Rules & Regulations for Non-Profit Associations in Pennsylvania

By Elizabeth Rayne

Forming a nonprofit will enable you to carry forth your charitable mission, while allowing your supporters to make tax-deductible donations to your cause. In Pennsylvania, nonprofit associations are referred to as nonprofit corporations, which are regulated by the state's Nonprofit Corporation Law. Before officially forming the organization under state law, it is important to understand the general requirements for nonprofits, and to have a board of directors in place to manage the corporation.

Charitable Purpose and Profits

Pennsylvania nonprofit law restricts how nonprofit corporations may distribute profits, and the law requires that nonprofits have a charitable purpose. Unlike for-profit corporations, nonprofits may not distribute profits to the board members or shareholders -- apart from reasonable compensation for services that individuals perform for the nonprofit. All Pennsylvania nonprofits must have a charitable purpose, meaning that the organization must serve to benefit the community. For example, the nonprofit may focus on ending poverty, or promoting health, education or religion.

Board of Directors

Pennsylvania law requires nonprofit corporations to have a board of directors, which is responsible for managing the organization. Every board must have a president, secretary, and a treasurer, although one individual may perform more than one role. The board may draft bylaws, which will provide how new board members may be added or removed from the board. If no bylaws are in place, Pennsylvania law provides that each board member will only serve for one year. Board members have the responsibility of acting in the best interest of the nonprofit, meaning they may not advance their own financial interests while serving the board, and they must make informed financial decisions for the organization.

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Formation

After you determine that your corporation complies with the profit distribution and charitable purpose requirements, and you have a board of directors in place, you may file the formation documents to form your nonprofit corporation in Pennsylvania. To do so, you must file Articles of Incorporation with the Secretary of State. In addition, you must file a Docketing Statement with the Department of State, which provides basic information about your nonprofit. You must also publish a statement that provides your intent to file the articles of incorporation with two local newspapers, including one legal journal.

Record Keeping and Fundraising

All nonprofits in Pennsylvania must maintain business records at their place of business, including a list of the board of directors and the organization's bylaws. Additionally, if your nonprofit will solicit money for donations, you are likely required to register with the Department of State, Bureau of Charitable of Organizations. However, organizations that raise less than $25,000 annually and do not pay someone for fundraising services are not required to register. For registered nonprofits, you must also submit annual reports to the department with information about your fundraising activities.

IRS Filing

To be recognized as an "exempt" 501(c)(3) organization, nonprofits must file an application with the Internal Revenue Service. Once exempt, the nonprofit is not responsible for paying federal income tax, and donations made to the organization are tax deductible for the donor. Nonprofits must file Form 1023 with the IRS, which will include detailed information about the finances and activities of the organization and must include the bylaws and any organizing documents, such as the Articles of Incorporation. The IRS will make a determination as to whether or not the nonprofit meets the requirements for an exempt organization based on the application.

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Maryland Rules for Dissolving Non-Profits
 

References

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Wisconsin Non-Profit Laws

A nonprofit is an organization formed to serve the public good, such as for a charitable, scientific, religious or educational purpose. The goal of a nonprofit is not to create profits for investors. The Wisconsin nonprofit laws provide guidelines for forming and operating a nonprofit in the state. Nonprofits generally follow the requirements of non-stock corporations, but have strict restrictions on profit distributions. All nonprofits should be careful to follow the legal requirements of their states, and may face fines or dissolution if not in compliance.

How to Prepare Bylaws for a Church-Non-Profit

For many religious nonprofits, drafting bylaws is one of the steps involved in officially forming the organization. However, the IRS may recognize a church as an exempt nonprofit even if the church is not incorporated and does not have bylaws. If you choose to incorporate your church at the state level, the laws of the state may require the organization to draft bylaws. Just like any other type of nonprofit, churches must follow the laws of the state throughout the incorporation process.

Pennsylvania Nonprofit Corporation Act

Getting your charitable organization off the ground in Pennsylvania requires following state law. If you decide that creating a nonprofit corporation best suits your business goals, you need to be aware of the Pennsylvania Nonprofit Corporation Act. This set of laws applies to all corporations that are organized in the state for a purpose other than generating profit and governs the business formation process. Understanding these requirements will help avoid delays in obtaining nonprofit status for your business.

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