Starting a nonprofit in Alabama

Starting a non profit in Alabama is governed by the Alabama Nonprofit Corporation Act.

Applicability - The provisions of this Act apply to starting of  nonprofit organization including but not limited to, any one or more of the following purposes: Charitable, Benevolent, Eleemosynary, Educational, Civic, Patriotic, Political, Religious, Social, Fraternal, Literary, Cultural, Athletic, Scientific, Agricultural,Horticultural, Animal husbandry, Professional, commercial, industrial or trade association, Historical.

The provisions of this law are not applicable to setting up of Labor unions & cooperative organizations . Organizations subject to any of the provisions of the insurance laws of Alabama may not be organized under this chapter.

Eligibility – To be eligible to incorporate a nonprofit organization in Alabama the proposed organization must have a registered office which may be, but need not be located in Alabama. However the corporation must have a registered agent, who must be either an individual resident in Alabama whose business office is identical with such registered office, or a domestic corporation, whether for profit or not for profit, or a foreign corporation, whether for profit or not for profit, authorized to transact business or conduct affairs in Alabama, having an office identical with such registered office.

Membership – The nonprofit organization may or may have non members.

Bylaws - The initial bylaws of a nonprofit corporation proposed to be incorporated in the State of Alabama shall be adopted by its board of directors. The board of directors can vest with themselves the power to change its bylaws or adopt a completely new bylaw later. The bylaws must be consistent with law or the articles of incorporation.

Incorporators – The Incorporator of a nonprofit organization in Alabama can include persons (one or more), partnerships, domestic corporations or foreign corporations, whether for profit or not for profit.

Mandatory clauses in the Articles of Incorporation – As per the Alabama Nonprofit Corporation Act the following clauses must compulsorily be included in the Articles of Incorporation – Name Clause, Duration clause (which may be perpetual), Purpose(s) Clause,  If the corporation is to have no members, a statement to that effect, Dissolution clause, the business address and the mailing address of its initial registered office, the name of its initial registered agent at such address, the number of directors constituting the initial board of directors, and the names and addresses of the persons who are to serve as the initial directors, the name and address of each incorporator.

Click here to download a sample of Alabama non profit article of incorporation.

Where to file – The incorporators are required to sign the articles of incorporation and file the same to the probate judge of the county in which the corporation is to have its initial registered office.

Process to be followed – The original articles of incorporation(along with two duplicate copies) msut be delivered to the probate judge of the respective county. This is to be accompanied by the filing fees.

Filing fees – The fees applicable for Filing of articles of incorporation in Alabama consists of two payments -

1) $20.00 payable to the Secretary of State of Alabama

2) $25.00 payable for the probate judge.

Thus The filing application must be accompanied by two different checks of the above mentioned amounts.

Final Incorporation – The probate judge scrutinizes the application for incorporation and if he finds the articles of incorporation as conforming to Alabama laws, he shall -

(1) Endorse on the articles of incorporation and on each of such copies the word “filed,” and the hour, day, month and year of the filing thereof.

(2) File the articles of incorporation in his office and certify the two copies thereof.

(3) Issue a certificate of incorporation to which he shall affix one certified copy of the articles of incorporation, and return such certificate of incorporation with the certified copy of the articles of incorporation affixed thereto to the incorporators or their representative.

(4) Within 10 days after the issuance of the certificate of incorporation transmit to the Secretary of State a copy of the certificate of incorporation with a certified copy of the articles of incorporation attached thereto, indicating thereon the place, date and time of filing of the articles of incorporation.

Conclusion

Having completed the above formalities, a nonprofit organization comes into a formal legal existence in the state of Alabama.

The complete and original Nonprofit Corporations Act of Alabama can be assessed at -

http://www.legislature.state.al.us/codeofalabama/1975/147217.htm

The process is pretty easy and one can complete it without hiring lawyers.

However, If one does not want to undertake these activities on their own they can seek the services of professional service providers to Incorporate their nonprofit organization.

There are literally hundreds of such service providers. (You can google them out on the net). Some examples include – http://www.activefilings.com, http://www.bizfilings.com

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About the Author:


Adrian B. Bennett is an attorney and nonprofit consultant by profession. He provides development sector legal services in areas of formation of nonprofit organizations, choice of entity, tax exemption, private foundation tax law, corporate governance and advocacy. He serves as a legal adviser to several non profit organizations in and around Florida.

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5 Responses to “Starting a nonprofit in Alabama”

  1. Brenda Sorrells says:

    I am in need of information concerning a voluntary board member of a non-profit corporation being a paid employee of said corporation. What is the state of Alabama’s rule if any, on board members of non-profit Corporation being paid employees of the corporation of which they are serving as a board member. (Note: Board members are all voluntary, not paid)

  2. Question says:

    State of Alabama does not prevent voluntary board member of a non-profit corporation from being a paid employee of said corporation… but it is a BAD practice.

    IRS will pose a lot of questions in form 1024/ form 990. Better to avoid such a situation.

    If one wants to get paid, he should quit from the board and get on as an employee.

  3. Question says:

    Alabama does not restrict a board member from getting paid, but its a bad practice. IRS is definetley against such a practice.

  4. steve badalamenti says:

    Hi…
    Once a non-profit gets rolling along, are there any periodic requirements, such as for simple audits ?

  5. Frank says:

    Yes there are periodic requirements – quarterly and annual reporting requirements. Audit is one of the annual requirement. Reporting is a vast topic.. which i cannot possibly cover here. Look under the governance section for a detail on reporting requirements.

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