Posts tagged ‘legal document’

Articles of Incorporation

The next step of an incorporated nonprofit is drafting the legal incorporation document.  This document may be called the certificate or the articles of incorporation depending on your state.  Call your Secretary of State or Attorney General and request written information on filing for incorporation; ask specifically if it includes an example of your states Articles of Incorporation. This will give you some guidelines to follow while forming your articles.  Once you have completed the document consult an attorney to review them for you.  The IRS is very specific about the wording in your organizations articles and you may be rejected for tax-exempt status if you have not included specific IRS language.

Besides the legal language you will be inserting your specific organization information.  This information includes the name of the organization and where its main office will be located.  You also need to include your organizations primary goals.   Keep your goals very broad so that you do not limit your organizations expansion in the future.

 A couple of decisions need to be made throughout the articles.  The first being what type of organization you will be.  For the purpose of becoming a 501© 3 organization your nonprofit should be established as one of the following:

CHARITABLE
EDUCATIONAL
SCIENTIFIC
RELIGIOUS
LITERARY
PROMOTING AMATEUR ATHLETICS
OR EDUCATIONAL

 (A more thorough list and explanation can be found at:
www.SumptionAndWyland.com – FAQ -General activities of nonprofits
or through www.IRS.gov)

 Next you will need to decide whether your nonprofit will have members, not have members or reserve that decision for later:

 shall have no voting members.
may (but need not) have voting members
shall have a voting membership

There are advantages and disadvantages to each choice.  You need to consider the long-term future of your nonprofit before making this decision.  Although you may start out as the founder and serve on the board of directors, after incorporation these decisions will follow strict voting procedures as laid out in your bylaws.  Voting membership is an opportunity to elect and remove directors as well as vote on changes and amend bylaws.  This prevents the nonprofit from being completely controlled by its board of directors.  This decision also places some liability in protecting member rights and outlining all responsibilities of each member.  Study several different types of membership organizations and ask questions concerning their voting procedures.  This will help you decide if it is the best decision for your nonprofit.

Recommended paperwork for members should include some type of letter of agreement.  This needs to be signed by each potential member and includes the rights allocated to the member through the bylaws.  You will also need some kind of nominating procedure stating who is eligible to become a member and the voting procedures to accept them.  You can have several different classes of members and allow different voting privileges to each class, each with separate dues amounts.  All of this information is established through the nonprofit bylaws and will be discussed more thoroughly at that point.  The only decision to be made here is which type of organization you will be.

The articles of incorporation are not as intimidating as they appear.  They do need to follow certain state and federal guidelines but your Secretary of State will provide those details and then all that is left to do is plug in your own information.  Once your attorney reviews them there may be slight modifications but you will have the basic document ready for them to work with.

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March 11, 2008 at 1:23 pm Leave a comment


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