A Guide to Incorporating a Non-Profit Organization

You have a great idea for an organization that will perform charitable work. Unfortunately, you need more than a good idea. You need everything other startup businesses need: a business plan, a niche market or service, and the money to implement your ideas. Incorporating your charitable organization can help you to accomplish all of those goals. By incorporating your non-profit organization you can receive tax benefits and protect yourself from lawsuits resulting from your charity's actions.

The first step, while obvious, is nonetheless important. You'll need to verify that your organization has a unique name. A distinctive name does more than stick in the mind of potential donors and the recipients of your charitable efforts - it avoids trademark infringement. You can check with a state agency or county clerk's office, depending where you live, to verify no other businesses have a similar name. Some states require registering the name of your non-profit when doing business with a name that is not the owner's own legal name.

Articles of Incorporation

Articles of incorporation govern the basic terms of a corporation's existence, such as the purpose of the corporation. Depending on your state, the articles may be the official recognition of the corporation's existence.

In the articles there should be specific language indicating that the organization is created for a charitable purpose.

At this stage you can also name a board of directors, if there is one, and create bylaws. Bylaws are the rules that govern the internal workings of the organization, and are generally more extensive than articles. Bylaws may indicate when to hold meetings and the powers of any directors or officers of the organization, for example.

Obtaining 501(c)(3) Status

One of the easiest ways to encourage donations to your non-profit organization (NPO) is to make any gift tax deductible. You can do this by filing paperwork with the IRS. If the IRS determines that your organization meets the criteria for tax-exempt status, your organization will be what the IRS labels a 501(c)(3) organization. This means all contributions are tax deductible, and you will not be taxed for income gained by the NPO. Most NPOs that seek 501(c)(3) status are corporations, but a variety of business entities are eligible.

The process for creating a tax-exempt NPO that protects the owner's individual assets, encourages donations through tax deductions and clearly states the organization's purpose and method of governing itself can be complex. However, by using a lawyer to establish your non-profit organization you can ensure a professional organization that allows you to focus on furthering your cause as much as possible.