Starting a Nonprofit in Vermont

P.S:  This article describes how to start a nonprofit corporation in Vermont and is NOT applicable to starting an unincorporated organization. (For unincorporated organization read: How to start an unincorporated nonprofit organization)

Starting a nonprofit organization in Vermont is governed by the Title 11B of Vermont Statutes Annotated titled Vermont nonprofit corporation act.

Scope of the Act

The clauses of the Vermont nonprofit corporation act are applicable to starting of :

1) Public benefit organizations – organizations that provide benefits to the public in general.
or
2) Private foundations – Organizations formed for the benefit of a closed group – say a trade union or a professional association.

Eligibility for starting a nonprofit organization in Vermont

a) One or more individual who has attained the age of majority can act as the Incorporator for starting a new nonprofit corporation. Incorporator need not be a resident of Vermont. Organizations cannot be incorporators in Vermont.

b) The organization must be represented by a ‘registered agent’ with a valid street address of Vermont. This address would be known as the ‘registered office address’ of the organization. The registered agent acts as the representative of the organization upon whom all notices and demands of the organization are served.

c) The registered office address of the organization may be different from the address of the ‘principal place of business’ of the nonprofit organization.The principal place of business of the organization need not be in Vermont.

d) The minimum number of directors required for a Vermont nonprofit corporation (Public or Mutual benefit) is three (3). The minimum number of directors is five(5) for marketing cooperatives and three (3) for Worker, Housing, Consumer or Railroad cooperatives.

Steps for starting a nonprofit organization in Vermont

Step 1) Choosing a name for the organization

Vermont nonprofit corporation Act specifies the following guidelines for naming a nonprofit organization –

a) The name MUST include any one corporate designators as suffixes . The allowed designators are ‘Corporation’, ‘Incorporated’, ‘Company’, or ‘Limited’. The suffix ‘cooperative’ can only be used if the organization is being formed as a cooperative under Title 11 of Vermont statutes annotated.

b) The name must not indicate a misleading purpose or a purpose different from the purpose laid down in the incorporation documents.

c) The name should be distinguishable from the names of other entities on records in the database of the state of Vermont. A nonbinding name availability check can be conducted online in the Vermont name database.

Additional recommended read: Naming a nonprofit

Step 2) Preparing the Articles of Incorporation

An Article of Incorporation is the principal organizing document for a nonprofit corporation and it spells out the basic constitutional framework of the organization.

Vermont nonprofit corporation act requires that the articles of incorporation of a nonprofit organization MUST capture the following details –

(1) The name of the nonprofit organization that satisfies the requirements mentioned above. A second choice of name may be specified in the Article. In case the first name is not available, the office considers . We will approve the first name that is available.

(2) A statement specifying whether the corporation is a public benefit corporation or a mutual benefit corporation.

(3) Valid Vermont based street address of the organization’s registered office and the name of the registered agent who is generally available at the office.

(4) The names and addresses of all the incorporators.

(5) A statement specifying whether or not the organization will have membership provisions

(6) Provisions describing the mode of distribution of assets to any other nonprofit organization in case it is decided to dissolve the organization in future.

Optional Clauses in the Article of Incorporation

The Article of incorporation MAY additionally include –

(1) the purpose (s) for which the organization is being established. One of the purpose may also be mentioned as ‘transaction of any lawful activity’. By adding this statement the organization can keep the scope open for expanding its activities in future.

(2) the names and addresses of the initial directors of the organization.

(3) Provisions that define, limit and regulate the duties, powers and limitations of the organization or its board of directors or of any class of members of the organization.

(4) Any other provision deemed expedient to be included for regulating and managing the the day to day affairs of the organization.

Sample article of Incorporation

Vermont office of secretary of states has prescribed sample article of incorporation for for Vermont nonprofit organization. (opens in a new window)

Modifying the article of Incorporation sample

This sample form provided by the office of secretary of states is a minimalistic version. It meets all the requirements of Vermont nonprofit corporation Act. However it does not meet the requirements specified by IRS for nonprofit organizations planning to seek tax exempt status recognition under section 501(c)(3) of the IRS code.

Accordingly, NPOs MUST add the following mandatory clauses at relevant places.

Step 3) Filing the Articles with the Secretary of states Vermont

Executing the Article

The article sample provided above should be printed on white blank sheets of paper (in duplicate set). The Article of Incorporation (completed in all aspects) must be signed by all the incorporators or all the directors (if named in the articles).

Filing Fee

Filing for incorporating in nonprofit organization in Vermont should be accompanied by a filing fee of $75.

The payment can be made in check, credit card, or money order made favoring secretary of state.

Where to file

Duly completed Article of Incorporation along with a check for the requisite filing fee must be mailed or delivered in person at:

Corporations
Redstone Building
26 Terrace Street
Montpelier, VT 05609-1104
802-828-2853 FAX

Tel: (802) 828-2386
Fax: (802) 828-2853

Office hours: 7:45 – 4:30 Monday – Friday

Time required

Starting a nonprofit corporation in Vermont take around 2-5 working days from the date of submitting the Article of Incorporation with the office of secretary of states, Vermont.

Birth of the organization

A nonprofit organization comes into formal legal existence in Vermont upon successful filing of the Article of Incorporation with the filing division of Vermont.Generally the date of filing is the effective date
on which the nonprofit organization comes into existence.

The office may return one copy of the article of incorporation, stamping the word ‘filed’ all the pages of the article along with the signature (original or fascimile) of the secretary of state, Vermont which can be reproduced as an evidence of existence of the organization.

Conclusion

The process of incorporation introduces the applicant to the legal framework involved in starting and managing a nonprofit organization in Vermont and therefore many individuals prefer to complete the process on their own instead of outsourcing it to incorporation service providers.

You can consider downloading Nonprofit for Dummies for a detailed step by step guidance to start a nonprofit organization in Vermont.

People who read this also read:

nonprofits for dummies
This publication is brought to you by Daystar Council - a publishing house of quality nonprofit publications.
If you are planning to explore the development sector or want to start a nonprofit organization, we recommend:
"Step by Step Nonprofit for Newbies" - A complete nonprofit reference handbook.
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About the Author:


Adrian B. Bennett is an attorney and nonprofit consultant by profession. He provides development sector legal services in areas of formation of nonprofit organizations, choice of entity, tax exemption, private foundation tax law, corporate governance and advocacy. He serves as a legal adviser to several non profit organizations in and around Florida.

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