How to Start a Nonprofit in NC: Everything You Need to Know
Before looking for ideas on how to start a nonprofit in NC, you should have identified a need or cause in your community which no organization is involved.4 min read
Before looking for ideas on how to start a nonprofit in NC, you should have identified a need or cause in your community which no existing organization is currently championing. If such an organization exists, it may be best to work together in order to maximize existing resources to better impact your community and achieve your goals.
Reports released by the National Center for Charitable Statistics showed that in 2012 there were over 40,000 nonprofit organizations in North Carolina.
The majority of nonprofits are 501(c)(3) organizations — meaning that they were formed for educational, literary, scientific, charitable, or religious purposes and as such, are eligible for state and federal tax exemptions.
Creating a 501(c)(3) tax-exempt organization requires the formation of a North Carolina nonprofit corporation — after which an application for tax-exempt status is submitted to the state of North Carolina and the IRS.
Selecting a Director
The first step to creating a nonprofit in North Carolina is selecting the initial officers and directors. In North Carolina, nonprofit organizations must have at least one director who must be at least 18 years old. A director who is 16 years old can be allowed for certain organizations that are involved in youth activities. Directors are part of the corporation's governing body and are stakeholders in the organization's ultimate success. To meet IRS requirements, it is best to identify three unrelated individuals for directorship positions.
Choosing a Name for the Nonprofit Corporation
The second step involves choosing a name for the nonprofit corporation. The name must be unique and distinguishable from other entities such as limited liability partnerships, limited partnerships, liability companies, business corporations, and other nonprofit organizations operating in the state.
The chosen name must contain "limited,” "company," "incorporated," "corporation" or their abbreviated forms (corp., inc., co. or ltd.). For more information on name restrictions, see North Carolina's General Statutes 55D-20 and 55D-21. You can check the availability of the chosen name by searching the North Carolina business name database or calling the Secretary of State's office.
Appointing a Registered Agent
Operating a nonprofit in North Carolina requires the appointment of a registered agent who will handle all official documents on behalf of the organization. The registered agent must:
- Be a legal resident of the state or a business entity legally registered and operating in the state
- Be available during normal business hours (Monday through Friday, 9 a.m. to 5 p.m.)
- Have a physical North Carolina address (not a P.O. Box)
- A registered agent can be anyone within your organization or an outside professional, both of whom must meet the above requirements
Filing of a Nonprofit's Articles of Incorporation
Creating a nonprofit entity requires the filing of a certificate of incorporation with North Carolina's Secretary of State. The articles of incorporation must include the following basic information:
- The name of the nonprofit
- The names and address of each incorporator
- Whether the corporation will have members
- A statement indicating that the nonprofit is religious or charitable
- The street and mailing address of the nonprofit's initial registered office, the name of the initial registered agent at the address, and the county where the office is located
- Provisions concerning the distribution of assets upon dissolution
- The street and mailing address of the principal office as well as the county where it is located
Correctly filing the articles of incorporation and paying the $60 fee officially incorporates your nonprofit organization.
There is a nonprofit article of incorporation form on the Secretary of State's website which you can fill to create a nonprofit organization. The form should be completed and filed in accordance with the instructions provided.
Although the form has the minimal information required to create a nonprofit corporation in North Carolina, it does not include the requirements for obtaining the 501(c)(3) tax-exempt status from the IRS. Receiving the tax-exempt status from the IRS requires the addition of certain specific language to the article. This includes:
- A statement of purpose that follows IRS requirements
- A statement affirming that the nonprofit will not engage in legislative or political activities
- A provision for distributing assets to another 501(c)(3) organization upon dissolution
To obtain sample language and additional information on IRS requirements for obtaining tax-exempt status, visit the IRS website to see the IRS Publication 557, Tax-Exempt Status for Your Organization.
Remember to include the federal and state tax-exempt required language when creating the articles of incorporation.
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