Incorporating a nonprofit is a lot like incorporating a business.
(article continues below)
It's a fairly rigid legal process that leaves little room for error. Many nonprofit leaders choose to hire an attorney or a nonprofit consultant to handle the incorporation process for them. But if dollars are in short supply (and in a nonprofit, when aren't they?), you could also opt for a do-it-yourself nonprofit incorporation.
Like for-profit incorporation, nonprofit incorporation has its share of hazards and pitfalls. The process itself isn't very complicated. But if you don't execute it properly, you could jeopardize tax-exempt status and other important features nonprofits are known for.
As a committed do-it-yourselfer, here is the bare minimum list of tasks you'll need to complete to establish your organization's status as a nonprofit corporation.
- Establish your mission and purpose. The first task associated with nonprofit incorporation is to clearly define your mission and purpose. From an organizational perspective, that's a good idea anyway. But whether you like it or not, the beginning of the incorporation process forces you to narrowly define the reasons why your organization exists.
- Select board members. Board members govern nonprofit organizations and are a mandatory element in the incorporation process. Your initial board members names and addresses will appear on incorporation documents, so it's important to pick capable board members who are willing to go on record for your nonprofit.
- Draft, approve, & file articles and bylaws. The completion and submission of articles of incorporation and corporate bylaws are at the heart of the incorporation process. These documents are filed with the state and contain the nitty, gritty details about your nonprofit organization. Check with your state (usually the Secretary of State's office) for process requirements, keeping in mind that the information you provide in these filings will shape your nonprofit's activity and governance.
- Apply for tax-exempt status and EIN. Incorporated nonprofits qualify for tax exemptions, but only after they have completed IRS Form 1023, Application for Recognition of Exemption. While you're at it, you will also need to apply for an EIN (Employer Identification Number).
- Record minutes. Your bylaws dictate how often your board is required to meet, but it's usually at least once a year. If you haven't done so already, conduct your first board meeting and maintain a record of the official minutes.