Kindle Notes & Highlights
Started reading
November 22, 2018
Fortunately, there are big payoffs to all this work and attention, including the ability to attract donors and grant funds, obtain real and personal property tax exemptions and special nonprofit mailing rates, avoid corporate income taxes, and shield officers and directors from legal liability.
Nonprofit corporations, on the other hand, generally must be established to accomplish one or more specific purposes that benefit either the public at large, a segment of the community, or a particular membership.
This means that your nonprofit corporation must be formed for religious, charitable, scientific, literary, and/or educational purposes.
Ask the advisor to help you (especially your treasurer) set up a good record-keeping system, which you can use to prepare your annual federal and state nonprofit tax forms and reports.
• 501(c)(3) performing arts groups are qualified to participate in the performance programs sponsored by federally supported colleges and universities.
After you’ve set up your corporation, you’ll need to file annual tax and reporting returns with the state (the state tax or revenue office and the attorney general) as well as the Internal Revenue Service. Also, you will need to regularly prepare minutes of ongoing corporate meetings, and, occasionally, forms for amending articles and bylaws.
Obviously, the most common method is to obtain revenue in the form of contributions, grants, and dues from the people, organizations, and governmental agencies that support the nonprofit’s purpose and goals.
(ticket sales, payments for art lessons or dance courses, school tuition, or clinic charges).
organized to encourage literary appreciation in the community and to raise money for the support and improvement of the public library.
In sum, your path to nonprofit status is a usually a two-step process—first you incorporate with the state, then you apply for tax-exempt recognition from the IRS.
In most states, more than one person is needed to organize and operate a corporation. Although most states allow just one person (who doesn’t have to be a lawyer) to act as the incorporator, typically, at least three directors are needed to manage a nonprofit corporation, and at least two of the officer positions (usually the president, treasurer, or secretary) must be filled by different people.
An incorporator is the person (or persons) who signs and delivers the articles of incorporation to the secretary of state for filing.
When an incorporator acts as a promoter, he or she is considered by law to be its fiduciary. This legal jargon simply means the incorporator has a duty to act in the best interests of the corporation, and must make full disclosure of any personal interest and potential benefits he or she may derive from business transacted for the nonprofit.
Directors meet collectively as the board of directors, and are responsible—legally, financially, and morally—for the management and operation of your nonprofit corporation.
Your directors are a crucial link between your organization and its supporters and benefactors. Make sure that the members of the community that you plan to serve will see your directors as credible and competent representatives of your group and its nonprofit goals.
Look for people with contacts and real-world knowledge and experience in the specific area of your nonprofit’s interest.
• the scope of the nonprofit’s proposed activities and programs • board member responsibilities and time commitments (expected frequency and length of board meetings, extra duties that may be assigned to directors), and • the rewards of serving on your board (such as the satisfaction of working on behalf of a cause you care about or the experience of community service).
The term of office for directors is usually specified in the corporation’s bylaws. Some states set a maximum term for directors (typically one year) only if the term is not specified in the articles or bylaws; other states specify a maximum term in all cases. Most states let you specify any term for directors in your bylaws.
Most states require a nonprofit corporation to have a president, secretary, and treasurer.
