Launching a Not-for-profit
Starting a not-for-profit in New York: you can do it yourself, or we can help.
You have a vision for making your community better. You are not alone. There are nearly 92,000 active not-for-profit corporations in New York. Will you make that number 92,001?
Should I start a not-for-profit?
Founding a not-for-profit is not the right solution for every organization. There are pros and cons to launching your own not-for-profit. You probably have an idea about some of the potential advantages such as tax exemptions, receiving charitable donations, and access to grants, but can you describe the disadvantages? For a short video talking about the pros and cons of starting a nonprofit or not-for-profit, check our YouTube channel or download our One Pager on the pros and cons of starting a nonprofit. (What's a One Pager?)
Still not sure? Before you invest your time and money, you might want to consult an attorney to evaluate whether not-for-profit status is right for your specific situation. If you would like to schedule a free 30 minute consultation about the pros and cons of founding your own nonprofit organization, you can schedule a call here.
DIY: How to start a not-for-profit in New York.
If you've decided that establishing a not-for-profit is the right decision, the bare minimum under New York law for starting a not-for-profit is to:
Draft a certificate of incorporation
There are a handful of items that are required to be included in the certificate of incorporation and a number of optional items. If you are planning to seek tax exemption from the IRS, there is particular language that they will be looking for in the certificate of incorporation about what activities the organization can do and what will happen to the not-for-profit's assets if and when it dissolves. If you have been told by the IRS that your certificate of incorporation prevents you from getting tax-exempt status, there is information about amending your corporate papers here.
You can download a free fillable form of the certificate of incorporation from New York's Department of State here.
File the certificate of incorporation with the state
The filing fee is $75. Mail the forms and payment to:
Department of State
One Commerce Plaza
99 Washington Ave.
Albany, NY 12231-0001
Draft bylaws of the not-for-profit
New York corporations, including not-for-profits, need to have bylaws to set out the day-to-day to operations. The point of bylaws is to set out how your not-for-profit is going to be run. The bylaws can be adopted by the incorporators (if no directors have yet been chosen) or by the first board of directors.
Appoint or elect the founding members of the board of directors
A not-for-profit corporation in New York is required to have a board of directors. The certificate of incorporation or bylaws will set out the number (but not less than three) and terms of services of the directors.
Conduct the first "organizational" meeting
Once the not-for-profit is incorporated, there must be an initial organizational meeting, called by the incorporators (if there are not yet any directors named) or by the directors. You will want to keep minutes of the actions taken at the organizational meeting (and every subsequent meeting for that matter) and keep those records at your organization's principal place of business.
After establishing the not-for-profit, you might want to:
Apply for tax exempt status from the IRS
The IRS says this: "Although most federal tax-exempt organizations are non-profit organizations, organizing as a non-profit organization at the state level does not automatically grant the organization exemption from federal income tax. To qualify as tax-exempt from federal income taxes, an organization must meet requirements set forth in the Internal Revenue Code."
If you want to be tax-exempt, you will need to file an application with the IRS. Those forms are required to be filed online now. If you want to be treated as a 501(c)(3), you file a form 1023 (filing fee of $600) or 1023-EZ (filing fee of $275). If you want to be treated under a different section of 501(c), you file a form 1024 (filing fee of $600). If you want to learn more about the difference between 501(c)(3) and the other subsections, check out our YouTube video here.
Apply for a New York income tax exemption
Not-for-profit organizations can apply for an exemption from the New York corporations franchise taxes. The form is CT-247, and there is no filing fee.
Apply for a New York sales tax exemption
Tax-exempt organizations can receive an Indiana sales tax exemption by filling out form NP-20A and mailing it to the Indiana Department of Revenue. You can download the form here.
Starting your nonprofit on a solid foundation involves more than doing the bare minimum. Your next steps might include:
Completing a conflict of interest policy and training your key personnel on it
Creating a policy on executive compensation
Drafting volunteer liability waivers
Building your employee handbook
Legal help in starting your New York not-for-profit.
For clients who have hired M.G. Morris Law, P.C., as their Outside General Counsel, the start-up package includes all of the above, and it is automatically included in your legal services subscription. To discuss, log in to your secure client portal and send a message, or just call the firm. If you would like to schedule a phone or video call, you can do that also.
If you are not yet a client, the firm offers a flat-fee nonprofit startup package. Learn more about what is included in the flat fee package here.
If you would like to learn more about the firm's Outside General Counsel service, there is more information here.