It depends on the type of nonprofit. Some can receive donations that are deductible for tax purposes by the donor. Other don't pay federal income tax on their activities, but the donors don't get an income tax deduction. The first step is to evaluate which part of Internal Revenue Code section 501 the organization might satisfy. The federal applications are usually done on IRS Form 1023 or Form 1024, depending on the exemption type. There are also state registration issues if the organization is going to be soliciting donations or claiming state tax exemptions.
Sit down with an attorney that helps to organize non-profits to see if you can get on the right track.
In no way am I offering you legal advice, and in no way has my comment created an attorney-client relationship. You are not to rely upon my note above in any way, but insted need to sit down with counsel and share all relevant facts before receiving fully-informed legal advice. If you want to be completely sure of your rights, you must sit down with an experienced criminal defense attorney to be fully aware of your rights.
You should hire Mr. Vanderhage. In addition to the federal tax issues, there are state law issues unique to Colorado. This is not something to be handled over the internet. You need to sit down in his office so he can go through all of the alternatives with you, and there are many.