How to Start a Charity in Michigan
If you want to know how to start a charity in Michigan, you need to know about the process of incorporation.3 min read
If you want to know how to start a charity in Michigan, you need to know about the process of incorporation. Incorporating your charity is the easiest way to achieve nonprofit status, and to complete this process, you will need to pick a name for your charity, appoint a registered agent, and file formation documents in your state.
Forming Your Charity
Choosing a board of directors is the first step you need to take to form your charity. Michigan nonprofits must have three directors, although you can have more. Your board of directors will play an important part in starting your company, as they will outline the goals and purpose of your charity.
It is possible to name a person who is 16 or 17 years of age to your board of directors as long as you state their age in your formation documents. Also, the number of minor directors cannot be more than 50 percent of what your organization considers a quorum.
Next, you need to choose a name for your charity. Just like with traditional corporations, the name of your nonprofit corporation cannot be similar to the names of other entities registered in Michigan. You can visit the Department of Licensing and Regulatory Affairs to find out if the name you want for your charity is already taken.
Naming a registered agent is the next step in forming your nonprofit corporation. Your registered agent will accept legal notices mailed to your charity and then deliver them to you as soon as possible. Eligible registered agents must be located in Michigan and should have an office in the state where they can be reached during business hours.
Write Your Articles of Organization
Actually creating your nonprofit corporation requires drafting and filing Articles of Incorporation. You should file this document with the Michigan Secretary of State. On the LARA website, you can find a blank form that you can fill in and then submit.
The purpose of the Articles of Incorporation is to provide the state with basic information about your charity:
- The nonprofit's name.
- The purpose of your charity. Unlike regular corporations, you cannot simply put “lawful activities” as your purpose.
- Whether you have used stock to organize your corporation or have chosen some other structure.
- Whether your organization uses directorship or membership.
- The registered office address of your nonprofit.
- Your resident agent's office address and name.
- How long you want your nonprofit to last.
- Contact information for incorporators.
You should be aware that the blank form you can download from the LARA website does not include the statements you need to include when applying for tax-exempt status from the IRS. If you want your charity to be a 501(c)(3) organization, meaning you would be exempt from taxes, your Articles of Incorporation need to include a few statements required by the IRS:
- A purpose statement that complies with IRS rules.
- A statement that your charity will not participate in legislative or political activities prohibited by the IRS.
- A provision that your charity's assets will be dissolved and transferred to another 501(c)(3) entity whenever your charity ends.
If you have a MICH-ELF account, you can submit your Articles of Incorporation by e-mail or fax. You will need to pay a standard filing fee of $20, and if you want expedited processing, you will need to pay an additional fee of between $50 and $1,000. The amount of time it will take to process your formation documents will depend on the fee you have paid:
- $20 fee: Five to seven business days.
- $50 fee: 24 hours.
- $100 fee: Same day.
- $500 fee: Two hours.
- $1,000 fee: One hour.
You also need to write corporate bylaws for your nonprofit corporation. Your bylaws will outline several procedures and rules for your corporation, including how you will hold meetings and elect directors and officers. Bylaws are an internal document and do not need to be filed with the state.
Some nonprofit corporations in Michigan need to acquire an Employer Identification Number (EIN). The IRS will issue this nine-digit number to your corporation, and it will be used to identify your charity. Only nonprofit corporations with employees need one of these identification numbers. Once you have your number, you will be able to submit your 501(c)(3) application, start a business bank account, and file your annual 990 returns.
If you need help with how to start a charity in Michigan, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.