Greetings,
Forming a nonprofit corporation is very similar to forming a regular corporation. Tax-exemption, grants & personal liability protection are the most important reasons to incorporate a nonprofit group. There are many more benefits to being a nonprofit.
There are two important benefits for forming a nonprofit, tax-exempt status and personal liability protection.
Note:
Obtaining nonprofit status is usually a requirement for obtaining funds from government granting agencies.
Some key steps just prior to formation to keep in mind,
Begin with a broad charitable purpose that motivates yourself or your group of concerned citizens.
Recruit members who support the charitable purpose that will help develop a body of individuals with diverse qualities and resources that can aid you or your group in satisfying this purpose.
Draft a mission statement that further refines your broad charitable purpose while providing your founding body of individuals with some realistic and concrete objectives toward which they may direct its collective energies. This mission statement is the first step toward the implementation of a nonprofit organization to achieve the goals of the founding body.
Survey potential funding sources (including local, state, and federal government sources, private foundations and other grant providers) to determine the availability of funds to conduct the mission statement of the new nonprofit organization.
Obtain some "startup finances" to enable your new nonprofit organization to obtain some professional services (e.g., legal, accounting, etc.).
Solicit a list of interested individuals from within your founding body interested in becoming the initial Board of Directors of the new nonprofit organization.
Seek assistance to incorporate the founding body into a nonprofit corporation by drafting a Certificate of Incorporation.
Draft a set of corporate bylaws, which will serve as the procedure that the Board of Directors will utilize to make decisions on behalf of the corporation.
Hold an organizational meeting. You must hold an organizational meeting to formally create the nonprofit corporation. At this meeting the bylaws should be adopted, the Board of Directors should be elected, and all other relevant business should be conducted
General guideline for nonprofit incorporation and tax exemption status:
(Optional) Clear and reserve the name of the corporation with the Secretary of State's office.
Draft articles of incorporation and file them with the Secretary of State's office. The articles of incorporation announce the formation of the corporation and give its broad purposes. Note: It's best to correlate the language regarding tax exemption status herein the articles of incorporation to match the language later when filing the forms for tax exemption.
Register your nonprofit's name (including a "fictitious business name").
Draft and adopt bylaws for the corporation. The bylaws are the "constitution" of the organization setting the ground rules and operating procedures for the activities and conduct of the corporation. Actions taken in violation of the bylaws also may be declared invalid or challenged, which could hurt the organization. It is very important for organizations to comply with their bylaws in order to protect their corporate status and the limitation of liability that comes with it.
Apply for tax-exempt status from the federal and state government.
Obtain business licenses and permits for your corporation from federal, State & local governments.
Hold the first meeting of the board. The directors must approve certain activities necessary to set up and run the nonprofit's operations. Giving specified people ("officers") the authority to do those things.
Other alternatives to accomplishing your vision and goals:
Study a list of nonprofits already active in the same area. Consider joining their efforts as a volunteer, a board member or even as staff.
Analyze a list of nonprofits already active in the area, identify the three most compatible with your ideas, and explore creating a special project or initiative & negotiate your involvement.
If your goals will be quite local and small, consider forming an unincorporated association or club, have meetings & activities skipping the reporting requirements (an option for groups with annual budgets under $25,000).
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