Starting a nonprofit in Mississippi

Starting a Nonprofit organization in Mississippi is governed by the Mississippi Non profit corporation act ( Title 79, Chapter 11 of the corporations, associations and partnership section of the Mississippi code)

Step 1) Choosing a Name for the Nonprofit organization –

While the Mississippi code does not require use of corporate designators in the name, the secretary of state nevertheless prefers that Nonprofit organizations use any one of the following corporate designators with its name – ‘Corporation’, ‘Incorporation’, ‘Company’ or ‘Limited’.

The meaning of the name should not be indicative of a purpose different from what the organization intends to do. Further the name of the Nonprofit organization should be distinguishable from the names of other corporations or business entities operating out of Mississippi.

Several other factors that need to be considered when naming a Non profit organization can be assessed here.

Step 2) Drafting the Articles of incorporation – As per the Mississippi statutes, the Articles of incorporation of a Nonprofit organization incorporated in the State, must include the following clauses –

(a) The Name of the Nonprofit organization which is chosen as per requirements explained earlier.

(b) The period or duration for which the NPO is being formed. In most of the cases the duration is written as perpetual.

(c) Valid street address of the Non profit organization’s initial registered office and the name of its initial registered agent at that office who would be generally available at the given registered office

(d) The name and valid street address of all the incorporators of the Non profit organization.

Optional clauses in the Articles of Incorporation – As per the Act, the Articles of incorporation may additionally include the following clauses –

(a) The names and street addresses of all the initial directors of the proposed Non profit organization;

(b) The purpose or purposes for which the non profit organization is being formed.

(c) Any other provision that is not inconsistent with law and is desired to be included for effective governance, regulation and management of the organization.

(d) Any clause that defines, limits and regulates the powers of the board of directors, members and the Non profit organization.

Clauses for obtaining tax exempt recognition under Section 501(c)(3) of the IRS code

IRS prescribes that the Articles of Incorporation of a Non profit organization seeking 501 (c)(3) organization must include the following clauses

a) The Purpose clause – already discussed above.

b) The dissolution clause – which explains how the asset of the Non profit organization would be distributed in case the NPO is to be dissolved in future.

c) A clause specifying the exact section (say Section 501(c)(3) or any other section) under which the Non profit organization would be seeking tax recognition.

d) A clause which specifically prohibits the organization and its members from undertaking any activity that is prohibited by the IRS for any organization that wishes to enjoy tax exempt recognition.

Click here to download a Sample Article of Incorporation as prescribed by the office of Secretary of States.

N.B – This is the minimalist version and needs to be modified with the clauses required for IRS exemption and any other clauses that may be required.

Step 3) Executing the Articles of Incorporation

The Articles of Incorporation so drafted, must be printed on white sheet of paper (one side only) and must be signed on all the pages by the – presiding officer of its board of directors, its president or by another of its officers. If the organization has not yet finalized its initial directors, then the articles must be signed by any of the incorporators.

Filing Fee – The fee payable for Incorporating a Non profit organization in Mississippi is USD 50.00. This amount is payable vide a check favoring Mississippi Secretary of State and is to accompany all the other documents being submitted at the time of the filing.

The documents duly signed along with the check for the requisite filing fee must be delivered in person or mailed across to :

OFFICE OF THE MISSISSIPPI SECRETARY OF STATE
P.O. BOX 136, JACKSON, MS 39205-0136 (601) 359-1333

Birth of Nonprofit organization – After the above documents are successfully filed with the Business services division of the Office of the Secretary of States, the Non profit organization comes into formal legal existence.

Time required – It takes 1-5 days time to complete the entire Incorporation formalities with the office of the Secretary of States.

Post Incorporation formalities

Immediately after Incorporation, the Initial board members are supposed to call a meeting to adopt the first by laws of the organization.

If the Initial board is not specified in the Articles at the time of incorporation, this meeting is to be called by the Incorporators, who first appoint the initial board of directors, who then proceed for adopting the organization’s bylaws.

The salient points to be kept in mind when drafting the bylaws for the organization are –

a) Number of directors – The Act does not prescribe any minimum or maximum number of directors for Non profit organizations, like it does in many other states. The minimum/maximum number of directors as fixed by the articles or bylaws.

b) Director’s quorum – As per the Act, the quorum of a board meeting is majority of directors unless a percentage is specified in articles or bylaws.

c) Member’s quorum – This is to be taken at 10% or as specified in bylaws. If less than 1/3rd members are represented than maters on which notice has not been served cannot be voted upon.

d) Director’s term- As specified in the Articles or the bylaws but not more than 5 years (not applicable for religious corporations)

P.S – Charitable Organizations must submit a Unified Registration Statement (URS) and an Annual Financial Statement Report Form (FORM FS) every year after Incorporation along with an annual  filing fee of $50.00

Conclusion-

A Nonprofit organization can be incorporated without actually taking the services of any outside agency.  The process of Incorporating is a great learning experience as one learns of the legal framework in which the organization will have to operate.

In case, however one wishes to outsource it, one can easily avail the services of a ‘commercial registered agent’ or a ‘professional service provider’ for Incorporation.

Even if you decide to use the services of the professional service providers, one should draft the articles and bylaws on one’s own not letting  anyone else draft them as these two documents eventually govern how the nonprofit functions on a day to day basis.