|
Profit corporations are authorized
to issue shares of stock to shareholders in return for capital
investments. Shareholders receive a return on their investments
when dividends are paid or when assets are distributed after
dissolution. Nonprofit corporations neither issue shares
nor pay dividends, no part of the income may be distributed
to its members, directors, or officers.
Nonprofit does not mean tax-exempt. A
“tax-exempt organization” is a unique entity
that is usually a nonprofit organization. However, a nonprofit
organization cannot be exempt from Federal and State income
or franchise tax until the organization applies for an exemption
and the IRS and the state franchise board issues a determination
of exemption.
Most states require three directors to
form a nonprofit. The following states will require less
than three directors if there are less than three members:
| |
Louisiana |
|
| |
Massachusetts |
|
| |
Minnesota |
|
| |
Virginia |
|
| |
|
|
The following states require only one
director:
| |
California |
Colorado |
Delaware |
| |
Michigan |
Mississippi |
New Hampshire |
| |
Pennsylvania |
South Carolina |
Virginia |
| |
Kansas |
Oregon |
West Virginia |
| |
Iowa |
Oklahoma |
Washington |
Yes. A nonprofit corporation can take
in more money than it spends. It can use the tax free profits
for its own operating expenses including salaries. What
a nonprofit corporation cannot do is distribute any profits
to officers, directors or employees.
The Attorney General has statutory authority
to (1) investigate charities that operate as nonprofit corporations,
and (2) inspect the books and records of all corporations,
including nonprofit corporations. The Secretary of State
has no such authority.
No. A Board of Trustees is equivalent
to a Board of Directors. Some nonprofit's find it advantageous
to have a Board of Advisors and may choose to describe its
powers in the bylaws. A Board of Advisors has no legal authority,
unless the bylaws or articles indicate otherwise.
|
