Starting a Nonprofit in Hawaii
Starting a Nonprofit in Hawaii is governed by the Hawaii Nonprofit Corporations Act, Chapter 414 D. (Hereafter we shall call it the ‘Act’). Click here for the complete act .
Applicability – The provisions of this Act are applicable to starting a public charity organization or a private foundation. (see types of nonprofit organization)
Eligibility criteria –
1) The proposed nonprofit organization must be represented by one or more incorporator who may or may not be a resident of Hawaii.
2) The proposed corporation must be represented by a ‘registered agent‘ who must have a valid mailing address of Hawaii (P.O Box address not acceptable). The registered agent may be an individual or a business entity.
3) The minimum number of Incorporators required is 1. No upper cap specified.
Steps required to Start a nonprofit corporation
STEP I) Choosing a Name – The Act does not require the name to have any corporate designators like co, company, inc etc. However the name should not be misleading or similar to the name of an existing organization which can be a cause of confusion. Other factors to be considered when choosing a name can be assessed here.
The act also allows for reserving a name by paying a small fee, however lets not get into the process here.
STEP II) Preparing Documents
Documents required for Incorporation
a) Articles of Incorporation – As per the Act, the Articles of Incorporation must include the following sections -A corporate name for the nonprofit that satisfies the requirements mentioned above , valid mailing address of the nonprofit’s principal office and the registered office (if different from the principal office address), the name and address of its initial registered agent, name and address of all the incorporator(s), a membership clause which explains if at all membership is allowed in the organization and a dissolution clause which provides the manner in which the assets of the organization would be handled in the event of its dissolution.
Additionally the articles of Incorporation might include the following (desired though not mandatory) – The purposes for which nonprofit organization is being setup. May also be mentioned as for the purposed of undertaking “any lawful activity”, names and addresses of the the initial directors of the organization, indemnity clause limiting the personal liabilities of the members, and any other clause related to regulation and management of the affairs of the organization.
Clauses to be inserted for Income tax exemption
As per IRS, any non profit organization seeking exemption under Section 501(c)(3) or otherwise needs to mention this in the Articles. Similarily if the organization seeks any state tax exemption, suitable clauses must also be added.
A sample article of Incorporation as applicable to nonprofits in Hawaii can be downloaded here. (modify and add clauses as per your requirements)
Executing the documents – The above documents need to be type written or printed on paper and signed on all pages by the by the chairman or president (presiding officer) of the board of directors, or by the incorporators (if the initital board has not yet been elected and not yet mentioned in the Articles).
The signer of the document must clearly mention under his signatures, the capacity or designation in which he is signing the above documents.
To complete the formalities as per the Act, download:
STEP III) Filing Documents
Fees payable – The Act prescribes the following fee:
$50 fee for Filing of Articles of Incorporation. (mandatory)
$10 fee each for obtaining copy of Certificate of Incorporation or any other document. (non-mandatory if one does not want the certificate)
The checks are to be made payable to the DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS. (separate checks for filing and for obtaining certificate)
The fee might change over a period of time. A good idea is to confirm it and any other query by calling at (808) 586-2727.
Neighbor islands may call the following numbers followed by 6-2727 and the # sign: Kauai 274-3141; Maui 984-2400; Hawaii 974-4000, Lanai & Molokai 1-800-468-4644 (toll free).
Fax: (808) 586-2733
Or you can write at Email Address: firstname.lastname@example.org
Where to file –The documents accompanied by check for the filing fee must be mailed to or personally delivered at the following address:
DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS
Business Registration Division
335 Merchant Street
Mailing Address: P.O. Box 40, Honolulu, Hawaii 96810
Phone No. (808) 586-2727
The birth of the organization – Upon successful filing of the documents, the department director stamps or otherwise signs on the documents with the date and the time of receipt.(Section 414D-8 defines the duty of the department director in this regard).
The department director issues a certificate bearing his signature (which may be in facsimile) along with the seal of the department as a proof of successful filing.
The organization then comes into a formal legal existence from the date and time of such filing.
Time required -The entire process can be completed in less than 1 day , though a lot depends on your level of pre filing preparation.
Conclusion- A large number of people file these documents on their own. If you wish to outsource this part, there are several same-day incorporation service providers that can do this in your behalf. (You can search for them on the net).
Even if you decide to use the services of the professional ‘registered agents’, you should ideally draft your own articles and bylaws and have them ratified if needed by the service providers.
You should not let a third party draft them at the time of starting a nonprofit because this will eventually govern how your nonprofit functions on a day to day basis.