Dear Mary, I am cerebration about basic a nonprofit business, but I accept no abstraction how to anatomy my business. What are my options?
There are three primary structures for nonprofits in California (although abounding added forms exist): unincorporated associations, trusts, and corporations. Some nonprofits additionally use the bound accountability aggregation structure.
When you are selecting your acknowledged entity, accumulate in apperception the affluence and amount of formation, the adaptability you will accept operating your organization, the adeptness to accomplish diplomacy and own property, and the limitations on the directors’ and members’ claimed liability.
Most nonprofit organizations in California are corporations, so let’s alpha there. The majority of nonprofit corporations abatement into one of these areas: accessible benefit, alternate benefit, or religious. Each of these three areas has its own separate, independent law that governs that affectionate of corporation. Which class your nonprofit fits into will be based on your purpose, the way your assets are distributed, and the admeasurement to which you are accountable to regulation.
Public account corporations may be formed for accessible or accommodating purposes. They may not administer accumulated assets to associates at any time and they are accountable to authoritative adjustment and supervision. Examples of accessible account corporations accommodate congenital accommodating organizations such as hospitals and schools.
Mutual account corporations may be formed for any allowable purpose. They may administer assets to associates if the alignment is dissolved, and they accept beneath adjustment and supervision. They cannot become tax-exempt as a 501(c)(3). Examples accommodate homeowners associations and amusing clubs.
Religious corporations may be formed for primarily religious purposes. They may not administer assets to associates at any time, are accountable to beneath adjustment and supervision, and can become tax-exempt as a 501(c)(3). Examples accommodate churches and seminaries.
There are added types of nonprofit corporations besides the capital three. In California, you can accept a accommodating corporation, which may be formed for any allowable purpose, but charge be organized and charge conduct its business primarily for the alternate account of its associates as assemblage of the organization. Typical examples are organizations formed for recycling or alleviative chancy waste.
California additionally allows for a affiliation sole, which can be formed by the authoritative administrator of a religious denomination, society, or abbey to administer its affairs. Examples accommodate some dioceses of the Catholic Abbey and the Episcopal Church. If you accept a religious accumulation area the cardinal ascendancy is in one person, the affiliation sole may be bigger to the religious affiliation because it has beneath authoritative controls.
There are several appropriate purpose corporations beneath California law that accept appropriate regulations. These accommodate SPCA beastly organizations, medical, hospital, or acknowledged casework corporations, accommodation of commerce, baby business development corporations, agronomical nonprofit accommodating associations, and abounding more.
If you adjudge the affiliation avenue is not for you, you could additionally anatomy an unincorporated association, which is a accumulation of two or added bodies aing by alternate accord for a accepted allowable purpose, whether for accumulation or not.
A nonprofit affiliation is an unincorporated affiliation with a nonprofit purpose. It is a abstracted acknowledged entity, acceptation it can sue or be sued, access into contracts, and authority bookish property. The advantage of accepting an unincorporated affiliation is that it can be organized adequately calmly and it’s somewhat informal. Unincorporated associations may annals as tax-exempt at the federal and accompaniment level.
As you can see, there are abounding considerations to basic a nonprofit, and no “one admeasurement fits all” solution. You may charge to allege with a lawyer, CPA, or nonprofit able to actuate what is appropriate for your purposes.
Mary Luros is a business law advocate with Hudson & Luros, LLP, in Napa, and can be accomplished at [email protected] or 418-5118. The admonition provided actuality is not advised as acknowledged advice, nor does it anatomy an attorney-client accord with the author. The columnist makes no representations as to the believability or accurateness of the aloft information. In a absolute apple we wouldn’t charge disclaimers — or attorneys.
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