Starting a Nonprofit in Massachusetts
Starting a Nonprofit organization in Massachusetts is governed by the Title XXII Chapter 80 of the General Law of the Commonwealth of Massachusetts. (abbreviated here as “M.G.L”)
Scope of the Act – This section of the MGL is applicable to starting of organizations that undertake or promote civic, educational, charitable, benevolent, religious, antiquarian, historical, literary, scientific, medical, chiropractic, artistic, monumental, musical, libraries, missionary enterprise, organizations that promote temperance or morality, athletic exercises , domestic animals husbandry and poultry, nonprofit credit counseling services, yachting, agriculture, horticulture, boards of trade, chambers of commerce, burial grounds and organizations set up for certain other similar purposes.
Steps involved in Starting a Nonprofit organization in Massachusetts
Step 1) Choosing a Corporate Name – M.G.L prescribes the following restrictions on choosing a Name for a Nonprofit organization –
a) The Name must include any one of the following corporate designators – “corporation,” “incorporated,” “limited,” or their abbreviations “Corp.”, “Inc.” or “Ltd.”
b) The name must be distinguishable from the names of other business entities operating in the Commonwealth of Massachusetts. Thus names sounding similar to an existing business entity are not allowed. The Name search facility is a free service provided by the Secretary of Commonwealth office, Massachusetts.
c) Several other factors must be kept in Mind when choosing a Name for a Nonprofit organization. Recommended read: How to choose a Name for a Nonprofit organization.
Step 2) Drafting the Articles of Organization – The Articles of Organization is the first and the most important document that lays down the policies for regulation and management of the NPO.
As per Sec 13(a) and other sections of the of the MGL, The articles of organization of a Nonprofit organization must contain the following clauses-
(1) A clause starting that the incorporators (with their names and postal addresses) hereby associate themselves with the intent to forming a Nonprofit organization.
(2) The name of the proposed Non profit organization that complies with the requirements mentioned above.
(3) The purposes for which the Non Profit organization is being set up. It is advised to add one of the purposes as ” Undertaking of any legal activity” to keep open the scope for venturing into other areas in the future.
(4) A statement explaining whether the Nonprofit organization will or will not have membership provision. If the NPO decides to allow for membership, the Articles should mention the classes of membership, a distinguishing designation for each class and, voting powers, qualifications, and powers, rights and duties of each classes of members.
Other Mandatory Clauses for Organizations seeking Tax exemption with the IRS under section 501(c)(3) or any other section
As per IRS, any Non Profit organization which proposes to seek Tax exemption with the IRS must include the following clauses to its Articles of Organization –
A) The Purpose Clause – already discussed above.
B) The Dissolution Clause – specifying the method in which the Assets of the Nonprofit organization would be treated in the event of its dissolution.
C) A clause specifying the Section under which the Tax exemption would be sought. (say under Section 501(c)(3) or any other section of the IRS code)
D) A clause prohibiting the organization from undertaking any activity that is not permitted by IRS for organizations for that particular section under which the IRS tax exempt recognition is sought.
Optional Clauses that can be included in the Articles of Organization
The articles of organization may additionally include clauses like –
a)The duration for which the organization is being setup. If this is not mentioned, the duration is considered to be perpetual.
(b) Valid street address in the commonwealth of the initial principal office of the Non Profit organization.
(c) The names and addresses of the initial directors, president,secretary, treasurer and other officers of the Non Profit organization.
(d) The fiscal year to be followed by the Non Profit organization
(e) the name and valid street address of the resident agent, if any, of the Non Profit organization.
(f) any other lawful clauses for the management and regulation of the day to day affairs of the Non Profit organization.
Click here to download a sample Articles of Organization for a Nonprofit proposed to be established in Massachusetts.
Also, download the Secretary of Commonwealth, Massachusetts prescribed format for Articles of Organization here.
Using these two formats as guide, one can draft the Articles of Organization for a Nonprofit organization.
Step 3) Executing and Filing the Articles of Organization
The final Articles of organization need to be printed on 8 1/2 x 11 sheets of paper with a left margin of at least 1 inch.
This is then to be signed by all the incorporators of the Nonprofit organization and mailed to or hand delivered along with the requisite filing fee at:
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
Any queries in this regard can be discussed at with the office of Secretary of Commonwealth at phone number – (617) 727-9640.
Online filing -Alternatively the Nonprofit organization Articles can also be filed online by clicking here.
Birth of Organization – The Nonprofit organization comes into a formal legal existence in Massachusetts upon successful filing of the Articles of Incorporation with the Secretary of Commonwealth,Massachusetts.
Time required -The filing of Articles of Organization for Incorporating a Nonprofit organization in Massachusetts takes around 3-7 days time. (The time required can be reduced if one pays for expedited filing).
The Incorporation process is a good learning experience for anyone planning to Form a Nonprofit organization as it involves understanding the policies that govern the day to day running of a NPO.
This learning does not happen, if one uses the services of professional incorporators. Incorporating by self also considerably reduces the Incorporation expenses.
Even if one decides to use the services of an commercial service provider, it is advisable to draft the articles of Incorporation and bylaws on one’s own.
These documents eventually govern the day to day affairs of the organization. It is therefore not advised to let outsiders draft them at the time of starting a nonprofit organization .