Starting Your Non-profit
There are a few things you might want to consider when starting your non-profit in Montana, particularly if you're thinking of forming a 501(c)(3) organization.
Creating a Mission Statement
How you prepare your mission statement, and the information you include in it, will help you answer questions from future lenders, board members and employees. 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 Montana. 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.
Social welfare organizations, business leagues, and social and recreational clubs may also qualify for nonprofit status in Montana. Some types of Montana nonprofits may not qualify for tax exemption.
Considerations for Starting a Non-profit
- Not for profit corporations are exempt from Montana's corporation license tax.
- Non-profit corporations provide their shareholders, directors and officers with protection from liability.
- Some Montana nonprofits have advantages in fund raising, especially 501(c)(3) non-profits.
- A non-profit corporation can outlive its original organizers, unlike partnerships and associations.
- Not for profit organizations may be exempt from property taxes on all or part of their real property.
- Although non-profits are good for managing large numbers of members, they're not a good choice if you want to retain personal control over your organization.
- Non-profits require more time and money to create and maintain than sole proprietorships or partnerships.
- Grants from some federal and state government organizations may require non-profit status.
Requirements and Mandatory Forms for Creating a Montana Non-profit
- Articles of Incorporation, submitted to the Montana Secretary of State
- Form 1023, Application for Recognition of Exemption, filed with the IRS, if your corporation is a 501(c)(3) nonprofit
- Application for exemption from the Montana corporation license tax. 501(c)(3) nonprofits that are exempt from federal tax may also apply for Montana exemption by submitting a copy of the corporation's Articles of Incorporation, bylaws, latest financial statement, and a certified copy the IRS exemption letter to the Montana Department of Revenue.
- Montana does not have a state sales tax.
How to Retain Your Non-profit Status
After forming your not for profit organization, you must follow certain guidelines to retain your nonprofit status.
- Nonprofit corporations must file an annual report with the Montana Secretary of State each year before April 15.
- A nonprofit corporation should maintain complete books and records of accounts, as well as minutes of corporate meetings, at its registered office.
What it Costs to Form a Montana Non-profit
- Montana charges a $20 filing fee for non-profit Articles of Incorporation.
Accountability and Ethics
Board members should avoid conflicts of interest. They must disqualify themselves from decisions if a conflict is present.
Nonprofits should respect the intentions of their donors in areas such as anonymity and the use of gifts. Written agreements can help avoid disputes over how gifts will be used.
Nonprofits operate for public purposes with public support, so information regarding your nonprofit's mission, activities and finances should be made available to the public.
Applying for Grants & Loans
Grants and loans from federal, state and private sources are a major source of funding for Montana 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.
Montana & National Non-profit Resources
Montana Nonprofit Association: MNA provides training, networking, information and acacy for Montana nonprofits.
Montana Department of Justice: This website helps nonprofits comply with Montana regulations.
National Council of Nonprofits: This national organization offers resources for starting and maintaining a nonprofit organization.
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.