Starting a nonprofit in South Carolina
Starting a nonprofit organization in South Carolina is governed by Chapter 31 of South Carolina statutes titled ‘South Carolina nonprofit corporation Act’.
Steps for starting a nonprofit organization in South Carolina
Step 1) Choosing a name
South Carolina nonprofit corporation Act does not require the organization to use designators like ‘Co.’,’Corp.’,’Ltd.’ etc with the name.
Two important provisions of the Act, regarding naming a S.C nonprofit organization are –
1) The name should be distinguishable from the name of any other ‘for profit’ or ‘non profit’ entity on records of the filing division of the office of Secretary of States, South Carolina .
2) The name should not be indicative of a purpose other than the purpose for which the organization is being formed.
Factors to be considered while choosing the name can be assessed here.
Step 2) Preparing the Article of Incorporation
Mandatory clauses in the Articles
A per South Carolina act, the articles of incorporation of a S.C nonprofit organization MUST include the following clauses –
(1) the name of the nonprofit organization as per requirements specified above.
(2) A statement specifying whether the corporation is a “public benefit corporation” or a “mutual benefit corporation” or a “religious corporation”.
(3) Complete street address (with zip code) of the nonprofit organization’s initial registered office at South Carolina and the name of initial registered agent who would generally be available at that office.
(4) The names and complete addresses of all the incorporators of the nonprofit organization.
(5) A clause specifying whether or not the organization would have membership provision.
(6) A dissolution clause specifying the process to be followed in case the organization is decided to be dissolved in future.
(7) Valid street address of the ‘principal office’ of the organization which may be outside S.C.
The Article may additionally include clauses pertaining to –
(1) the purpose(s) for which the organization is being setup. It could also include a statement that the purpose of in combination with other purposes stating that the purpose of the organization is ‘transaction of any lawful activity’
(2) the names and complete addresses of the initial directors of the organization.
(3) any other provision(s) for managing and regulating the affairs of the organization.
Download sample article of incorporation for a South Carolina nonprofit organization
The office of secretary of state has prescribed this format sample article of Incorporation for a S.C nonprofit organization.
IRS mandates addition of 4 clauses to the Article of incorporation for organizations that want to obtain tax exempt status recognition under section 510(c)(3) of the IRS code.
Accordingly, organizations seeking to obtain such an exemption must also download this attachment and add it to the article of incorporation.
Step 3) Filing the Article of Incorporation with South Carolina secretary of states
Filing fee – The filing fee applicable for incorporating a nonprofit organization in South Carolina is $25. The fee is payable through check made favoring Secretary of state.
Where to file
Duly filled Article of Incorporation (in duplicate set – but signed originally) along with a check for requisite filing fee and a self-addressed and stamped return envelope, must be mailed to :
South Carolina Secretary of State’s Office
Attn: Corporate Filings
P.O. Box 11350
Columbia, SC 29211
If the nonprofit organization is proposed to be a political Association, it must additionally send a duly filled CL-1Form which can be obtained from the filing division of the office of secretary of states at an additional $25 fee.
Birth of the organization – A nonprofit organization comes into a formal legal existence in South Carolina upon successful filing of the articles with the filing office of secretary of states. The office issues a ‘Certificate of existence’ as an evidential document for the birth of the organization.
Time required for Incorporation : Incorporating a NPO in S.C takes around 3-7 working days from the day, the article is delivered at the filing office.
Conclusion- Typically services of lawyers or professional incorporation service provider is not required for incorporation, if the organization has a valid street address of Carolina. If not the organization needs the service of ‘commercial registered agents’.
The process of starting a NPO in itself is a valuable learning experience as it introduces the applicant to all the legal aspects and systems that would eventually be involved in running nonprofit organization in South Carolina.