How to start a nonprofit in MA begins with determining which type of nonprofit you want to establish. The most common type is the 501(C)(3). First you form the nonprofit corporation, then you apply to the State and the IRS for tax-exempt status. A 501(C)(3) isn't taxed at the Federal level under IRS code, and this status is typically reserved for charities, religious groups, literary foundations, and educational groups.

Nonprofits That Aren't Tax Exempt

The National Center for Charitable Statistics noted that in 2012 there were more than 34,000 nonprofits in Massachusetts. Not all of those, however, were tax exempt. The nonprofits that aren't exempt from taxation include:

  • Business leagues
  • Farm Bureaus
  • Labor unions
  • Recreational clubs
  • Social clubs
  • Social welfare organizations

The things all nonprofits share, whether tax exempt or not, is that they exist to help others and benefit communities.

Why Start a Nonprofit

Starting a nonprofit is a way to turn a dream for helping others into reality, and it helps to have enthusiasm for helping others when you want to serve the community. Starting a nonprofit is a positive thing, but you should note that it can take a lot of time and money to get it going. Before you set up a nonprofit, explore the need for it in your community and make sure there isn't a similar one already in operation. If you do find an existing organization with similar goals, you may find working with that organization a better way to help your community.

Writing a Nonprofit Mission Statement

The way you prepare your mission statement and the data you add to it can make it easier to respond to queries from potential lenders, members of your board of directors, and employees of your nonprofit. Your mission statement should:

  • Summarize the purpose of your nonprofit
  • Explain why your nonprofit exists
  • Explain the who, what, when where, why, and how behind the organization
  • Share objectives of the nonprofit
  • Discuss activities and resources available
  • Tell how and where funding is expected to be gained

What Nonprofits Are Exempt From in MA

Corporate income tax isn't levied against Massachusetts nonprofits. They also offer liability protection to shareholders, officers, directors. There are fund-raising advantages for nonprofits. As an entity, a nonprofit is able to exist even after the original organizers have left the organization. They're exempt from some or all property tax on real property.

Naming a Nonprofit

The name you pick for your nonprofit in Massachusetts becomes part of its brand, and it's also an important step when setting up a corporation in MA. It is important that the name be different from existing corporations and other entities that are doing business in the state. The name must meet state requirements. The Secretary of the Commonwealth of Massachusetts maintains a website where you can check to see if the name you want is available for use by your nonprofit. The word Limited, Incorporated, Corporation, or the abbreviation for one of those must be included in your nonprofit's name unless it is a religious-based nonprofit.

Choosing Directors and Officers

There are several requirements for the number of people appointed to MA nonprofits:

  • The Incorporator signs and files the Articles of Incorporation, and there must be at least one
  • Directors govern the nonprofit and have an interest in the nonprofits purpose and its success, and there must be at least three unrelated according to IRS rules
  • Registered Agents receive legal notices for the corporation. The registered agent has to be located in the state and have an office that stays open during regular business hours.

Articles of Organization

The creation of a nonprofit officially begins with the filing of the Articles of Incorporation. These Articles of Incorporation provide details about where you are forming the organization and when, as well as other data that's required by the state to verify the existence of your nonprofit. There are some basic things that need to be included in the language of the Articles of Organization to accommodate IRS rules. These include a statement of your nonprofit's purpose, statement agreeing to avoid prohibited political activity, and a dissolution of assets provision that assigns the nonprofit's assets to another nonprofit should your nonprofit dissolve.

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