How Does An Organization Incorporate?

A nonprofit organization becomes a corporation by: (1) selecting a name for the organization that is not being used by any other incorporated group in the state, (2) drafting the legal incorporation document, or articles of incorporation, and filing it with the state, and (3) holding the first official meeting of the board to adopt bylaws and elect officers. Legal assistance in filing for incorporation is advisable but not necessary. In many cases, an attorney may simply review the articles of incorporation after the organizers complete the form.

Check your state's law on the minimum number of persons needed to act as incorporators. In Minnesota, for instance, at least three of legal age (eighteen or older) may form a corporation. In choosing a name for your corporation, check with the secretary of state's office to make sure that the same or a similar name is not being used by another group within the state.

The secretary of state also can supply a form for the articles of incorporation. This form can be used as is, or it can be used as a guide to formulating your own articles of incorporation (for instance, in a case in which more space is needed than is provided on the form).

The information required for the articles of incorporation generally includes the following items.

  1. The name of the corporation.
  2. The purpose of the corporation.
  3. A statement that the corporation does not afford "pecuniary gain," or profit, to its members.
  4. The period of duration of corporate existence, which may be perpetual.
  5. The location, by city or community, of its registered office.
  6. The name and address of each incorporator.
  7. The number of directors constituting the first board of directors, the name and address of each director, and the tenure in office of the first directors.
  8. The extent of personal liability, if any, of members for corporate obligations and the methods of enforcement and collection (there will be none, except in unusual circumstances).
  9. Whether the corporation has capital stock (most nonprofit corporations do not have capital stock).
  10. Provisions for the distribution of corporate assets and for dissolution.
  11. Whether or not there will be a membership separate from the board of directors. A statement that membership is the board of directors is advantageous for nonmembership organizations. Without such a statement, it could be assumed that the corporation has a separate membership that elects the board of directors.

When they are complete, the articles of incorporation are submitted to the secretary of state. A certificate of incorporation will be issued by the secretary of state; at that time, the corporation legally begins to exist. The articles will be filed with the secretary of state and the county registrar of deeds, and the certificate of incorporation will be sent to the organization within a couple of weeks.

After the organization's incorporation, the first meeting of the directors should be held. During the first meeting, the initial bylaws are adopted, the officers are elected, and any other business is conducted. This meeting is mandatory. State law requires that nonprofit corporations have bylaws and conduct themselves in a certain manner and within certain structural limitations (such as having a board of directors, officers, periodic meetings, financial records and minutes, et cetera). For membership organizations, the law sets out various requirements that are assumed unless stated otherwise in the bylaws. If the organization desires a relatively small, closed base, the "board equals members" concept should be considered. Should community involvement be desired at some later time, the bylaws could be revised to provide for an advisory board or another such body.

The articles of incorporation form for nonprofit organizations is available from the secretary of state.

This section was taken from the article, "Legal Aspects: Cutting the Red Tape," from Starting and Running a Nonprofit Organization, Second Edition by Joan Hummel (University of Minnesota Press, 1980, 1996) pp.31-33.