Articles of Incorporation of a non profit organization
The articles of Incorporation (also called the Certificate of Incorporation or simply ‘Charter’ in some states) is a legal document that is to be filed by a non profit organization(all all corporations) at the time of its formation with the concerned department of the secretary of state.
The articles of an organization are the very basis on which a non-profit organization is set up and cannot be modifed later on, except under exceptional circumstances. The modification process
is not only difficult but it also does not speak favorably for the organization. It is therefore very important to draft the Articles most carefully right at the first instance.
The articles of a non profit organization typically consists of the following clauses –
1) Name Clause – Lists down the name of the organization.
2) Address clause – Specifies the address of the head office and branches (if any).
3) Tenure Clause – This clause specifies the date on which the proposed organization would be dissolved. In most of the cases, it is best to mention that the organiation would continue in perpetuity.
4) Jurisdiction Clause – Specifes jurisdictions that apply to the organization.
5) Object Clause – A very important section of the Articles of Association which lists down the obectives for which the organization is being started. This section is of utmost importance because you can later undertake only those projects that matches the objects laid down in your articles.
A wise thing to do in this case is to include as many objects as you can possibly think of even if you have no plans to be undertaking up activities in that segment in the foreseeable fututre.
Thus if you are working say on environmental issues, add that as the first clause followed by clauses pertainig to say education, child rights, women rights, youth development, health issues etc as the additional clauses of the Articles of association.
6) Membership and Structure Clause – This section of the Articles lays down the minimum and maximum number of members allowed on the board and outside the board, the
qualfications for becoming a board/non-board member, membership fees payable etc.
The articles also lays down the organization structure with names and functions of sub committees of the organization along with the leadership rules.
7) Record and Book keeping Clause – This clause of the article specifies the accounting year, the books of account to be maintained, the registers to be kept and similar other details like methods for recording minutes of meetings, the vouching systems and similar details.
8) Dissolution Clause – This clause specifies the method for dissolution of the non profit organization including the rules for disposing off of the assets of the organization in the event of its dissolution.
A nonprofit corporation that wishes to apply for tax exempt status under section 501 (c) (3) with the Internal Revenue Service (IRS) will have to add further clauses to their article of association as per the latest terms laid down by the authorities. The clauses to be inserted into the artilces of incorporation can be taken from http://www.irs.gov/charities/
After incorporating the IRS requirements into the articles of association, the article needs to be submitted to the respective Secretary of states along with a duly filled in application form and a minimal fees for filing.
After the article of incorporation has been filed with and accepted by the secretary of state, the organization comes into legal existance.
The organization can then proceed to file applications for obtaining tax exempt status to the IRS.