaid volunteers, independent contractors, or a combination. If contractors are used, describe the scope of their work and who supervises them. If volunteers are used, explain how they are trained and overseen. If officers or directors participate in operations, say so directly.

1. If insiders perform the work, the IRS is checking whether compensation is reasonable, whether services are necessary, and whether decision-making remains with the organization rather than the individual.
2. If related parties are involved, that relationship must be disclosed and explained. Silence here reads as avoidance.
3. If another organization conducts activities on your behalf, you must explain the relationship, the agreement governing it, and how your organization retains control.

For regulated or licensed activities, you must clearly say who holds the required credentials or licenses. Running a school with unqualified staff doesn't pass this test. Running a hospital without the State's blessing doesn't pass this test. Running a coastal water cleanup without the Coast Guard's blessing doesn't pass this test.

Where is the Activity Conducted?

The "where" question is about jurisdiction, control, and compliance, not geography trivia. The IRS wants to know where each activity physically occurs and whether that location creates legal, regulatory, or oversight issues. You must explain whether activities are conducted at a fixed facility, multiple sites, private property, public spaces, client homes, leased locations, online, or in foreign countries.

Be specific.

1. Name the type of location and its relationship to the organization.
2. If the space is owned, leased, donated, shared, or used by permission, say so.
3. If activities move between locations, explain how it's managed and supervised.
4. Don't rely on vague phrases like "various locations" or "where needed." Those invite follow-up.

Location matters because different rules attach to different places. Operating in schools, clinics, shelters, housing facilities, correctional settings, or private residences can trigger licensing, zoning, safety, or inspection requirements. Your narrative must show that the organization is allowed to operate in those locations and understands the limits that come with them.

If activities are conducted online, say what's delivered remotely and where participants are located. If activities are carried out outside the United States, you must identify the countries involved and maintain consistency with your foreign activities disclosures elsewhere in Part IV of the Form 1023.

Percentage of Time and Resources Allocated to Each Activity

Percentages are not optional. The IRS requires you to state the percentage of time and resources allocated to each activity because that's how it applies the substantiality test. Without percentages, the examiner can't determine which activities are primary, which are incidental, and whether any nonexempt activity is creeping into a substantial role.

For each activity, assign a percentage of the organization's total time and total resources devoted to that activity.

• Time includes staff hours, volunteer effort, and management attention.
• Resources include money, facilities, equipment, and administrative support. The percentages should add up to 100%.

Be realistic and internally consistent. Don't inflate numbers to make an activity look important, and don't bury activities you would rather not explain. If an activity is supporting or administrative, mark it as such rather than pretending it's programmatic.

These percentages are one of the indicators used by the IRS to distinguish substantial activities from incidental ones, and charitable benefits from private or nonexempt benefits. If an activity takes meaningful time or money, the IRS treats it as substantial, and that carries consequences.

How is the Activity Funded?

The "Funding" question is about financial control and sustainability, not fundraising prowess. The IRS wants to know how each activity is paid for and whether the funding method is consistent with Section 501c3 501(c)(3). You must disclose the source of revenue that supports each activity and how those funds are used.

1. If an activity is supported by donations, say so.
2. If grants fund it, say whether they're public or private and whether they're restricted to that activity.
3. If fees are charged, say who pays them, how amounts are set, and whether they're designed to cover costs rather than generate profit.
4. Avoid vague language like "various sources" or "community support".

Here the IRS is checking for commerciality, private benefit, and unrelated business income through the activities. If an activity relies heavily on earned income, your narrative must make clear how that income supports the exempt purpose rather than becoming the purpose. If fundraising events support multiple programs, say how proceeds are allocated.

How does the Activity Further the Organization's Exempt Purposes?

Finally, you connect action to qualification. The IRS is not interested in whether an activity is helpful, popular, or well intentioned. It's checking whether the activity directly advances the exempt purpose stated in your organizing documents. That connection must be explicit. Don't assume it's obvious.

For each activity, explain how what you do produces a charitable outcome recognized under Section 501c3 501(c)(3). Show the line between the activity and the purpose it serves. Feeding meals furthers relief of the poor. Operating a clinic furthers the advancement of health. Providing classes furthers education. The activity must move the purpose forward on its own, not by implication.

Avoid aspirational language. Statements like "this activity supports our mission" or "aligns with our values" mean nothing to an examiner unless you explain how. The IRS is looking for cause and effect, not branding.

More importantly, the IRS is looking for nonexempt activities. If an activity primarily benefits private individuals, insiders, members, or a narrow group without charitable justification, it doesn't further an exempt purpose even if the organization believes it does. Ancillary benefits are tolerated only when they're incidental to the charitable outcome.

Using Revenue Rulings in Your Narrative

Your narrative description is where you make your case to the IRS. Unless you're running a garden variety nonprofit like a cat rescue, you might want to borrow their own rulebook and reference the Internal Revenue Code and Revenue Rulings.

Revenue Rulings are official IRS interpretations of tax laws applied to specific situations. They are NOT court decisions, but IRS agents treat them like gospel when reviewing your application.

For example, if Organization X fought the IRS over a similar nonprofit and won because of a specific Revenue Ruling, you can cite that ruling to strengthen your case. It's like telling the IRS, "Hey, this isn't just our opinion, it's your own official stance."

Before submitting your narrative description, dig through the IRS's Revenue Rulings Archive. Reference one or two that back up your activities and purposes. It shows you're not just guessing, you're playing by their rules. But don't get carried away. Most nonprofits won't need this. Only bother if your mission is a bit unusual or borderline.

Form 1023 Narrative Description Example