Learn how to protect your tax-exempt status while running a nonprofit corporation.
Nonprofit corporations are organized very much like regular corporations; however, running a nonprofit corporation means complying with a few special rules. Here's what you need to know.
The Organizational Structure of Nonprofit Corporations
Like any corporation, a nonprofit has a board of directors to make important policy decisions, officers (president, treasurer, and secretary) to oversee and manage the day-to-day operations of the organization, and possibly employees to do the work.
Unlike regular corporations, however, nonprofit corporations do not have shareholders or owners. (Nonprofits are owned by no one person or group of persons and cannot be sold. In the event the directors of a nonprofit want to dissolve the corporation, they must distribute all of its assets to another nonprofit corporation.)
Although a nonprofit corporation can choose to have members who have voting rights, many nonprofit corporations decide not to adopt a membership structure and, in the interests of efficiency, leave the decision-making up to the directors. If a nonprofit does opt for a membership structure, the members participate in major corporate decisions. Specifically, the members have the exclusive right to elect directors, amend articles and bylaws, and vote on a merger or dissolution of the corporation.
Corporate Records
All nonprofit corporations must keep good corporate records. These records help to preserve directors' limited personal liability and protect your organization's tax-exempt status. Good record-keeping means preparing minutes of directors' and members' meetings and documenting important corporate decisions.