UBC Law Review

UBC Law Review

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Important Documents of 501c3 Nonprofit Corporation

A 501c3 nonprofit company is an organization exempted in paying taxes and has the capacity to accept tax-deductible contributions. A corporation is nonprofit if it is controlled formally at the state level, and if has a tax-exempt status from the IRS. All nonprofit corporations cannot be given a 501c3 nonprofit status. To be able to become a 501c3 tax-exempt organization, your corporation needs to be organized solely for fictional, educational, generous, spiritual, and avoidance of unkindness to animals or children purposes.

There are significant documents that you must prepare prior to formally organizing and applying for tax exemptions. Obtaining a nonprofit statement is very important, because it will contain all the objectives and desires of a nonprofit business. It will also include the precise way you intend to go in achieving those objectives and desires. The mission statement is required for three main purposes; first to guarantee that your directors, members and other main personnel cooperate to work towards a common objective. A brainstorming meeting should be scheduled in order to give everyone the opportunity to contribute something precise, comprehensive and appealing. The second purpose is for potential supporters and other companies will have the ability to read the mission statement in order for them to fully understand the purpose of your nonprofit corporation.

Just like any corporations, your nonprofit business must be working under the rulings of the corporate bylaws. It usually provides not only the legally required information, but it also handles specific procedures and processes designed especially for the nonprofit organization. There must be a Board of Directors governing your corporation. Usually, a board must have three or more directors whose main role is to guide your organization in a way that it goes along towards your mission. Your organization’s success in achieving its goals is the main responsibility of the directors.

The nonprofit bylaws have clauses that the directors must use as guidelines in governing the organization. The clauses must handle the particular roles and processes that include: the number of administrators that comprise a board; the process that allows the board to create exceptional committees to deal with issues that occur; board member removal procedure; procedures on replacing a walking out board member; definite functions of the corporate officers and directors; the definite use of funds given by donors, funding money, and so on; any agreements the company has with any other company or individual; and a policy for conflict of interest.

The last purpose is to give the IRS something concrete to work on while considering your application. With your mission statement the IRS will be able to determine if your organization is eligible to fall under section 501c3 nonprofit of the Internal Revenue Code, which is the section that covers mainly those specific purposes discussed. This is of course not a complete list of the whole thing that needs to be incorporated in your bylaws. The company will have very definite requirements; your state also has definite needs that you must be aware of. The next thing you should do is to gather all documents, but do not forget to get a lawyer look at your Bylaws and Mission Statement. In the long run, getting eligibility for tax exemption will save your company a lot of money, which you can use to improve your services.