Should i incorporate my nonprofit

The nonprofit corporation continues to exist beyond the lifetime or involvement of the people who began it or who have managed it. Because the organization persists in this way, it is more attractive to donors who want to fund a cause for the long term. Being a corporation opens the door for employee benefits such as group life insurance, health insurance, or a pension plan, advantages not always available to workers in unincorporated organizations.

Forming a nonprofit corporation is not simple. But the preparation forces clarity about mission , operating rules, and procedures for decision making. It's essential for a nonprofit, whose board members may hold opposing ideas, to have clear-cut rules about delegation of authority and how to get things done. Having all of these principles in the articles of incorporation and bylaws makes running the organization much easier.

Other advantages of incorporation include exemptions from county real and personal property taxes, lower postal rates on third-class bulk mailing, cheaper advertising rates, free radio, and television public service announcements PSAs , and more—depending on your activities. Disadvantages of incorporation include a lot of paperwork and some expense. For instance, you may need to hire a lawyer to prepare your documents. Then there is the time and energy to comply with regulations and to grow your organization.

There are restrictions too, such as no pay for your directors and limits on political campaigning and lobbying. And when your organization closes , its assets must be given to another nonprofit. But if the benefits of incorporating make sense and outweigh the disadvantages, you may be ready to move ahead.

Certainly, if you anticipate that your nonprofit will grow, it would be wise to incorporate and apply for tax exemption earlier rather than later. If you don't incorporate, you might be an unincorporated nonprofit association. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Charitable nonprofits, or c 3 s, must receive a substantial part of their income from the general public through donations and grants.

Incorporated nonprofits are required by state law to have a board of directors. The directors have duties defined by corporation law that are similar to boards for regular corporations.

Your state's incorporation laws will determine the minimum number of directors. Your first board of directors should be picked carefully as its members will guide you through the startup phase of your organization.

You will want to find people with expertise, passion for your cause, and the ability to help raise money. Nonprofit board directors are volunteers who will guide your organization but not operate it. The board hires the CEO, but that person hires the staff. IRS Publication Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance.

Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Nonprofit Organizations Starting a Nonprofit. Table of Contents Expand. Table of Contents. What Does Incorporation Involve? How to File for Tax-Exemption.

When Can You Start Fundraising? Frequently Asked Questions. She has over 30 years of experience in nonprofits. Learn about our editorial policies. Updated on April 23, Article Sources. Your Privacy Rights. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page.

Citizens for a Smoke-Free America informs the public about the health hazards of secondary smoke from cigarettes. The group decides to campaign for local legislation banning cigarette advertising on billboards in the community. It expects an unfriendly response from cigarette advertisers in the form of expensive and time-consuming lawsuits against the organization and its directors and officers.

The group decides to incorporate before beginning the campaign, to allow the corporation to pay the officers' and directors' legal expenses, and to insulate the directors and officers from personal liability.

Although these aren't the main reasons people form nonprofit corporations, nonprofits can take advantage of other benefits, including:. To learn more about forming a nonprofit corporation, see the article How to Form a c 3 Nonprofit Corporation.

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Grow Your Legal Practice. Meet the Editors. Not sure whether to incorporate your nonprofit? Here's some information to help you decide.

Your Association Makes a Profit From Its Activities If your group will make a profit from its activities, becoming a nonprofit corporation can yield a great benefit: As long as the money you make is related to your charitable activities, your nonprofit corporation won't pay income tax on it. Example Better Books and Learning begins as a part-time effort by a few dedicated individuals to hold book groups for disadvantaged youth.

Example For Shore United wants to sponsor monthly cleanup drives to pick up and haul away trash left along the local bay shore.