Nonprofit in New Mexico: Introduction

Before you start your nonprofit organization, the first step is looking at existing organizations in your community to determine whether any are offering similar services to what you want to offer. If you find another existing organization, you may want to think about working with that organization to share resources and make a bigger impact in the community.

The first step in starting a nonprofit organization is coming up with a plan to form a corporation. You will then need to apply to receive 501(c)(3) status for your organization. After you become a 501(c)(3) nonprofit organization, you can:

  • Accept donations
  • Apply for grants
  • Limit the personal financial liability for the organization's directors and officers
  • Be exempt from corporate income tax on the federal level

The most important benefit of becoming this type of organization is the fact that you gain legitimacy and confidence in your cause, which helps instill confidence in your organization with members of the community. Typically, the purpose of creating a nonprofit organization is to provide assistance to members of your community. However, you need to take certain steps to make sure the business is meeting its goals, as well as to protect yourself from potential liability.

You may choose to draft a mission statement that outlines the purpose of the organization. As you draft the statement, consider the issue or problem that your organization will address. From there, focus the mission statement on the methods and values that will guide the organization toward meeting the goals that will help address that problem or issue.

Incorporate the Organization

The next step may be to incorporate the organization as this business formation offers protection for the owners. If the organization has any creditor claims or lawsuits against it, forming it as a corporation can help protect the volunteers, officers, and trustees associated with it. Since a nonprofit is unique from other corporations in that it isn't owned by a single individual or its shareholders, choosing to incorporate does take away some of the autonomy and control of forming the organization.

You are also required to handle more paperwork, such as keeping and maintaining corporate minutes and drafting bylaws for the organization. Applying for the federal tax exemption requires money and time. Most people who start nonprofit organizations consult with legal and/or financial professionals to handle some of the startup tasks and daily operations. If you incorporate and take your company public, its finances would be available for members of the public to inspect.

Steps in Starting Your Nonprofit in New Mexico

The next step in starting a nonprofit organization in New Mexico is coming up with a name. The name you select will be important as you go through the process of incorporation, as well as to establish the brand. Your nonprofit organization's legal name can't conflict with another organization that is operating and registered in New Mexico. Most people start by searching existing names of organizations and businesses that are registered in the state before they file any paperwork.

You can search for existing names in the Corporations Bureau Database Search. As you review the existing organizations, it's important to note that the name of a non-profit organization is not allowed to imply any purpose other than what its actual purpose is, as stated in its articles. If you need to reserve a name, you can file the application for the reservation of a corporate name. This form is valid for 120 days and requires payment of a $25 filing fee.

Incorporators and Initial Directors

Another step in starting a nonprofit organization in New Mexico is selecting three individuals who will serve as directors. This is a requirement set forth by the IRS. Review the residency and age requirements for directors before you appoint individuals. You must also file articles of incorporation with the Secretary of State. This document must include some basic information about the organization:

  • Name
  • Duration
  • Purpose
  • How assets will be distributed upon dissolution
  • Registered agent's name and address
  • Names and addresses of the three individuals who will serve as directors
  • Each incorporator's name and address

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