Starting a nonprofit is a great way to help a community. Because a nonprofit organization’s purpose is to assist the public, they can be granted tax-exempt status by the IRS. This type of classification must be requested prior to the nonprofit operating with a tax-exempt status. The most well-known IRS tax-exempt classification is a 501(c)(3) which is formed and operated solely for religious, charitable, scientific, testing for public safety, literary, educational, or other specified purposes that meet certain IRS requirements. Other common tax-exempt classifications include:
• 501(c)(5) Labor, Agricultural and Horticultural Organizations
• 501(c)(7) Social and Recreation Clubs
• 501(c)(19) Veterans’ Organizations
• 501(k) Child Care Organizations
There are some common misconceptions about nonprofits. For example, nonprofits do not have owners. These entities do not issue stock or offer dividends. In Nevada, nonprofits have directors and officers who are responsible for managing the organization but the entity itself has no ownership structure. Directors and officers are expected to carry out their responsibilities in good faith. A director or officer may be held personally liable for any violation of the law involving a nonprofit entity. NRS 41.480. After all, the purpose of nonprofit entities is to be a resource for the community. Lastly, before selecting your directors, you’ll want to make sure to select at least three individuals that are not related to meet certain IRS nonprofit board of director requirements.
The services nonprofits provide are considered non-commercial actions. These services can include charity, religion, public safety, and education. It is expected that donations received by the nonprofit will be used to achieve a specific public benefit. During this process, the nonprofit itself never actually owns any of the donations it receives. The organization holds the donations in trust for a specific public service. For this reason, directors and officers of a Nevada nonprofit corporation must manage the organization with due care.
Nonprofits in Nevada should also have bylaws, similar to for-profit corporations. However, nonprofit bylaws and corporate bylaws have several key differences. These differences primarily arise because nonprofit organizations do not have owners and for-profit companies do. Also, nonprofit bylaws must be presented when they are requested in Nevada. Technically speaking, nonprofit bylaws are public record, and many nonprofit organizations make their bylaws publicly accessible to increase transparency and trust. This is usually done to attract more donors and supporters. Generally, for-profit corporations do not make their bylaws available.
Forming a nonprofit is a great way to support your local region. If you are interested in starting a nonprofit in the Las Vegas area, you may also need to file a notice of charitable solicitation. A Las Vegas business lawyer should be able to help you navigate the necessary filings for this and help you get started. Similarly, a Phoenix business lawyer can assist you with a notice of charitable solicitation in Arizona. Operating a nonprofit can be very fulfilling and is a great way to help address something important to you within your community.
