Starting a nonprofit in North Carolina
Starting a nonprofit organization in North Carolina is governed by the North Carolina nonprofit corporation act (Chapter 55A of North Carolina statues)
Eligibility for starting a nonprofit organization in North Carolina
1) The Application must be filed by one or more incorporators.
2) The organization must be represented by a resident agent, who should have a valid street address of North Carolina. (P.O Box address not acceptable). North Carolina permits both individuals and corporate entities to act as registered agents for nonprofit organization.
3) The address of the resident agent would also constitute the registered office of the nonprofit organization. The registered office may or may not be the principal place of business for the nonprofit organization.
Steps Involved in starting a nonprofit organization in North Carolina
Step1) Choosing a name for the nonprofit organization
As per North Carolina statute, a nonprofit organization may or may not use corporate designators like ‘Co.’,’Corp.’,’Inc.’,’Corporation’ etc. with its name.
However the name of the nonprofit organization should not be indicative of a purpose for which the organization is being set up. The name should also be distinguishable from the names of other business entities operating out of North Carolina.
Restricted words – Bank, Banker and Banking, Trust, Mutual Cooperative, Co-op, Insurance, Engineer, Engineering, Architect, Architecture, Architectural, Surveyor, Survey, Surveying, Certified Public Accountant and abbreviations of such, Wholesale
For more information about naming – read: Naming a nonprofit. (opens in a new window)
Step 2) Drafting the Articles of incorporation
As per North Carolina statutes, the article of Incorporation of a nonprofit organization must include :
a) The corporate name of the nonprofit organization as per requirements mentioned above.
b) A 501(c)(3) tax exempt organization is called a “charitable or religious corporation” in the North Carolina Nonprofit Corporation Act. If the nonprofit organization proposes to obtain a 501(c)(3) tax exempt recognition and if it is eligible for exempt status recognition then the article of Incorporation must include a statement that the organization is a “charitable or religious corporation.”
c) The name of the initial registered agent of the nonprofit organization along with a valid street street address (and the mailing address, if different from the street address) of the registered office of the nonprofit organization and the name of the county where the the registered office is located.
d) The name and address of all the incorporators of the nonprofit organization.
e)A statement indicating whether or not the organization will have provision for membership.
f) A statement detailing the provisions that would apply for distribution of the organization’s assets in the even of its dissolution and termination of existence.
g) Address of the principal office of the nonprofit organization. (which may or may not be based out of North Carolina).
Optional Provisions in the Articles
The Articles of Incorporation may additionally include any lawful clause that is considered importance for the governance of the nonprofit organization like –
1. The purpose(s) for which the organization is being instituted
2. The names and addresses of the initial directors of the organization
3. Any other provision related to the management and regulation of the corporation’s affairs including clauses to define, limit, or regulate the powers of the organization , directors or its members (or any class of members).
4. Clauses defining the qualifications, rights, and responsibilities of. its members.
5. Provisions regarding limiting or eliminating the personal liability of directors and other members of the organization.
Mandatory clauses for IRS section 501(c)(3) ta exempt recognition
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.
Download New Carolina NPO sample article of Incorporation
Click here to download a sample article of Incorporation for North Carolina NPO.
Please note that this format has the bare minimum clauses and it does not include IRS clauses for tax exemption. (Be sure to add that )
Step 3) Filing the Articles of Incorporation
a) Executing the documents: The Article of Incorporation so drafted should be printed on blank white sheet of paper and signed across on all pages by the presiding officer of its board of directors, (president/chairman or any other designation, if known otherwise). If the organization has not yet decided it board members, the documents must be signed by all the incorporators of the organization.
b) Filing fee: The fee for filing the Article of Incorporation of a nonprofit organization in North Carolina is $60. This is to be paid through check favoring “Secretary of State”.
d) Where to file: The Article of Incorporation duly signed along with a check for the filing fee must be delivered in person or mailed across to the corporation division of the office of secretary of state of North Carolina at:
PO Box 29622
Raleigh, NC 27626-0622
Address to be used (if delivered in person):
2 South Salisbury Street
Raleigh, NC 27601-2903
Time required – Incorporating a Non profit organization in North Carolina can be completed in 3-7 days. Same day expedited filing is also available upon payment of expedite fee.
Birth of the Nonprofit organization – A Nonprofit organization comes into formal legal existence in North Carolina on successful filing of the Article of Incorporation with the Corporation division of the office of the Secretary of State, North Carolina.A certified copy of the office of secretary of states is returned to the incorporator either electronically via e-mail as an evidence of incorporation.
Conclusion- Incorporating a nonprofit organization in North Carolina is a good learning experience that introduces the Incorporators with all the legal processes and systems that govern starting and running a nonprofit organization in North Carolina and a lot many people have been incorporating nonprofits without any help from lawyers or third party service providers.
The process of Incorporation can alternatively be outsourced to professional Incorporation service providers. However even in that case, we advise you not to let the service provider draft the Article of Agreement or the bylaws of the NPO as these two documents eventually govern how a nonprofit functions on a day to day basis.