Forming a nonprofit in Washington state

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Forming a nonprofit in Washington state

Before we get started with incorporating as a nonprofit we should discuss on this forum, what kind of decision-making process we want to have and if we want to go ahead with forming a nonprofit.
If we decide to go ahead and assuming Alex will be the Incorporator, we will need to determine who will be the initial Directors and where assets go in case of dissolution. We have the option to set it up for a limited number of years or indefinitely; in either case we would be able to dissolve it if necessary. Incorporating as a nonprofit is a fairly simple process, and can be done online for $50, offline by mail for $30.
Once registered as a nonprofit, we would need to create Bylaws, which should include a meeting schedule, procedure for the election of officers and directors, and other administrative details.
We would need to set up a Corporate Records Binder to hold the Articles of Incorporation, Bylaws, and Meeting Minutes and a bank account.
Unless we start collecting more than $50K in annual donations we wouldn’t need to register with the Washington State Charities Program. Similarly, we probably don’t need to rush registering with the IRS as a 501(c)(3) but when we do, we can use Form 1023-EZ, “Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code.”

Here is a list of steps to take after registering as a nonprofit in Washington:
a. Write Bylaws
i. Meeting schedule
ii. Election of officers and directors (can also be called trustees)
iii. Administration
b. Create corporate records binder to hold the Articles of Incorporation, Bylaws, Meeting minutes, and Operating Manual
d. Set up accounting and tax period and open a bank account.
2. Federal Tax Exemption as a small nonprofit (assets < $250K, annual gross < $50K) – since our donations and budget needs (at least initially) are going to be very small, we can hold off on this since we won’t have enough income to pay taxes.
a. Form 1023-EZ, “Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code”
3. COOPERATIVE ASSOCIATION
a. Requires a minimum of three directors
I am trying to find out more information on setting it up as a cooperation. Also I am fine with being one of the initial directors.

coops and incorporators

does there have to be a single person as an incorporator or executive director, or can it be filed by equal directors?

and can directors be from outside the state or outside the nation?

Nonprofit continued

The incorporator can be a single person, one of the initial directors or someone else. His/her legal role is to file the Articles of Incorporation with the Secretary of State online or by mail. http://www.sos.wa.gov/_assets/corps/forms/NonprofitArticles2014.pdf. The person doesn't have to be you. I could print it out and mail it or file online if we decide to go ahead. We can start out with only one director to begin with but judging by what i have read, it seems to be better to have at least three, which would be mandatory if we decided to structure the nonprofit as a cooperative association.

Directors and differences

ok, so the incorporator can be anyone

directors must all be from Washington? or other possibilities?

not sure i understand why we would consider being a coop. what do you see as a possible benefit to that?

Directors and differences

The directors can reside outside of Washington. I am not sure that there would be a benefit for a nonprofit to be a cooperative association. When we file the Articles of Incorporation we only need one incorporator and one director. Afterwards we need to have a meeting to determine Bylaws, procedures for the election of the directors, etc - all in my initial post.

Steps

thanks Bee. i started looking up a couple things to satisfy some curiosities and wrote a few things down as well that might be helpful for making some initial decisions

Roles

incorporator - one or more persons that file the articles of incorporation, often one of the initial directors or a lawyer. does not need to reside in WA. role is legally over once the corporation is formed.

registered agent - accepts tax and legal documents on behalf of the non-profit and must have a physical address in the state of incorporation, which is made public record. can be a person, or a third-party service provider.

board of directors - sets policy and provides guidance and oversight, ensuring the organization stays aligned with its mission and values, and stays in compliance with non-profit legal requirements (maintaining exempt status).

WA state requires a minimum of one director (odd numbers are recommended). there is no age limit and directors do not need to reside in WA state, or in the US as far as i can tell, but should be confirmed. initial board members will be listed in the Articles of incorporation. and according to the WA Nonprofit Handbook, public documents also include "the corporate annual report forms that disclose the names and addresses of the corporation’s directors and officers." may be important for the shy types.

the board must meet at least once annually by law, more if defined in the Articles or Bylaws. specifics on the board's duties and powers, how directors are chosen, terms etc, are primarily outlined in the bylaws. some of this can be defined in the articles if choosing to do so, but bylaws are more flexible and easier to amend.

note, in regards to meetings, “Regular and special meetings may be conducted by conference calls or similar methods of communication that allow comment and response by all directors at the same time,” but the WA Nonprofit Corporation Act “does not currently permit ‘online’ meetings of any kind.” not sure i understand if this seriously means a conference call is fine, but a Skype chat would not be? need clarification.

executive director - not required. where one is chosen, that person is more involved in day-to-day operations and with staff if staff exists (liason), while the board provides general oversight. the executive director attends board meetings and they work together to plan strategies and fundraising. doubt there's an initial need for this role.

officers - according to the WA Nonprofit Corporation Act: "The officers of a corporation shall consist of a president, one or more vice presidents, a secretary, and a treasurer, each of whom shall be elected or appointed at such time and in such manner and for such terms as may be prescribed in the articles of incorporation or the bylaws. In the absence of any such provision, all officers shall be elected or appointed annually by the board of directors. If the articles or bylaws so provide, any two or more offices may be held by the same person, except the offices of president and secretary. Such other officers and assistant officers or agents as may be deemed necessary may be elected or appointed by the board of directors or chosen in such other manner as may be prescribed by the articles or bylaws." and yes, directors may also be officers.

officers will be elected or appointed at the organizational meeting held once incorporated. according to WA Nonprofit Handbook:

"Typical responsibilities of officers include the following:

The president is responsible for facilitating the effective action of the board in governing and supporting the organization. The president sets the agenda for board meetings (in partnership with the chief executive, if one exists) and leads board meetings. Often, the president appoints the chairs of all standing and ad hoc committees of the board.

The primary role of the vice-president is to assume the responsibilities of the president in the event of her/his absence. Often, the vice-president also carries out special assignments as requested by the president or the executive committee. If an organization has multiple vice-presidents, each is typically charged with a set of unique responsibilities.

The secretary is responsible for maintaining corporate records. The secretary ensures that accurate meeting minutes are recorded and retained, and that notices are duly given in accordance with the provisions of the bylaws.

The treasurer is responsible for managing the board’s review of, and action related to, the organization’s financial health. The treasurer ensures that comprehensive financial reports are made available to the board on a frequent basis (at least quarterly), and identifies opportunities to strengthen the board’s ability to carry out its fiscal responsibilities. The treasurer is accountable for maintaining accounts and appropriate fiscal controls."

other roles may be established such as paid and volunteer staff or advisory committees. the nonprofit may also allow for a membership with certain basic rights such as voting for directors. perhaps the user base of Liquid Solidarity would be defined as the membership.

Purpose for which the nonprofit is organized

this will need to be defined in the Articles and drafted in such a manner that the corporation will qualify as exempt from federal corporate income taxes. the IRS defines Exempt Purposes as such:

"The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency."

this article may be helpful: Purpose Statement. legal advice may also be helpful.

Steps

if we are moving forward with a nonprofit, we should consider ahead of time who will be directors and officers, if there is a membership as well, and what kind of decision-making methods to use. and we need a clear, succinct mission statement.

but first, for all on board right now without much structure, it must be first established if there is a general consensus on doing it at all.

some questions to be raised: does everyone see good reason to do this? does anyone object? does everyone feel like they have enough information to form a decision?

Steps

For me a good reason to go ahead with a nonprofit would be if we anticipate growth that would require, for example, fund raising, more administrative work, or raise liability issues. If I remember correctly, our intention was to gradually increase membership - otherwise there'd be no point.
A reason not to go ahead would be the lack of participation in this discussion on the part of everyone currently involved.

Can we make the nonprofit an international non-profit?

Would it be possible to set the nonprofit up as an international non-profit charitable organization, like the Wikimedia Foundation that runs Wikipedia and related projects? Then donations are tax-deductible – not only in the U.S., but very likely also in The Netherlands, and probably indirectly in the U.K.

For qualifying as a charity we'll need some moving mission statement, like:

The mission of the Blablabla Foundation is to empower the civic engagement of people around the world by developing and discussing alternative approaches and solutions to urgent societal issues.