Starting a nonprofit in Kansas

Unlike most of the other states, Kansas law does not have a separate chapter for starting a nonprofit organization.

Starting a Nonprofit organization in Kansas is governed by Chapter 17  of the Kansas statute (Article 60 onward)  –  the same statute that governs the starting of ‘for-profit organizations.’

Eligibility for starting a Nonprofit organization in Kansas

(see incorporation terminologies for new underlined terms used in this section)

a) The organization must have a registered address (a valid street address – P.O box not acceptable) of Kansas, which can be different from its place of business. The place of business may or may not be located in Kansas.

b) The organization must be represented by a ‘resident agent‘ with a valid street address of Kansas. The address of the resident agent must be the same as the registered address mentioned above and he should be generally available at the given address during normal business hours to recieve notices/demands on behalf of the nonprofit organization.

c) Minimum number of directors required is 1. No upper cap fixed.

d) Minimum number of Incorporators required is 1. No upper cap fixed.

e) The organization may or may not appoint officers (president, secretary etc) but atleast one officer (may be called by whatever name) will have to be officially given the responsibility of maintaining a record of events of all the meetings. One Individual can hold any number of offices.

Steps Involved in starting a nonprofit organization in Kansas

Step 1) – Choosing a Name for the organization.

As per the Act, the name must include any one of the following Corporate designators  – incorporated, association, church, club, college, company, corporation, foundation, funds, institute, limited, society, syndicate, union or an abbreviation such as co, corp, inc, ltd.

Roman charecters or letters only allowed when naming an organization. Several other factors need to be considered when naming a nonprofit organization.

The name should be clearly distinguishable from the name of an existing  corporations, limited liability companies and limited partnerships opertaing in Kansas or reserved with the Secretary of State,Kansas.

Suggested reading – “Naming a nonprofit organization

Step 2 ) Drafting the Articles of Incorporation

Mandatory clauses to be added in the Articles of Incorporation

As per the Kansas Act, The articles of incorporation for a NPO must include the following clauses –

(1) The name of the proposed Nonprofit organization that meets the requirements soecified above.

(2) A valid Kansas address,(Including the street, number, city & zip code) of the proposed organization’s registered office.

(3)The name of the ‘resident agent’ (also called the ‘registered agent’ who is generally available at the given registered address.

(4) The proposed purpose (s) and the nature of activities desired to be undertaken by the organization. the purpose can also be stated as “any lawful act or activity” to include possibility of adding new purposes for the organization.

(5) A clause stating that being a nonprofit organization, it will not have the authority to issue capital stock.

(6) A clause explaining whether on not the organization will have membership provision.If the organization is proposed to allow for membership – the articles should mention the conditions of  membership.

(7) The name(s) and mailing address(es) of all the incorporator(s)

(8) The names and mailing addresses of the initial directors, if the powers of the incorporator or incorporators are to terminate upon the filing of the articles of incorporation. If the intial directors have not yet been decided,this clause can be skipped in the Articles and can later be added in the bylaw.

Optional Clauses in the Articles of Incorporation

(9)  A clause specifing the method to be followed for adoption, alteration or repeal of the organization’s bylaws.

(10)  A indemnity clause to restrict or limit the personal liabilites of people involved with the organization subject to provisions laid in the Act.

(11) Any other clause to regulate or manage the affairs of the organization.

P.S – The non mandatory clauses can also be mentioned in the bylaws instead of the Articles – as it is easier to amend the bylaws if required.

Eligibility Clauses for obtaining IRS tax exemption recognition.

If a nonprofit organization plans to apply for tax exemption recognition with the IRS, it must consider adding the following clauses  in the Articles of Incorporation:

1) The Purpose(s) which should include the primary purposes of the orgnization and a general purpose statement which reads as “conducting of any lawful activity”

3) The Dissolution clause  which describes the method and procedures to be followed if the nonprofit organization is dissolved in future.

4) A clause which specifies the exact section of the IRS code under which tax exemption would be sought (Say under section 501(c)(3) in case of public charity organizations, Sectio 509 (a) for private foundations etc.)

5) A clause specifically prohibiting the organization from undertaking any activity(ies) that are not allowed by the IRS for a tax exemption seeking organizations. (e.g lobbying/political affiliation etc.)

6) Kansas provides state corporate income and franchise tax exemption. Similar provisions as stipulated by the state revenue department in this regard needs to be complied.

To download a sample article of Incorporation for Kansas, visit here

Click on the link to download the Sample Nonprofit Article of Incorporation for Kansas as provided by the Secretary of state

Step 3) Filing the Articles of Incorporation

Fee payable – The fee payable for filing the Article of Incorporation is fixed by the secretary of State. However the Act has fixed the maximum fee that the secretary of State can charge for incorporating a Nonprofit organization as $50.

Similarily the secretary of state may decide fee for providing a certificate of Incorporation which can also not exceed $50.

The latest fee structure for filing of Articles of Incorporation for a:

1) Domestic Not-For-Profit Corporation   is  $20.00

2) Foreign Not-For-Profit Corporation Application is $115

Where to file

The above documents can be filed manually by delivering the documents along with the filing fee cheque at:

Memorial Hall, 1st Floor
(785) 296-4564
120 S.W. 10th Avenue
[email protected]
Topeka, KS 66612-1594
www.kssos.org

Online filing

The Articles of Incorporation for starting a NPO in Kansas can be filed online here.  (Site maintained by the Secretary of state – Kansas.)

Birth of Organization – The Nonprofit organization comes into a formal legal existence in Kansas upon successful filing of the Articles of Incorporation with the Secretary of State, Kansas.

Post Incorporation formalities

Drafting of Organization’s Bylaws

The following important provisions of the Kansas statute must be kept in mind when drafting the organization’s bylaws –

a) Director’s quorum – Articles may specify a quorum less than 1/3rd, If not specified- it is to be taken as 1/3rd.

b) Member’s quorum – As specified in the Articles or bylaws – to be taken as 1/3rd if not specified.

The bylaw must be adopted in the very first meeting of the newly formed nonprofit organization.

Time required -The filing of Articles of Incorporation can can be completed in 3-5 days. ( The time is even lesser if you pay an extra fee and apply for expedited filing).

Conclusion-

Many individuals who start NPOS file for Incorporation on their own.

If one wants to outsource the incorporation formalities, he/she can avail the services of professional agents or consultnants who provide this service in return for a fee. (Fee varies widely).

One should draft the articles of Incorporation and bylaws on his own and then have them ratified by the service providers, even if you decide to outsource.

These documents eventually govern the day to day affairs of the organization and therefore one should not let an outsider draft them at the time of starting a nonprofit organization .

its not just sufficient to be honest to yourself. You have to prove your honesty in front of people who have nothing to do with honesty.