Information on How to Start an Incorporated Nonprofit Organization in South Dakota. To start Unincorporated Nonprofit Organization read: Start an Unincorporated Nonprofit Organization
You may also consider downloading Nonprofit Organization for Dummies which takes you thorough the step-by-step process of starting and managing a nonprofit organization in South Dakota.
Starting a Nonprofit Organization in South Dakota is governed by chapter 47-22 of South Dakota codified laws.
Scope of Act
Nonprofit organizations may be established under this chapter for the purpose of agricultural,animal husbandry, athletic, benevolent, charitable, civic, cultural, educational, eleemosynary, fraternal, horticultural, literary, patriotic, political, religious, scientific, social, or for professional, commercial, industrial, or trade association or any similar lawful non profit purpose.
Formation of labor unions, cooperative organizations and communals do not fall under the scope of this chapter.
Eligibility for starting a nonprofit organization in South Dakota
1) A minimum of three (3) or more natural persons who have attained the age of majority can act as incorporators for starting a nonprofit organization in South Dakota. Incorporators may but need not be domiciles of South Dakota.
2) The incorporators must appoint one resident agent. To be eligible for becoming a resident agent the individual must have a valid street address of South Dakota. (P.O Box address is not acceptable) . An organization can avail the services of a ‘commercial resident agent’ in return of a small annual fee, if it does not have a valid street address of South Dakota.
The address of the resident agent is construed as the registered office address of the organization, where all notices are served upon the organization. The registered address may or may not be the principal place of business for the nonprofit organization. The principal place of business may be situated outside the state.
Steps for starting a nonprofit organization in South Dakota
Step 1) Choose a Name for the organization
South Dakota laws prescribes two restrictions on choosing a name for nonprofit organizations –
1) The name should be distinguishable from the name of any other entity on record of the business division of the office of secretary of states, South Dakota.
2) The name should not indicate any purpose other than the purpose for which the organization is being set up.
3) Non-English name have to be transliterated into English in the application form.
Other Factors to be considered while choosing the name can be assessed here.
Step 2) Prepare Article of Incorporation
As per South Dakota statutes, the articles of incorporation of a nonprofit organization must capture the following details:
(1) The proposed name of the organization which satisfies the requirements mentioned above.
(2) The duration for which the nonprofit organization is being formed. The duration can be perpetual.
(3) The purpose(s) for which the nonprofit organization is being formed.
(4) A statement specifying whether or not the organization will have members. If the organization will have members, it must also specify the classes of members and qualification and rights of each of these classes.
(5) If any class of members would have the right to vote on matters of electing or appointing of director, the manner in which the directors would be elected or appointed should also be specified.
(6) Clause specifying the provisions for distribution of assets on final liquidation of the organization.
(7) The name and the address of the business office of the organization’s noncommercial or commercial registered agent upon whom service of process can be sent and the official title held by that registered agent in the nonprofit organization.
(8) The name and addresses of all the incorporators of the organization.
(9) The number, names and addresses of initial board of directors of the nonprofit organization.
(10) Any other provisions that the incorporators deem expedient to include for the regulation and management of the affairs of the organization may be included.
Download sample articles of Incorporation for South Dakota nonprofit organization
The office of secretary of state, South Dakota has prescribed this sample article of incorporation for a S.D nonprofit organization.
Clauses required to be added for IRS tax exemption recognition
The sample provided above confirms to state laws but it does not meet requirements specified by IRS for a nonprofit organization that wishes to obtain tax exempt status recognition under section 510(c)(3) of the IRS code.
Accordingly, such organizations should add these 4 clauses as attachment to the article of incorporation to make it compliant to IRS requirements.
Step 3) File the Article with the Secretary of state, South Dakota
Executing the Article of incorporation
The format provided above must be printed in white blank sheets of paper in duplicate (one original and one exact or conforming copy) and should be signed on all pages by all the incorporators of the organization.
The resident agent should sign across in the column whereby he agrees to the appointment as the resident agent of the organization.
The signatories must sign in original on both the copies of the Article.
The Article must be signed in front of a notary public who would then notarize the article.
The filing fee applicable for incorporating a nonprofit organization in $30. This is payable through check made favoring “Secretary of state”
Where to file
Two copies of article of incorporation along with check for requisite fee is to be mailed across to –
Secretary of State Office
500 E Capitol Ave
Pierre, SD 57501
Queries if any related to incorporation can be discussed at secretary of state assistance phone number (605)773-4845.
Birth of the organization – A nonprofit organization comes into a formal legal existence on the date of filing of the articles with the office of secretary of states of South Dakota. The office issues a ‘Certificate of Incorporation’ which acts as an evidence of the incorporation of the new nonprofit organization.
Time required for Incorporation : 2-5 working days from the date the articles is received at the incorporation office.
The process of filing for incorporating a nonprofit organization introduces the incorporators to the legal systems and processes that would govern its operation in future. It is for this reason that many people prefer to complete the process of starting a nonprofit on their own, instead of outsourcing it to lawyers.
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