Starting a Nonprofit in New Jersey
Starting a Nonprofit in New Jersey is governed by the Title 15 A of the New Jersey Statutes.
Eligibility for Starting a Nonprofit in New Jersey
1) Minimum number of directors required for a New Jersey Nonprofit organization is three(3).
2) Minimum number of Incorporators required for starting a Nonprofit organization in New Jersey is 1.
3) The Nonprofit organization must be represented by a resident agent with a valid street address of New Jersey. This address is to serve as the registered office address of the Nonprofit organization.
4) The Address of the principal place of business of the Nonprofit organization may or may not be based out of New Jersey.
Steps Involved in Starting a Nonprofit organization in New Jersey
Step 1) Choosing a Name for the Nonprofit organization
As per the New Jersey Act, A non profit organization of New Jersey should use any one of the following words – ‘Incorporated’, ‘Corp.’, ‘Inc.’ or ‘Corporation’ with its name.
Additionally, the name is always to be followed by the term – “A New Jersey Nonprofit corporation”.
The Name of the Non profit organization should be distinguishable from the name of any other entity operating out of New Jersey.
Further, the name should not be indicative of a purpose different than the purpose for which the organization is being formed.
Other factors to be considered when choosing a name for the Non profit organization can be assessed here.
Step 2) Drafting the Certificate of Incorporation
As per New Jersey Laws, the Certificate of Incorporation must include the following clauses –
a) The Corporate Name of the proposed Nonprofit organization, as per requirements mentioned above.
b) The Purpose(s) for which the Nonprofit organization is being formed.
c) The duration for which the Nonprofit organization is being set up.This may be mentioned as perpetual in most of the cases.
d) The Name of the registered agent of the Nonprofit organization.
e) The registered address of the Nonprofit organization, which should be a valid street address of New Jersey.(P.O Box address not allowed)
f) Address of Principal place of business of the Nonprofit organization.
g) The Name and Valid street address of the Initial directors of the Nonprofit organization.( Minimum number of directors for a New Jersey Nonprofit organization is 3)
h) The Name and street address of Incorporators of the Nonprofit organization.
i)Whether or not the organization plans to allow for membership options.If the organization plans to allow membership in the organization, it should additionally provide information about the qualifications, rights, duties and limitations and the method of election in either its Certificate of Incorporation or in its bylaws.
Additional Clauses to be Inserted for organizations seeking IRS tax exempt recognition
As per IRS guidelines, an organization planning to seek Income tax exempt recognition under section 501(c)(3) of the IRS code must insert the following clauses in its Certificate of Incorporation –
1) Purpose Clause: The Purpose Clause of the Certificate of Incorporation should include a clause specifying that the organization is organized for charitable, educational, religious, or scientific purposes as defined under Section 501(c) (3) of the IRS Code.
2) Inurement of Income: The Certificate of Incorporation must include a statement restricting inurements of the income of the Nonprofit organization for the benefit of its directors, officers or any class of members.
3) Legislative or Political Activities: The Certificate of Incorporation should include a clause restricting the organization or its members on its behalf from undertaking any propaganda or trying to influence legislation through political campaigning.
4) Operational Limitations : The Certificate of Incorporation should include a clause that prohibits the Nonprofit organization from undertaking activities that are specifically not permitted for Federal Income Tax exempt organizations under Section 501(c) (3) or Section 170(c) (2) of the IRS Code of 1954.
5) Dissolution Clause: The Certificate of Incorporation should include a clause specifying that if the Nonprofit organization is dissolved in the future, its Assets shall be disposed off only to another 501(c)(3) exempt organization(s).
Step 3) Filing the Certificate of Incorporation
Filing fee: The basic filing fee for all domestic non profit organizations is $75 per filing. Filing fee for foreign Non profit organizations is $125 per filing.
The fee for expedited filing request (within 8.5 working hours of filing) is subject to an additional $15 fee (in addition to the basic fee mentioned above), plus $1.00 per page fee for all accepted filings that are FAXED back
The fee can be paid through Cash, Check or money order payable to the Treasurer, State of NJ, Credit card -MASTERCARD/VISA or DISCOVER (details to be provided – card number, expiration date and name/address of card holder) or through payment to the depository account as assigned by the Treasurer.
Where to File
Duly filled Certificate of Incorporation in triplicate copies, along with a check for the requisite filing fee, a cover letter and a self-addressed return envelope must be mailed across to :
The Certificate of Incorporation New Jersey Department of the Treasury
Division of Revenue/Corporate Filing Unit
PO Box 308
Trenton, NJ 08646-0308
Expedited Filing – Application for expedited filing must be delivered over-the counter to: 33 W. State Street, 5th Floor, Trenton, NJ 08608-
Birth of Nonprofit organization – A Nonprofit organization comes into formal legal existence upon successful of the Certificate of Incorporation. The office of Secretary of State generally issues a certificate of existence which acts as a proof of the existence of the Non profit organization.
Post Incorporation formalities
Drafting the Bylaws – The New Jersey Act prescribes certain guidelines to be kept in mind when drafting the organization’s bylaws.
Director’s quorum – Majority of directors constitutes the director’s quorum, or as specified in the certificate of Incorporation or bylaws.However under no circumstance can the director’s quorum be less than 1/3rd of directors or 2 directors which ever is less.
Director’s term of office – The director’s term of office is to be taken as specified in the bylaws. Its is to be taken as 1 year if nothing is specified.
Officer’s requirements – A new Jersey Nonprofit organization must appoint President,Secretary and treasurer. If alternative designations are used, the bylaw must specify which of the designations pertain individually to the functions of the president, secretary and the treasurer respectively.
The incorporation process can be outsourced to professional Incorporation service providers for a normal fee, however 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.
The process of filing for Incorporating a Non profit organization is a valuable learning experience for any one starting a Nonprofit organization in New Jersey.