Pennsylvania is home to nearly 79,000 nonprofit organizations. Nonprofit organizations, also called 501(c)(3)s, provide various valuable charitable services, including educational, housing, and food services for low-income individuals. Forming a nonprofit organization allows groups to receive deductible donations. However, the process of forming a nonprofit involves complying with multiple state and federal laws and can be challenging.
If you’re forming a nonprofit organization in Pennsylvania, you’ll benefit from working with a skilled business attorney. The experienced attorneys at Jones, Gregg, Creehan & Gerace LLP understand the importance of forming a solid organizational foundation to avoid legal headaches. Our nonprofit practice group will work closely with you to advise you on how to form and protect your 501(c)(3) nonprofit.
What Is the Mission of Your Nonprofit Organization?
Forming a nonprofit can help you provide services or education to at-risk groups in Pennsylvania. There are many different types of nonprofits, but they all focus on helping others and benefiting their communities. The first step in forming a nonprofit is to make sure you’ve identified an urgent need in your community.
You will need to conduct some research and make sure there aren’t any existing nonprofits that serve your specific cause. If another nonprofit currently exists, you may want to consider fiscal sponsorship. In this case, an umbrella 501(c) organization will sponsor your project, allowing you to receive tax-deductible donations while they handle administrative paperwork.
The Benefits of Obtaining 501(c)(3) Status
After you’ve narrowed down your nonprofit’s focus, you will need to apply for 501(c)(3) status to achieve your goals. Receiving 501(c)(3) status is important for several reasons, including limiting the liability of your nonprofit’s directors and officers. Other benefits include applying for grants, becoming exempt from federal corporate income tax, and providing tax deductions to your donors. Becoming a nonprofit will give the public confidence by showing you are a legitimate charitable group. Donors are more willing to provide donations when they know they will receive tax deductions.
The Different Types of Nonprofit Organizations
You’ll need to decide on the type of organization you’ll form. Currently, 29 different types of nonprofit organizations are defined in the IRS code. For example, you’ll need to decide whether you’ll become a charitable corporation under a 501(c)(3) or another type of nonprofit. You also need to determine if you’ll be a member corporation or not and whether you’ll be a corporation or unincorporated, an association, or a trust.
Do you want to become a membership organization or be governed by a board of directors who will choose their successors? The skilled business formation attorneys at Jones, Gregg, Creehan & Gerace LLP are prepared to help you make informed decisions about your nonprofit organization.
The Requirements for Forming a Nonprofit in Pennsylvania
Under Pennsylvania law, you must select an incorporator who will sign your nonprofit’s articles of incorporation. You’ll need to choose directors who will act as a governing body of your nonprofit corporation and help you transform your ideas into reality by clearly stating goals and developing fundraising strategies. You’ll need to identify at least three board members to meet IRS requirements.
Additionally, state law requires every nonprofit organization to have a designated president, treasurer, and secretary. A single individual can hold all these offices at once. When applying for nonprofit status, you’ll need to appoint a registered agent in Pennsylvania who will receive legal notices on behalf of your nonprofit.
Filing Articles of Incorporation with the Department of State
The attorneys at Jones, Gregg, Creehan & Gerace LLP can help you draft and file Articles of Incorporation, which will officially mark the creation of your nonprofit organization. Your Articles of Incorporation should include detailed information about the formation of your nonprofit and include statutorily required information necessary to verify its existence. Working with one of our skilled attorneys can ensure that your Articles of Incorporation are customized to your nonprofit organization. We can also ensure you meet IRS and Pennsylvania requirements. We can also help you draft bylaws, which will be the governing documents for your nonprofit. Your bylaws will also act as the operating manual for your organization and should include a conflict of interest policy.
Applying for 501(c)(3) Exemption through the IRS
Pennsylvania requires new nonprofits to advertise their Articles of Incorporation filing with the Department in newspapers in the county where their principal office is located. After the Articles of Incorporation have been filed, the nonprofit will need to hold an initial meeting. The board of directors should approve the bylaws and electors, adopt the conflict of interest policy, point officers, and approve resolutions, such as opening the organization’s bank account. The secretary should record all these important decisions.
After the initial meeting, your organization can apply for 501(c)(3) tax exemption status. Doing so is one of the most time-consuming and complex steps to setting up a nonprofit. You can apply using form 1023 or 1023-EZ, and you will need to include your proposed budget, bylaws, and certified articles of incorporation.
You’ll need to complete an SS-4 to obtain an employer identification number (EIN) from the IRS to operate your nonprofit. Your EIN will identify your nonprofit organization. You will need this number to open a bank account, apply for 501(c)(3) status, and submit returns to the IRS. Obtaining an EIN number will also help when you request sales tax exemption through Pennsylvania.
Contact a Nonprofit Formation Attorney in Pittsburgh
Forming a nonprofit organization in Pennsylvania and applying for a 501(c)(3) tax exemption can be complicated. Working with the experienced attorneys at Jones, Gregg, Creehan & Gerace LLP Can help you move through the process as smoothly as possible while ensuring compliance with all state and federal laws. Contact Jones, Gregg, Creehan & Gerace LLP to learn more about our nonprofit formation services. We represent clients in Pittsburgh and throughout Pennsylvania.