How to Start a Non-Profit // 02

Certificate of Incorporation

There are eight parts or “paragraphs” to the Certificate of Incorporation to be filed for a not-for-profit corporation in New York State. The most important information to know before attempting to fill out this form is:

  • What is the name of the not-for-profit corporation going to be
  • What is the purpose of establishing the corporation (this can be very brief)
  • What type of not-for-profit corporation is it (charitable organization, social or recreational, trade or professional, etc.)
  • Where the primary office of the corporation is going to be
  • Who the “directors” of the not-for-profit corporation are, and finally
  • Language that states what will happen to any corporation funds if you were to dissolute

In my case, I knew that I wanted the corporation to be entitled, The Tiny Professional, Inc. and I had already established a mission statement. I used the IRS website to verify that my corporation was indeed a charitable organization because according the Internal Revenue Manual (IRM), Part 7 Chapter 25 Section 3 Subsection 3.7, a charitable organization or trust must be set up for the benefit of an indefinite class of individuals, not for specific persons. A trust or corporation organized and operated for the benefit of specific individuals is not charitable. This specific definition was passed by the IRS on February 23, 1999. I designated my primary office to be my house, since I do not have an established office location yet. If a not-for-profit corporation has a physical location established, it would be in their best interest to have that location listed as their primary office.

COI

The directors of the not-for-profit can be composed of anyone and many times are the first board members of that organization. I chose to have my brother and the attorney who helped put together all the documentation as the other two directors. Of course this also meant drafting, establishing and requiring both parties sign a Conflict of Interest Agreement as well. As a final point, “the strategic plan should also include something few bother to consider when entering a business – an exit plan” (Sweet, 2006, p. 62). A corporation can always fail, especially in the not-for-profit world when profits are rarely in existence. If you are a 501(c) (3) corporation, meaning that you are tax exempt, you must explain on your Certificate of Incorporation where any funds you might have at that time, would go if your corporation was to go out of business. There are rules and regulations that require organizational funding to go to other 501(c) (3) organizations. The funding cannot go to a family member, individual person or company who makes profits.

In the event that a not-for-profit corporation decides to change their name in the original State they filed in, for any reason, there is a different form you can file to do so.

First, to avoid confusion in the numbering of its certificate of incorporation, rather than re-naming the New Certificate of Incorporation the ‘Third Amended and Restated Certificate of Incorporation,’ the Corporation intends to simply name the New Certificate of Incorporation the ‘Amended and Restated Certificate of Incorporation’. (Murphy, 2012, p. 20858)

Again, this is only necessary if a person or corporation chooses to change the name of their original filed entity. I hope that you find this non-profit series informative and helpful. These excerpts are based off my Master’s Thesis paper that I wrote this Spring and felt passionate about sharing with others, in the hopes that this information might help another individual succeed in their start up endeavor.

Sooner than later,

The Tiny Professional

References:
Murphy, E. M. (2012). Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Certificate of Incorporation of BATS Global Markets, Inc. Federal Register, 77(67), 20858-20859.
Sweet, K. (2006, March). Avoiding the Black Hole of Business Start-ups. USA Today Magazine. pp. 62-64.

25 Comment

  1. Michele says:

    Whether you are forming a non profit or a for profit corporation and exit plan is an excellent idea! You may get along with everyone now–but one never knows what will happen down the road!

  2. Samantha says:

    Awesome information. People are so sue happy this is a great way to cover your behind

  3. Excellent primer for starting a non-profilt. I’m sure this will be a good resource for all who are venturing down that path; nicely done!

  4. Natalie says:

    this is great information! love seeing things coming together for you and that you’re sharing the process on the blog!

    Natalie

  5. Heather says:

    Wow, this is great. You are totally on your way to getting your non-profit business open! Way to go!

  6. Amanda @ Erickson and Co. says:

    Thanks for the information. Sometimes it is hard to figure out all the steps in creating a new business.

  7. Thanks for the great info. I would love to start a booster club for the rec cheer squad. That would make if far easier to organize fundraisers. Wonderful tips.

  8. kungphoo says:

    Really great information! We are looking into starting one for my daughters gymnastic team so we can raise money.

  9. lisa jones says:

    Thank You For The Great Information This Isn’t The Easiest Thing To Do If You Don’t Know Whereto Start & Get Some Help

  10. Lots of great info. If I ever decide to start one I will definitely refer to this.

  11. I’m sorry I couldn’t focus on the post as I’m mesmerized by your beautiful blog. I love the new design, it’s simple yet cute and attractive. Good job! :)

    1. I am so glad you like the new layout and design. I feel like it has taken me forever to get to like point, but I am so glad to finally be here!!

  12. Ashley M says:

    It sounds like you really did your research – so important when starting ANY kind of business plan.

  13. Liz Mays says:

    You clearly learned your stuff. That’s a great overview of the process!

  14. Rosey says:

    I bet this is going to be useful info. for people thinking of starting up a non-profit. Awesome that you shared it!

  15. That is definitely some good information for people looking to do so.

  16. Elisebet F says:

    Very informative! I wonder how the laws differ by state? If I started a non-profit, would it only have to be filed in the state of its primary office, or would I have to register in every state the organization had a presence?

  17. wow this is very informative! What awesome information to know,thank you for sharing.

  18. Great tips! It’s important to have everything in order. And knowing thing in advance can help so much!

  19. I was explaining to my daughter all the things that go into something like this.

  20. Very informative post for businessmen… Thanks for sharing :)

  21. Farrah says:

    I love your tips. My friend and I started a non-profit a couple of years ago. I wish we would have had your guide back then!

  22. I used to work for a non profit company and still volunteer for their silent auction. I love it.

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