Click here to search for names of certified nonprofit organizations
The following information
describes formation of a nonprofit corporation in Hawai`i and some of the
documents needed to create and organize such a corporation (requirements in states other than Hawai`i could be substantially different.)
Please note: A nonprofit organization needs the
assistance of an attorney and/or accountant. There are
more technical details, not addressed by this information, that affect
the creation and operation of a nonprofit corporation. Information
and documents found on these pages can serve to help illustrate the process
of forming such an organization, although competent professional assistance
is essential to actually do so.
One of the more common
reasons for creating a nonprofit corporation is to qualify for grants that
may be available to IRS certified organizations. Internal Revenue
Code section 501(c)(3) tax-exempt certification is given to qualified organizations
established for charitable, educational, scientific and religious purposes.
Not every nonprofit corporation is qualified for tax-exempt status under
section 501(c)(3), yet having IRS certification is required by most grant-givers.
The following forms use the Acrobat Reader, available to download
free from the Adobe
website (where instructions are also available.)
Creation of a corporation is accomplished under state law. The Hawaii
Nonprofit Corporations Act is found in Hawai`i Revised Statutes (HRS) Chapter 414D. These statutory sections can be browsed on-line at the Hawai`i State
Legislature’s website. Click
here for a directory of the State's website with the entire text of
the Hawaii Nonprofit Corporations Act.
Initially, in Hawai`i, Articles of Incorporation are filed with the
Business Registration Division
of the State Department of Commerce and Consumer Affairs (DCCA.)
A form provided by the DCCA is sufficient for the purposes of state law, but
the DCCA form omits some terms required by the Internal Revenue Service
for tax-exempt certification under federal law. Therefore, I have prepared a
hybrid form combining both sets of required organizing language (click
here for the Articles of Incorporation in Adobe PDF format; click
here for the Articles of Incorporation as a file in RTF word processing format.)
Some notes on Articles of Incorporation:
1. The corporation's name cannot be similar to an already
registered name. (Click
here for the State's registered names search page.)
2. The organization may have members, or it can choose no members.
(Click here for more information about members.)
3. The initial principal office and registered agent
must be identified.
4. A simple statement of purpose is optional.
5. The state filing fee is presently $25 (usually takes a few weeks).
6. An additional $25 expedited filing fee is optional (one week filing).
After the Articles of Incorporation have been filed, the corporation exists under state law.
The next step is to have an organizational meeting. The incorporators
adopt by-laws and designate the first Board of Directors, if it is a non-member
organization, or else they call a meeting of the members to adopt by-laws
and elect a Board of Directors.
Click
here for a sample set of draft by-laws in Adobe PDF format; click
here for the sample set of draft by-laws as a file in RTF word processing
format. This sample is a simple example of minimal by-laws that assumes
a non-membership organization where directors are also elected as the officers
of the organization, a calendar fiscal year, and additional assumptions
such as when annual meetings will be held, etc.
Following the creation of the nonprofit corporation under State law, an application may be filed
with the IRS for tax-exempt certiifcation. Click
here to visit the IRS web page where tax-exempt organization forms -- such as Form 1023, the application for tax-exempt status under section 501(c)(3) -- can be found and downloaded.
The organization needs to obtain a federal employer ID number (EIN), roughly similar to a social
security number for organizations. Use IRS
Form SS-4 for that purpose, or some organizations may apply online for the Federal EIN.
Then the organization needs to apply to the IRS for tax-exempt certification under section 501(c)(3).
IRS Package 1023 has the forms and instructions for that purpose. The standard IRS filing fee
is presently $750, although the filing fee is $300 for an organization with anticipated annual gross receipts
averaging not more than $10,000 during the organization's first four years.
Nonprofit organizations may be required to file an
annual
information return using IRS Form 990 or Form 990 EZ, depending on
the organization's financial situation for the year.
Two IRS brochures address tax laws conferring tax-status: Publication 4220, Applying for 501(c)(3) Tax-Exempt Status, is designed to help prospective charities apply for tax exemption under the tax law, and Publication 4221, Compliance Guide for 501(c)(3) Tax-Exempt Organizations, explains the record keeping, report filing, and disclosure rules that apply to organizations that have tax-exempt status under section 501(c)(3). More detailed information is available in Publication 557, Tax-Exempt Status for Your Organization.
A nonprofit organization needs to keep good books and minutes of meetings for required reports,
such as the IRS information returns and grant reports. A CPA can
help set up the organization's books so that they are easier to keep accurately
and also less expensive to audit. Many foundations require audits
as a condition of grants. It is appropriate to budget sufficient
funds for bookkeeping, audits and also to purchase liability insurance
for the organization and its directors and officers.
Some organizations that apply for certification under IRS § 501(c)(3) obtain an advance
ruling that is good for five years. At the end of the five year period,
additional information is submitted to the IRS to obtain a final ruling.
Click
here for some more information about advance rulings (including IRS Form 8734.)
Additional nonprofit organization resources are provided below.
GuideStar's
searchable database of nonprofit organizations in the United States.
IRS Search, an online version of IRS Publication 78 listing certified 501(c)(3) organizations.
IRS Regulations, a searchable form of the official source of tax regulations, Title 26 of the Code of Federal Regulations (CFR).
NonProfit Gateway, federal nonprofit-related sites list.
Internet Nonprofit Center, publications, information and data about nonprofit organizations and the nonprofit sector.
The Foundation Center, gateway to philanthropy on the web.
