Information Frequently Required on Nonprofit Formation Documents
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If you are considering forming your organization as a nonprofit corporation, also called a not-for-profit corporation, one question you may have is, “what information is required on the incorporation documents?” Knowing this ahead of time helps you save time as you begin the incorporation process.
As with a for-profit corporation, the formation document for a nonprofit is called the articles of incorporation or certificate of incorporation. There is often just a checkbox on the form to designation that the type of corporation being formed is a nonprofit. Each state has its own version of the articles of incorporation, creating a number of variances in the amount and type of information required. This article outlines the most common information requested by the states.
Nonprofit Name: The desired name of the nonprofit must be included. About half of the states require that a name contain a corporate identifier, such as “Corporation,” “Company,” “Incorporated,” “Limited,” or an abbreviation of those terms, such as “Corp.” Undertaking a preliminary name availability search prior to submitting the articles of incorporation will help to see if your desired name is available. Keep in mind that the state holds final approval rights on the desired name to ensure it is not already in use by another nonprofit in that state or is not “deceptively similar” to a name already in use.
Business Purpose: The business purpose is an explanation of what the nonprofit corporation is formed to do or provide. For nonprofits, having a very detailed description is important. If you plan to apply for tax-exempt status for your nonprofit, the Internal Revenue Service (IRS) will require a copy of your articles of incorporation and will pay particular attention to the business purpose contained.
The business purpose is also important for ensuring your nonprofit is appropriately classified with the IRS. The most common type of nonprofit is the 501(c)(3) nonprofit, which is a public charity or private foundation that is established for purposes that are religious, educational, charitable, scientific, literary, testing for public safety, fostering of national or international amateur sports, or prevention of cruelty to animals and children. These nonprofits are called 501(c)(3) organizations because they are formed for the purposes outlined in Section 501(c)(3) of the Internal Revenue Code; however, there are also501(c)(4) through 501(c)(27) organizations.
Registered Agent: Virtually all states require nonprofit corporations to have a registered agent in the state of formation. The registered agent is the party responsible for the receipt of important legal and tax documents for the nonprofit. The registered agent must have a physical address (no P.O. boxes) in the state of formation and must be available during normal business hours.
Examples of documents sent to the registered agent include Service of Process (or notice of litigation), which is the document that initiates a lawsuit; mail from the state; and often taxation documentation from the state’s department of taxation.
One thing to note is the registered agent address is a matter of public record. In states that do not require the legal address of the business to be included in the formation documents, the registered agent address is the only address on file for the company.
Incorporator: The incorporator is the person or company preparing and filing the formation documents with the state. Most states require the name and signature of the incorporator to be included in the formation documents and some also require the incorporator’s address be included.
Directors: Many states require the names and addresses of the initial directors of the nonprofit to be included on the formation documents. The directors are the individuals responsible for overseeing and directing the affairs of the nonprofit corporation, including making major decisions. They are not responsible for the day-to-day activities, which are the responsibility of a nonprofit corporation’s officers.
Officers: While inclusion of the officer information is optional in many states, a few states do require it. The officers are responsible for the day-to-day activities of the nonprofit corporation. Common officer titles include president, vice president, secretary and treasurer.
Legal Address of the Nonprofit: Supplying the legal address, or the principal address, of the nonprofit is optional in many states but a few states do require it.
While this is not a complete list of everything a state might require on its articles of incorporation for nonprofits, it outlines the typical items and will help you assemble this information prior to starting the incorporation process.
Also, keep in mind, that filing the nonprofit articles of incorporation does not equate to obtaining tax-exempt status for your nonprofit. In order to apply for tax-exempt status, Form 1023 must be completed and filed with the IRS. Some states also have state tax-exempt status procedures. To learn if your state is one of those, it is best to contact your state department of taxation.
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