Starting a Nonprofit in Nebraska
Starting a Nonprofit in Nebraska is governed by Chapter 21 of the Nebraska revised statutes titled the Nebraska Nonprofit Corporation Act (2007).
Eligibility for Starting a Nonprofit organization in Nebraska
1) The Application for incorporating a new non profit organization must be moved by one or more incorporators.
2) The Nonprofit organization must have a registered office based out of Nebraska. This may or may not be the principal place of business of the Non profit organization.
3) The application must include the name, address and consent of an Individual who agrees to act as a ‘resident agent’ of the Nonprofit organization. The resident agent is a person who is normally available at the above registered office to receive notices and demands on behalf of the organization.
4) The minimum number of directors required for a NPO in Nebraska is 3.
Step 1) Choosing a Name for the Nonprofit organization –
The Nebraska Act does not require the use of designators like ‘Co.’, ‘Corp.’, ‘Ltd.’ etc in the name of the Non profit organization.
The Name of the Non profit organization should not be indicative of a purpose other than the purpose for which the organization is being instituted.
Other factors to be considered when naming a Nonprofit organization can be assessed here.
Step 2) Drafting the Articles of Incorporation
As per Nebraska Act, the article of Incorporation must include the follwoing clauses –
a) The Name of the Nonprofit organization as per requirements provided above.
b)A statement specifying whether the organization is a ‘Public benefit Corporation’, a ‘Mutual benefit corporation’, or a ‘religious corporation’.
c) A valid street address of the registered office of the proposed Nonprofit organization and the name of its Initial registered agent who wold be generally available at the given address to receive notices and demands on behalf of the Nonprofit organization.
d) The name and street address of all the Incorporators of the Nonprofit organization.
e)A statement specifying whether or not the said non profit organization will have members.
f)A statement specifying the method to be applied for disposing the assets of the organization in case it is decided to dissolve the Nonprofit organization in future.
Optional Clauses that can be included in the Articles of Incorporation
Additionally the Articles of incorporation may include the following clauses-
1) The purpose(s) for which the said Nonprofit organization is being instituted.Amongst other purposes, this can also be written as ‘transaction of any lawful activity’.
2)The names and street addresses of all the Initial board of directors of the Nonprofit organization.
3)Any other provision that may be desired to be included for effective regulation and management of the affairs of the Non profit organization.
The Business filing division of the Nebraska office Secretary of State does not provide a sample format of Articles of Incorporation. As such, the Article of Incorporation must be drafted by the applicant in any acceptable format.
Clauses mandatory for Organizations seeking 501(c)(3) tax exempt recognition
If a Nonprofit organization want to obtain Tax exempt recognition under section 501(c)(3) of the IRS code, it must include the following mandatory clauses to its Articles of Incorporation –
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.
Step3) Executing and Filing the Articles of Incorporation
Filing Fee – The fee applicable for filing of Articles of Incorporation of a Nonprofit organization is USD10.oo plus USD5.00 per page for the articles of incorporation.
This is to be paid vide check favoring the ‘Secretary of State – Nebraska’ and must accompany all other documents submitted for filing.
Executing the Articles of Incorporation – The Articles of Incorporation must be printed in duplicate copies on white blank sheet of paper and must be signed by all the Initial board of directors. If the names of Initial board members has not been mentioned in the Articles, it should then be signed by all the Incorporators on all the pages.
The Registered agent must also sign expressing his consent in the relevant section of the Articles of Incorporation.
The signature should be done in original on both the copies. Copy of signature is not acceptable on the duplicate set.
Filing of the Articles – The Articles of Incorporation, duly signed along with check for the requisite filing fee must be hand delivered or mailed across to –
Secretary of State
State Capitol Building
Lincoln, NE 68509
Queries if any in this regard can be discussed at Phone: 402-471-4079
Birth of Nonprofit organization – A Nonprofit organization comes into formal legal existence upon successful of the Articles of Incorporation. The office of Secretary of State generally issues a certificate of existence which acts as a proof of the existence of the Non profit organization.
Post Incorporation formalities
1) After successful filing with the office of Secretary of state, a duplicate copy of the field article must also be filed with the office of the Clerk of the County where the registered office of the Nonprofit organization is proposed to be set up.
2) The Notice of incorporation must be published for three consecutive weeks in a legal newspaper of general circulation in the county where the Nonprofit organization has its principal office or if none in the county of the registered address of the Nonprofit organization. The Publication must include the name of the Nonprofit organization, whether the organization is a public benefit, mutual benefit, or religious corporation, the street address of the organization’s initial registered office, the name of its initial registered agent, the names and addresses of all the incorporators of the Nonprofit organization and whether the organization will have members or not.
3) After publication in Newspaper, the incorporators are required to obtain two copies affidavits of publication. The affidavit is prepared by the newspaper publisher when the Articles are published. One copy of the affidavit is to be sent to the Secretary of State office at the above address , and the second copy is kept for the organization’s own records.
4) This is to be followed by buying a corporate seal and a corporate outfit kit. Typical kits kits consist of the seal,preprinted special forms, stock transfer ledger, stock certificates, , and sample ‘fill in the blank’ minutes and by-laws. These kits are generally advertised in Lawyer’s trade journals.Alternatively you can have them printed with the printers.
5) Immediately after this, the initial board of directors must convene a meeting to adopt the bylaws of the organization. The following salient features of the Act must be kept in mind when drafting the bylaws of the organization.
a) Director’s Quorum – The directors quorum is taken as majority of directors in the office, unless a different percentage is specified in the Articles or the bylaws. The percentage can under no case be less than 1/3rd of the directors in office or less than 2 directors in any case.
b) Member’s quorum – The member’s quorum is to be taken as mentioned in the Articles or the bylaws of the organization. However the member’s quorum can never be less than 10% of the voting members.
c) Matters for which notice has not been served cannot be discussed at the meeting if it is attended by less than 1/3rd of the voting members.
d) The Director’s term of office is to be taken as mentioned in the Articles or the bylaws. However this can not be more than 5 years except for in the case of designated or appointed directors.
e) The NPO must appoint President, Vice president, Secretary and treasurer. Except for the president, one person may hold two offices simultaneously at a time.
6) This is to be followed by obtaining the Federal I.D number. This involves a simple process of completing an online form.
7) This is to be followed by opening of a corporate checking account. To open a corporate checking account the Nonprofit organization will need the ‘Federal i.d number’ as obtained above, a corporate seal and a corporate resolution for opening the corporate checking account.
8) The last in the series is to obtain the Employer Identification number with the IRS and applying for tax exempt recognition under section 501(c)(3) of the IRS code.
Though the process can be outsourced to professional Incorporation service providers for a normal fee, it is advised not to let service providers draft the Articles and bylaws as these two documents govern how a nonprofit functions on a day to day basis.
The process of filing for Incorporating a Non profit organization in Nebraska is a valuable learning experience for any one starting a Nonprofit organization in Nebraska.
Secretary of State Corporation Division Room 1301 State Capitol Building Lincoln, NE 68509 phone: 402-471-4079