Starting a Nonprofit in Montana
Starting a Nonprofit organization in Montana is governed by the Title 35, Chapter 2 of the Montana Code Annotated,2009.
Eligibility for starting a Nonprofit in Montana
1) The Application to form a Nonprofit organization must be moved by one or more incorporators.
2) The proposed Nonprofit organization must have a valid street address of Montana to be called as its registered office. This may or may not be the principal business office of the Non profit organization.
3) The registered office, as decided above must be occupied by a ‘resident agent’ who is a person who accepts it as his responsibility to accept notices, demands and letters on behalf of the organization. If an organization does not any such person staying at Montana, they can avail the services of a commercial resident agent of Montana, who will accept this duty in return for a small annual fee.
Steps Involved in starting a Nonprofit organization in Montana
Step 1) Choosing a Name for the Nonprofit organization – Unlike many other states, Montana does not require the Non profit organization to use corporate designators like ‘Co.’,’Corp.’,’Ltd.’ etc in its name.
The Name must be distinguishable from the name of any other business or non business entity registered with the Secretary of States Montana.
The Name should not be indicative of a purpose other than the purpose for which the organization is being established.
Other factors to be considered when naming a Non profit organization can be assessed here.
Step 2) Drafting the Articles of Incorporation
As per Montana laws, The articles of incorporation of a Nonprofit organization must include the following clauses –
a) Name Clause – specifying the name for the Nonprofit organization that meets the requirements specified above.
b) A statement clarifying whether the Nonprofit organization is a ‘public benefit’, ‘mutual benefit’ or a ‘religious corporation’
c) the name and address of the registered agent of the Non profit organization and that the person has consented to serve as a registered agent.
d) the name and street address of all the incorporators of the Nonprofit organization.
e) A statement explaining, whether or not the Nonprofit organization will have members.
f) A dissolution clause with provisions for distribution of assets in the event of dissolution of the Nonprofit organization in future.
Optional Clauses that may be included in the Articles of Incorporation
As per Montana Laws, the articles of incorporation may include the following optional clauses:
a) The purpose clause – The Articles may include the purpose(s) for which the Nonprofit organization is being set up. The Purposes may also include one of the purposes as “the transaction of any lawful activity” to provide possibility to add new purposes for the organization.
b) the names and addresses of all the initial directors of the Nonprofit organization.
c) Any other provisions aimed at managing and regulating the affairs,defining, limiting, and regulating the powers of the organization and its members and any other provision that may be desired to be included.
d) A clause that provides for eliminating or limiting the personal liability of a director.
Clauses compulsory for Organizations seeking 501(c)(3) tax exemption
If a Nonprofit organization plans to seek Tax exempt recognition under section 501(c)(3) of the IRS code, it must include the following clauses to its Articles of Incorporation –
1) Purpose Clause: The Purpose Clause of the Articles must include a statement that says that the NPO is organized for charitable, educational, religious, or scientific purposes as meant under Section 501(c) (3) of the IRS Code.
2) Inurement of Income: The Articles of Incorporation must include a statement that prohibits inurements of the earnings of the NPO for the benefit of its members, directors, officers.
3) Legislative or Political Activities: – The Articles of Incorporation must include a statement that prohibits the organization from carrying on of propaganda or attempting to influence legislation through political campaign.
4) Operational Limitations : The Article must include a statement prohibiting the organization from carrying on any activities not permitted to be carried on by a corporation exempt from Federal Income Tax under Section 501(c) (3) of the IRS code or activities prohibited to be undertaken by an organization that operates under Section 170(c) (2) of the IRS Code of 1954.
5) Dissolution Clause: The Articles must include a dissolution clause stating that in the event of dissolution, the Assets of the Nonprofit organization shall dispose of all its assets to another organization(s) which qualify as an 501(c)(3) exempt organization at the time of the dissolution.
Sample Montana NPO Articles of Incorporation
Click here to download the Sample Article of Incorporation for a Non profit organization proposed to be incorporated in Montana.
Step 3) Executing and Filing the Articles of Incorporation
Filing Fee: The filing fee is USD20.00.
Time required: The filing process takes a maximum of 10 working days to be completed. Expedited 24 hour filing facility is also available by paying an extra USD20.00 towards expedited filing. A one hour filing service can also be availed by paying an extra of USD100.00.
Executing the Articles:
The Article must be printed on blank white sheet of paper and must be signed on all pages by all the initial directors of the organization. If the directors have not yet been finalized, the Articles must be signed by all the Incorporators.
The signer should mention below each of his signature, the capacity in which he/she is signing the document.
Filing of Articles
Duly signed Articles of Incorporation along with check for the requisite filing fee should be delivered in person or mailed across to –
Secretary of State
P.O. Box 202801
Helena, MT 59620‐2801
PHONE: (406) 444‐3665
FAX: (406) 444‐3976
Any questions regarding the Incorporation process can be raised at the office Secretary of State Business Services at (406) 444‐3665.
Birth of the Nonprofit organization – A Nonprofit organization comes into formal legal existence in Montana immediately after the Articles of Incorporation are successfully filed with the office of the Secretary of States, Montana.
Conclusion- The process of filing for Incorporation process is a valuable learning experience for any one planning to form and manage a Nonprofit organization in Montana.
Though the process can be outsourced to professional Incorporation service providers for a normal fee, it is advised not to let service providers draft the Articles and bylaws as these two documents govern how a nonprofit functions on a day to day basis.