While joining the board of or founding a nonprofit is admirable, it’s important to always keep in mind the organization must exist for the common good of the public at large.
Are you considering joining the board of directors of a charitable organization? Maybe you’re considering forming one?
I am always struck by how many laws and government entities control nonprofits, and how often people misunderstand “tax-exempt” as “law-exempt.” On the contrary, because charitable organizations are stewards of public money they are subject to more regulations and reporting requirements than the average business.
A public benefit corporation is formed by filing articles of incorporation with the California Secretary of State. The person signing the articles of incorporation, and therefore creating the entity, is the “incorporator.” Once the articles have been filed, the incorporator elects a board of directors and officers and adopts bylaws. Bylaws are the “operating manual” for the corporation.Forming the corporation is only part of the work to be done.
Tax ID: Although the corporation’s goal is to be tax-exempt, the corporation will still need a tax identification number. This is obtained by filing a Form SS-4 online with the IRS who will then assign the corporation a number.Once the corporation is formed and the tax ID number is obtained, the organization is a “non-profit public benefit corporation,” but that doesn’t mean it’s tax-exempt or can receive tax-deductible donations.
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