Starting a Nonprofit in Pennsylvania

Starting a Nonprofit Organization in Pennsylvania is governed by Chapter 41 of Pennsylvania statutes.

Scope of the Nonprofit Chapter

Organizations which can be formed under chapter 41 of the code include:

Athletic, beneficial, benevolent, cemetery, charitable, civic, control of fire, cultural, educational, encouragement of agriculture or horticulture, fraternal, health, literary, missionary, musical, mutual improvement, patriotic, political, prevention of cruelty to persons or animals, professional, commercial, industrial, trade, service or business associations, promotion of the arts, protection of natural resources, religious, research, scientific, social or any other lawful purpose undertaken on a not-for-profit basis.

Eligibility for Starting a Nonprofit Organization in Pennsylvania

1) Incorporator: The Application must be put up by one or more incorporator who should be at least 18 years of age. Alternatively a business entity may also act as incorporator of the nonprofit organization.

2) Registered Agent: The nonprofit organization must appoint a ‘registered agent’, who should have a valid street address of Pennsylvania.

This address would be the registered office address of the nonprofit organization. If the applicant organization does not have a valid street address of Pennsylvania, it can avail the services of ‘Commercial registered agents’ who are willing to provide services in lieu of a fee.

3) Principal Place of Business: The principal place of business may be different from the registered office address of the organization and could even be situated outside Pennsylvania.

4) Minimum number of directors: The minimum number of directors for a PA nonprofit is 1. The director must be 18 years or older.

Steps for starting a nonprofit organization in Pennsylvania

Steps to form a nonprofit in PA include:

Step 1: Select a name for the organization
Step 2: Obtain Employer Identification Number (E.I.N)
Step 3: Prepare the Organizing Document (the Articles)
Step 4: File the documents with Pennsylvania business division

 

Step I: Select a Name for the Organization

Pennsylvania statutes specifies two guidelines for naming a nonprofit organization –

1) The name should be distinguishable from the name of any other entity operating in Pennsylvania.

2)  The name should not be indicative of a purpose that is different from the purpose of the organization.

The name need not have any corporate designators like ‘Co.’ , ‘Corp.’, ‘Inc.’ etc attached to it.

Step II: Obtain Employer Identification Number (E.I.N)

After the name is decided, IRS requires the organization to obtain an Employer Identification Number (E.I.N). This is a simple process. E.I.N can also be obtained online from the IRS website.

Step III: Prepare the Organizing Document (the Articles)

An article of organization is the principle document that evidences the existence of a nonprofit organization.

As per Pennsylvania statutory requirements, the article must include the following details:

a) Name of the organization as per requirements specified above.

b) Address of the organization’s initial registered office, which should be a valid street address  in PA or the name of the organization’s commercial registered agent and the county where the address is located.

c) Purpose(s) for which the nonprofit organization is being established. The purpose may also include a clause like: “To conduct any legal activity” but this can not be the only purpose in the Article. The purpose clause should mention the specific purposes for which the NPO is being instituted.

d) An exact statement that reads as –  “The corporation does not contemplate pecuniary gain or profit, incidental or otherwise.”

e) A clause specifying that the nonprofit organization  is being organized on a non-stock basis.

f) A clause mentioning whether or not the organization will have members.

g) Name and addresses of all incorporators of the nonprofit organization.

Download forms

Pennsylvania statute has promulgated Form DSCB:15-5306 – the standard form which is to be used for preparing the Articles of Incorporation for a Domestic Nonprofit Corporation.

This is to be accompanied by a docketing statement.  The instructions for filling the Article and the docketing statement are included in the form.

Meeting IRS requirements for 501(c)(3) eligibility

Please note that the Article format provided above is not compliant with the requirements of IRS for tax exempt recognition under Section 501(c)(3) and needs to be suitably modified to include clauses that are compulsory for exemption seeking organizations.

Click here for IRS clauses to be inserted into the Article of Incorporation. (opens in a new window)

Step IV: Filing the Article with the office of secretary of state, Pennsylvania

Filing Fee – The filing fee is $125 and is payable through check made favoring ‘Department of State’.

Where to File

Duly filled Article, docketing statement and check for the requisite filing fee and any other supporting document as desired may be mailed across or delivered in person to

Department of State
Corporation Bureau
P.O. Box 8722
Harrisburg, PA 17105-8722

Queries if any in this regard can be discussed at (717) 787-1057

Time required: Starting a nonprofit organization in Pennsylvania takes around 3-10 days.

A Nonprofit Organization is formed!

A Nonprofit organization comes into formal legal existence in Pennsylvania on the date of successful filing of the Article of Incorporation.

Certificate of Incorporation: Unlike many other states, PA authorities DO NOT issue a certificate of formation. The newly formed organization is required to keep a copy of the original articles as an evidence of the formation.

Post Formation Formalities

1) Newspaper Publication: Immediately after filing of the articles, a nonprofit organization is required to publish the its formation details in two newspapers of general circulation (mandatory) and one publication in a legal journal (recommended though not mandatory).

Proof of such publications need not be submitted to the department of state, but should be kept on record of the organization.

2) Prepare Organization’s Bylaws: The bylaws specify the rules for day to day operation of the organization. A nonprofit organization is required to draft & adopt its bylaws. Unlike the articles, there are no specified formats for drafting the bylaws – the organization is free to choose a format.

3) First Meeting: The new organization must convene the first meeting to appoint the initial directors and the adopt the bylaws of the organization.

4) Apply for Federal Tax exemption: Applying for Federal IRS tax exemption under section 501(c)(3) tax exemption using FORM 1023.

5) Apply for State Sales Tax Exemption: : The commonwealth of Pennsylvania offers several sales tax exemption. This process is done by the Department of Revenue, Registration Division, Exemption Unit, Department 280901, Harrisburg, PA 17128-0901.

6) Apply for Fundraising Registration: A nonprofit organization is required to obtain registration with the Bureau of Charitable Organizations of the Department of State before soliciting funds from the public of Pennsylvania. The Bureau is located at 207 North Office Building, Harrisburg, PA 17120. Phone numbers: (717) 783- 1720 or 1-800-732-0999.

Conclusion

Incorporating a nonprofit is the most popular method of forming a nonprofit organization in Pennsylvania.

A nonprofit organization can also be structured as an unincorporated association, trust, cooperative or a LLC. There are advantages & disadvantages for each of these structures.

References:

  • Department of State Corporation Bureau, PA
  • Bureau of Charitable Organizations, PA
  • Department of Revenue, PA
  • Internal Revenue Services

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