Does a Nonprofit Report to the State When the Board Members Change?

By Cindy DeRuyter, J.D.

Does a Nonprofit Report to the State When the Board Members Change?

By Cindy DeRuyter, J.D.

Regardless of a nonprofit organization's classification under the Internal Revenue Code (IRC), it must make certain filings periodically. State laws govern nonprofit organizations, so these laws and reporting requirements vary depending on where the company conducts business. Nonprofits in some states must notify the Secretary of State or other business authority when board members or officers change. Other states do not impose notification requirements.

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Nonprofit Company Basics

To form a nonprofit organization, the organizer follows the same initial steps as those required to start a for-profit corporation. The person or company forming the nonprofit files articles of incorporation with the state(s) where the business will operate, indicating an intent to form a nonprofit company.

Nonprofits differ from for-profit companies in the way they handle earnings. Where for-profit companies seek to make a profit for the company's investors (shareholders) and leaders, nonprofits serve the public interest. A properly-structured nonprofit organization does not have to pay income taxes on the company's earnings. To qualify for this tax-exempt status, a nonprofit's organizer files an application with the Internal Revenue Service after registering the company with the state(s) where it intends to conduct business.

A nonprofit may qualify as a charitable organization under Section 501(c)(3) of the IRC, as a social welfare organization under Section 501(c)(4), or any one of 29 different subsections under IRC Section 501(c). Depending on which tax-exempt status an organizer chooses, donors may qualify for tax deductions for their contributions to the nonprofit.

Changes to Board Members or Officers

Just like for-profit organizations, nonprofit companies need boards of directors and officers. The minimum number of required board members and the number and type of officers vary by state. The company's bylaws identify the initial roster of officers and directors, their terms of service, and how the company intends to handle resignations and elections in the future.

Some states' corporate statutes require company organizers to identify officers and directors in the initial articles of incorporation. Generally speaking, if a nonprofit in one of these states makes changes to its board of directors or removes or appoints a new officer, the company needs to notify the state of the changes. The format of such reports should follow the state's requirements. Common filing types include annual reports, amendment filings, certificates of change, or similar documents.

The information nonprofits must report can also vary. Some states simply want to know the names of officers and directors, while others ask for home addresses, telephone numbers, and other contact information. There are often time limits associated with making such updates, so it is important to understand what to report and when.

Adhering to Filing Requirements

Nonprofit rules and requirements are complex. In some cases, a nonprofit conducting business in multiple states is subject to state notification requirements in one jurisdiction but not another. The person responsible for handling filings should ensure they understand what types of events trigger state notifications. A licensed business law attorney can help.

To create a new nonprofit organization, you can work with an attorney or use a reputable online legal services provider.

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