Starting an Unicorporated Nonprofit Organization

If an organization is expected to work on a small scale or if the members do not wish to go that far to keep qualified staff for meeting with compliances required by an incorporated organization, they may decide to start a non profit organization without incorporation.

An unincorporated non profit organziation is similar to a incorporated organization except for the following practical differences –

A) The protection against personal liabilites is not available to an inincorporated organization. (See discussion on how an unincorporated organization can provide partial protection against personal liabilities to its members)

B)An unincorporated organization does not have to draft articles. Instead it has to draft and adopt a ‘constitution’ which has similar contents as those of articles of incorporation of a non profit organization.

C) The orgainzation may or may not draft its by laws.

D) The unincorporated organization does not have to file annual reports and other compliances with the secretary of states. (other than those reports that need to be filed for fundraising regulation purpose)

While incorporation may not be necessary for organizations that do not envision to operate on a large scale. If not, incorporation must be considered as it provides credibility in the eyes of funding agencies.