17512 Columbia

rules for non-profit entities

Last week, in a conversation with a Pennsylvania Department of State representative, the topic of the conversation dealt with the issue of organizations and entities declaring “non-profit status” when, in fact, the organization or entity had not gone through the legal steps to gain nonprofit status.

Clearly, said the representative, if the entity has not received Internal Revenue Service documentation, then any declaration of nonprofit status is inaccurate and potentially deceptive and very much a concern under Pennsylvania law. The representative suggested that all people considering identifying their entity as nonprofit or not for profit refer to the stipulations in the guide produced by the Attorneys General office, “Charitable nonprofit organizations handbook.” He also suggested that everyone should verify the nonprofit status claim before contributing money to any entity.

“When forming a nonprofit corporation, it is advisable to engage an attorney to review the law and assist in drafting the Articles. Articles of Incorporation must be filed with the Department of State. Generally, Articles of Incorporation must contain information including, but not limited to, the following:

  • the name and registered address of the corporation;
  • the purpose for which the organization was formed;
  • a statement that the corporation is a not-for-profit corporation incorporated under the Nonprofit Corporation Law;
  • the voting rights of members;
  • the name and address of each individual incorporator;
  • the effective date of the Articles; and
  • whether or not the corporation is organized on a nonstock or a stock share basis.

Further, the IRS states, “During its existence, a private foundation or charity has numerous interactions with the IRS – from filing an application for recognition of tax-exempt status, to filing required annual information returns, to making changes in its mission and purpose. The IRS provides information, explanations, guides, forms, and publications on all of these subjects – they are available through this IRS website. The illustration below provides an easy-to-use way of linking to the documents most foundations will need as they proceed through the phases of their ‘life cycle.'”

Life Cycle of a Public Charity

Life Cycle of a Private Foundation

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