Starting Your Non-profit
There are a few things you may want to consider when starting your non-profit in Alaska. How you prepare your statements, and the information you include in your statements, will help you answer questions from future lenders, board members and employees. Considerations may vary depending on whether you form a 501(c)(3) or other type of non-profit organization.
Creating a Mission Statement
Create your mission statement by outlining what you want your non-profit to do and by explaining its purpose. Answer these six important questions: who, what, where, when, why and how? Lay out your company's objectives, activities, and resources, and explain how and where it will obtain funding.
501(c)(3) and Other Types of Non-profits
There are different types of nonprofits in Alaska. A 501(c)(3) nonprofit is exempt from federal taxation under the Internal Revenue Code. These are usually organizations that operate for charitable, religious, scientific and other similar reasons. They may include both public charities and private foundations. Other organizations may be non-profits as well, such as social welfare organizations, civic leagues, trade and professional organizations, and social and recreational clubs. However, these entities may or may not be exempt from federal taxation.
There are also two other types of Alaska nonprofits: membership and non-membership. Membership nonprofits are made up of members who have the right to vote on important matters. Non-membership nonprofits are not required to have members. They're run by their board of directors.
Considerations for Starting a Non-profit
When creating your Alaska nonprofit, consider the potential advantages and disadvantages:
Advantages:
- Alaska not for profits are exempt from Alaska corporate income tax.
- Non-profit corporations may provide their shareholders, directors and officers with protection from liability
- Some Alaska nonprofits have advantages in fund raising, especially 501(c)(3) non-profits.
- An Alaska non-profit corporation can outlive its original organizers, unlike partnerships, and associations.
- Grants from organizations like the Alaska Division of Family and Youth Services or the National Science Foundation may require non-profit status.
- Not for profit organizations may be exempt from property taxes on all or part of their real property.
Disadvantages:
- Although non-profits are good for managing large numbers of members, they're not a good choice if you want to maintain control of your organization.
- Non-profits require more time and money to create and maintain than a sole proprietorship or partnership.
Requirements and Mandatory Forms for Creating a Non-profit
In order to start and run a nonprofit in Alaska, you must Articles of Incorporation with the Alaska Corporations Section.
How to Retain Your Non-profit Status
After forming your not for profit organization, you must adhere to specific guidelines so you can retain your nonprofit status.
- An initial report must be filed with the Alaska Corporations Section after you file your Articles of Incorporation.
- You must also file a biennial report once every two years with the Alaska Department of Community and Economic Development.
- If your non-profit has members, it must hold an annual meeting. It's important to document the meeting by taking and keeping meeting minutes.
- Alaska requires all nonprofits to maintain complete books and records of accounts, as well as minutes of corporate meetings, at its registered office.
- Nonprofits must also obtain an employer identification number from the Internal Revenue Service, as well as an Alaska employer identification number.
What it Costs to Form an Alaska Non-profit
The current fee for incorporating a non-profit in Alaska is $50.
Accountability and Ethics
Board members should avoid conflicts of interest. They must disqualify themselves from decisions if a conflict is present.
The Alaska Open Meeting Act also requires that non-profits hold meetings that are open to the public whenever discussing matters relating to state or federal funds.
Applying for Grants & Loans
Grants and loans from federal, state and private sources are a major source of funding for Alaska non-profits. A not for profit corporation is responsible for complying with grant requirements and keeping appropriate records. It's important for non-profits to keep money received from grants separate and apart from the non-profit's general fund. A good reputation in administering grant monies helps non-profits obtain more funding from these sources.
Alaska & National Non-profit Resources
Alaska Division of Corporations: The Alaska Corporations Section offers information on filing Articles of Incorporation, annual and biennial reports, and obtaining an Alaska employer identification number.
Alaska Volunteer Legal Handbook: Part III of this handbook provides in-depth information about creating, maintaining and terminating an Alaska nonprofit corporation.
USA.gov for Non-profits: This website explains obtaining government grants, obtaining and maintaining tax-exempt status, and includes tips on operating a nonprofit.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
