Wisconsin Nonprofit Corporations: Laws and Requirements

Key Takeaways

• Wisconsin nonprofit corporations must comply with both state-specific requirements and federal IRS rules to qualify for 501(c)(3) tax exemption.
• Nonprofits must maintain good standing by filing annual reports with the Wisconsin Department of Financial Institutions and applying for state-level tax exemptions separately from the IRS.
• Operating a nonprofit in Wisconsin may also require registering with the Department of Revenue and Department of Safety and Professional Services depending on activities.
• Recordkeeping, board governance, and compliance with charitable solicitation laws are essential for legal operation.
• Dissolution of a nonprofit must follow strict state procedures, including asset distribution to other 501(c)(3) entities.

Wisconsin non-profit laws apply to 501(c)(3) organizations that are formed for certain reasons and wish to take advantage of tax exemptions on a state and federal level.

Introduction to Forming a Nonprofit Corporation

In most cases, a nonprofit will be formed as a 501(c)(3) organization. In simple terms, this means that nonprofits are generally formed for one of the following reasons:

• Religion.
• Charity.
• Science.
• Literature.
• Education.

Nonprofit organizations formed in this way are eligible for certain tax exemptions on the state and federal level. To form a 501(c)(3) organization that takes advantage of these tax exemptions in the state of Wisconsin, you'll first need to form a nonprofit corporation. Next, you'll need to apply for tax-exempt status, both with the state and the Internal Revenue Service.

How to Form a Nonprofit in Wisconsin

Forming a nonprofit in the state of Wisconsin requires several steps. Under Wisconsin state law, the first thing you'll need to do is register a nonprofit corporation with the state. Then, you'll need to work on the following:

• Choose the nonprofit's initial directors.
• Choose a name for your nonprofit organization.
• File your Articles of Incorporation.
• Prepare your organization's bylaws.
• Hold a board of director's meeting.
• Keep a binder of corporate records.

In the state of Wisconsin, nonprofit corporations are required to have a minimum of three directors.

When naming your organization, you'll need to make sure it contains one of the following words or abbreviations:

• Corporation (Corp.)
• Incorporated (Inc.)
• Company (Co.)
• Limited (Ltd.)

To make sure your intended name is available for use, you can do one of the following:

• Contact the office of the Wisconsin Department of Financial Institutions.
• Search the online Corporate Records database.

Part of forming any business corporation in Wisconsin is filing Articles of Incorporation with the office of the Wisconsin Department of Financial Institutions. This document needs to include information such as:

• A statement indicating that your nonprofit has been incorporated under state-specific laws pertaining to such organizations.
• The name of your organization.
• The principal office's mailing address.
• The initial registered office's street address.
• The name of the registered agent.
• The name of every incorporator.
• The address for every incorporator.
• Whether the nonprofit corporation has corporate members.

The Wisconsin Department of Financial Institutions has made a template available specifically for nonprofit organizations to quickly and easily complete and file their Articles of Incorporation. This form, known as Form 102, can be found on the department's official website. Simply complete this form and follow the included instructions to file your articles with the state.

Please note, filing your Articles of Incorporation can't be done online. You'll need to mail them to the address included in the instructions. It is also worth noting that the state-provided template only includes the minimum amount of information required to form a nonprofit corporation in Wisconsin. It doesn't include many of the items the IRS will require from you if you wish to obtain tax-exempt status from the federal government as a 501(c)(3) organization.

To be recognized as a tax-exempt organization by the Internal Revenue Service, you'll need to include the following additional information:

• A statement of purpose that meets specific requirements set forth by the IRS.
• A statement to the effect that your organization will refrain from engaging in prohibited legislative or political activities.
• A provision that dedicates your organization's assets to another 501(c)(3) organization in the event that yours dissolves.

Once you have completed your Articles of Organization, you'll want to prepare a set of corporate bylaws. These need to comply with Wisconsin laws that pertain to nonprofit corporations and should be completed before filing your articles with the state. These bylaws should contain the rules your organization should follow pertaining to:

• Holding meetings.
• Electing officers.
• Electing directors.
• Any other formalities required by the state.

It should be noted that your bylaws will not be filed along with your Articles of Incorporation. This is an internal document that should serve as the organization's operations manual.

Next, you'll need to hold a meeting with your organization's board members. This first meeting is normally called the "organizational meeting." During the organization meeting, the board should focus on:

• Electing the organization's initial directors.
• Approving the proposed bylaws.
• Appointing officers.
• Establishing the accounting periods and tax year.
• Approving the organization's initial transactions.

Ongoing Compliance for Wisconsin Nonprofit Corporations

Forming a nonprofit is just the beginning—Wisconsin nonprofit corporations must meet ongoing compliance requirements to maintain their legal and tax-exempt status.

Key ongoing obligations include:

• Annual Report Filing: Every nonprofit corporation must file an annual report with the Wisconsin Department of Financial Institutions (DFI) to remain in good standing. This report includes updated contact information for the registered agent and directors.
• Federal Tax Filings: Nonprofits with 501(c)(3) status must file Form 990, 990-EZ, or 990-N with the IRS annually, depending on their revenue.
• State Tax Exemption: To be exempt from Wisconsin state sales tax, nonprofits must file Form S-103 with the Wisconsin Department of Revenue.
• Charitable Solicitation Registration: Organizations that solicit donations may need to register with the Wisconsin Department of Financial Institutions under Chapter 440 of the Wisconsin Statutes, unless exempt (e.g., religious institutions).
• Registered Agent Maintenance: The nonprofit must continuously maintain a registered agent and office within the state.
• Bylaws and Board Meetings: Regular board meetings should be held, and accurate minutes must be kept. Any amendments to the bylaws should be documented and retained.
• Licensing Requirements: Depending on services provided (e.g., health or child care), additional licensure from state agencies like the Department of Safety and Professional Services may be required.

Failure to meet these obligations can result in penalties or loss of corporate status.

Dissolving a Wisconsin Nonprofit Corporation

If a nonprofit organization in Wisconsin decides to cease operations, it must follow formal dissolution procedures under state law.

Steps include:

1. Board Resolution: The board of directors must approve a resolution to dissolve the corporation.
2. Member Approval (if applicable): If the nonprofit has voting members, they must approve the dissolution.
3. Articles of Dissolution: File Articles of Dissolution (Form 510) with the Wisconsin DFI.
4. Final Tax Filings: Submit final IRS Form 990 with a termination statement and notify the Wisconsin Department of Revenue if previously exempt from sales tax.
5. Asset Distribution: Remaining assets must be transferred to another 501(c)(3) organization per IRS requirements and the organization’s dissolution clause.

It is also advisable to notify any state agencies or licensing bodies of the closure to ensure proper termination of registrations.

Resources and Support for Wisconsin Nonprofits

Wisconsin offers several resources to help individuals form, manage, and grow nonprofit corporations:

• Wisconsin Department of Financial Institutions (DFI): Offers incorporation forms, filing instructions, and annual report filing systems.
• Wisconsin Department of Revenue: Provides information and forms for state tax exemption.
• IRS Charities & Nonprofits Division: For 501(c)(3) recognition and compliance.
• Wisconsin State Law Library: Offers legal resources and references for nonprofit law and governance.
• Marquette University Law Library & Guides: Supplies curated legal guides on nonprofit formation and operation in Wisconsin.
• Nonprofit Associations: Groups like the Wisconsin Nonprofits Association and national organizations like the National Council of Nonprofits offer guidance, training, and networking.

Access to these resources can make navigating legal requirements easier for new and existing nonprofits.

Frequently Asked Questions

• Do all Wisconsin nonprofit corporations need to apply for 501(c)(3) status?
  No, only those seeking federal income tax exemption must apply. Others may operate as nonprofits under state law without 501(c)(3) status.
• Is it mandatory to file bylaws with the state of Wisconsin?
  No, bylaws are internal documents and are not filed with the state, but they must comply with Wisconsin nonprofit laws.
• Can a Wisconsin nonprofit pay its board members?
  Generally, directors are not paid, but they may be reimbursed for reasonable expenses. Compensation policies should be included in the bylaws.
• What happens if a Wisconsin nonprofit fails to file its annual report?
  Failure to file can result in administrative dissolution of the nonprofit corporation.
• Can a Wisconsin nonprofit operate in other states?
  Yes, but it must register as a foreign nonprofit corporation in each state where it operates.

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