If you clicked on this page, then I assume you are looking for some tips about starting your very own nonprofit. I know the process can be overwhelming and finding a starting point can seem quite difficult. Below, you will see a brief overview on starting your own nonprofit. Please know this is not a step-by-step guide. Instead, my goal is to give you a place to start. Now, before we dive in, here is my disclaimer: While I am an attorney, this is not legal advice. This is merely meant as an aide to help you ask yourself some questions. If you want some actual legal advice, feel free to reach out.
1) How many people do I need to start up a nonprofit?
The simple answer here is that you need at least 3 people to start a nonprofit. You need to list three directors on your Certificate of Formation that you will file with the Secretary of State. There are a few other roles that need to be filled in your non-profit, but these roles can all be filled by the three directors above.
- Registered Agent: A registered agent is someone who agrees to accept legal documents on behalf of your organization. The registered agent can a person or an entity (other than the organization itself). Some nonprofit organizations choose to hire an outside registered agent, but any Texas resident can be your registered agent. Of course, this person/entity must consent to be the registered agent. The consent does not need to be included in your Certificate of Formation but needs to be kept in your files.
- Members: You are not required to have members in your organization. If you choose to not have members, then this needs to be designated in your Certificate of Formation.
- Organizer: An organizer can be an organization, other legal entity, or person 18 years of age or older.
2) What paperwork is required to start my nonprofit?
First and foremost, you need to file a Certificate of Formation with the Secretary of State. You can find a link to this form at the bottom of the page. The Certificate of Formation requires some basic information like the name of the entity, the nonprofit status, the purpose. For a full list of the requirements, take a look at the Texas Certificate of Formation linked at the bottom of the page. This form will give you a deeper dive into what is required.
There a few things that are not required in your Certificate of Formation but you may want to add anyways. Here are a few of those things:
- Members: As I mentioned above, your nonprofit does not need to have members. If you choose to not have members, you need to include that information in your Certificate of Formation. On the other hand, if you choose to have have members, then you have the option of having a member managed nonprofit. If you don’t specifically provide this information in your Certificate of Formation, then the management will default to the board of directors.
- Duration: The default of the Certificate of Formation is that your nonprofit will exist perpetually. If this is not your intention, then you can designate that your nonprofit will end on a certain date.
- Manner of Distribution: The Texas Business Organizations Code has a manner for which any assets will be distributed if and when you need to dissolve your nonprofit. Again, this is the default. You can designate another manner of distribution in your Certificate if you choose to do so.
3) How do I name my nonprofit?
Your nonprofit must have a unique name that is not the same as, or deceptively similar, to another entity. You can check with the Secretary of State with the availability of names for a $1 fee per check here. The website is linked below. It is important to know that a name that is too similar to an existing corporation is the most likely reason your Certificate of Formation will be rejected. Be diligent and careful to pick a unique and original name.
4) Does my idea qualify as a nonprofit?
The general rule is that an organization can be a nonprofit so long as it is created for a lawful purpose. (There are a few additional exceptions). Having said this, the IRS has specific purpose requirements for granting tax-exempt status to a nonprofit organization. For more information on gaining tax exempt status, take a look here. It is important to note that this form does not include the required language to receive a 501(c)(3) status. For more information on 501(c)(3) requirements, keep an eye out for my next post.
I hope this was helpful. If you would like some additional help in starting your nonprofit organization, feel free to reach out.
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