With the ever-increasing costs of legal counsel, many nonprofit organizations in the Chicago area seek to find affordable yet quality legal advice when starting and managing their organizations. UpCounsel, an online legal services marketplace, provides a network of experienced lawyers with the experience and expertise to serve a wide variety of legal needs. Whether you’re a small business or a Fortune 1000 company, UpCounsel's online attorneys come with a proven track record of providing high quality, cost-effective legal services to a variety of clients. Understanding the unique needs of Chicago non-profits, here’s a guide to some of the most common questions and answers to help you better understand the legal needs of your non-profit.

What is the incorporation process for Chicago non-profits?

The process of incorporation may vary depending on the type of non-profit and the purpose of the organization. Generally, the first step is to choose an incorporation option, such as forming a limited liability company (LLC) or filing as a corporate entity with the state. Once you’ve selected your incorporation option, you'll need to file the required documents with the Secretary of State. This includes an articles of incorporation, which which specifies the organization's goals and purpose, the creation of bylaws, and the election of directors. You will also need to create an operating agreement and obtain an employer identification number from the Internal Revenue Service (IRS). Once the documents are filed, the organization will become an official non-profit entity.

What are the regulations regarding taxes and non-profits in Chicago?

Non-profits in Chicago must still comply with the requirements of the federal tax code and local state regulations. These regulations include filing an informational tax return with the IRS and submitting a separate filing with the Illinois Department of Revenue. Non-profits are also required to submit annual tax returns that include information on the organization’s income and expenses, as well as the full disclosure of all donations and grants received by the organization. Non-profits that receive more than $5,000 in gross receipts in a single year must also file with the state’s Charitable Trust Division.

Are there restrictions on fundraising activities for Chicago non-profits?

Yes, there are various restrictions on fundraising activities for non-profits in Chicago, such as the gathering of donations or applying for grant funding. Non-profits must be aware of the laws that govern charity tax obligations and must follow state and local regulations regarding solicitation. In addition, certain restrictions may also apply, depending on the type of organization and the type of fundraising activities. For example, certain restrictions may apply to political organizations, while others may apply to religious organizations. It is important to consult with legal counsel to ensure that your fundraising activities comply with all applicable regulations.

Are there any restrictions on private benefit for non-profits in Chicago?

Yes, there are restrictions on private benefit for non-profits in Chicago. Generally, an organization’s primary purpose must be to benefit the public at large and not provide a private benefit to any individual or small group. For example, the organization cannot provide private gain or pay dividends to its directors, officers, or private individuals. Non-profits may also not engage in activities that are for the benefit of a private person, such as purchasing real estate for use by a particular individual or providing tuition for the children of a particular individual.