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Legal Info | Incorporation | About Incorporation | How to Incorporate a Non-Profit Ministry

How to Incorporate a Non-Profit Ministry

by Terry Masters, Demand Media

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Ministries are often operated under the guidance and nonprofit status of an affiliated church. When structured in this manner, the ministry does not have the financial independence to raise money from third-party entities such as foundations, government agencies and corporations. For recognition as an independent financial entity, a church-affiliated ministry or a new ministry that is organizing for the first time must incorporate under a state nonprofit incorporation statute, following the same procedures as any new nonprofit organization. Some churches will spin off a ministry into a separate nonprofit entity but maintain control over the new organization by populating the board of directors with church officials. This enables the ministry to establish financial independence for fund-raising purposes while still maintaining a close affiliation with its governing church.

 

Step 1

Establish an initial board of directors. Most states require organizations that want to incorporate under their nonprofit incorporation statute to have at least three board members. Nonprofit entities are owned by the public and not private individuals, so these initial directors act as the nonprofit’s founders, organizers and incorporators. Ministries that want to maintain an affiliation with a church typically appoint church officials as the initial directors.

 

Step 2

Choose a name for the nonprofit ministry. This name must be unique and not in use by any other business entity in the state where the organization will be registered. Go to the website of the state business registrar and conduct a name search in the state’s business entity database. If the ministry was operating under a church, it may have been using a generic name that is not available for a registered entity. In that case, the ministry will have to change its name.

 

Step 3

Define the ministry’s charitable purpose or mission statement. The law requires the proposed activities of a new nonprofit to fall under one of the state’s public benefit categories. This charitable purpose must be specified in the articles of incorporation as the basis for the organization’s formation as a special entity.

 

Step 4

Select a registered agent. All states require business entities to indicate a state resident with a physical address who can accept official correspondence on behalf of the entity. A nonprofit ministry can often use an affiliated church as its registered agent. Otherwise, it can select any qualified person who is willing to act in this capacity, including a founder or director. The organization can also hire a company that provides registered agent services for a fee.

 

Step 5

Prepare nonprofit articles of incorporation. Online services are available to help you obtain the necessary forms and fill them out correctly. Indicate the basic information requested, such as the name of the nonprofit ministry, an outline of its charitable purpose, the name and address of a registered agent and the names and addresses of the initial board or directors. Sign and date the form.

 

Step 6

Obtain any government approvals or certifications. Certain types of nonprofit activity require approval by a state agency before the state will allow an organization to form. Examples include child care, drug rehabilitation and certain types of after-school education. Refer to the state’s incorporation statute for individual state requirements. Submit a copy of the organization’s articles draft to the governing agency for approval. If the agency approves of the organization’s formation, it will return an approval form that should be attached to the articles when they are filed.

 

Step 7

File the articles of incorporation with the state. The template will come with instructions that will indicate the options for filing and the state contact information. Most states accept articles by mail, fax and in-person. Include the correct filing fee, as indicated by the instructions. Nonprofit corporation filing fees are typically less that the filing fees for regular corporations. Request that the state return to you a certified copy of the articles. You will need a certified copy of the articles if you want to apply for tax-exempt status with the Internal Revenue Service. Your ministry is incorporated as a nonprofit once the state accepts the articles for filing.

 

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Tips & Warnings

If you plan to apply for tax-exempt 501(c)(3) status with the IRS, check the IRS requirements for nonprofit articles of incorporation before filing with the state. The IRS requires certain language in the articles that is not included on some state templates by default. To save yourself the need to amend the articles after filing, make sure to check the information requested by the state template against IRS tax-exempt requirements.

It is often a good idea to have an attorney or document preparation service handle both the articles of incorporation and the IRS tax-exempt application at the same time to ensure all of the paperwork is completed correctly.

References & Resources

SBA.gov: Nonprofit Organizations

Citizen Media Law Project: Articles of Incorporation for Nonprofits

American Bar Association: Model Nonprofit Corporation Act

Citizen Media Law Project: Nonprofit Organization

FindLaw: How to Form a 501(c)(3) Nonprofit Corporation

The Foundation Center: How do I start a nonprofit organization?

Internal Revenue Service: State Nonprofit Incorporation Forms and Information

Internal Revenue Service: Life Cycle of a Public Charity – Sample Organizing Documents

Enoch Pratt Free Library: How to Find Grants for Your Nonprofit Organization

Free Management Library: Free Complete Toolkit for Boards

About the Author

Terry Masters has been writing for law firms, corporations and nonprofit organizations since 1995. Her online articles specialize in legal, business and finance topics. Masters holds a Juris Doctor from Howard University and a Bachelor of Science in business administration with a minor in finance from the University of Southern California.

 

More on Incorporation

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Reasons to Form a Corporation

Two Types of Corporations

Tax Advantages of Corporations

Differences Between a Corp and a LLC

This article was created by and is owned by Demand Media, its subsidiaries, affiliates, or contractors (“Demand Media”) and do not necessarily reflect the views or opinions of LegalZoom. Nothing stated or implied in this article should be construed to be legal, tax, or professional advice. Demand Media is not a law firm and this article should not be interpreted as creating an attorney-client or legal advisor relationship. For questions regarding your specific situation, please consult a qualified attorney. LegalZoom is not a law firm and can only provide self-help services at your specific direction.

 

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