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
North Dakota recognizes different types of nonprofits. 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, social and recreational clubs may also qualify for nonprofit status in North Dakota. Some types of North Dakota nonprofits may not qualify for tax exemption.
Considerations for Starting a Nonprofit
- North Dakota not for profits are exempt from North Dakota income tax.
- Non-profit corporations may provide their shareholders, directors and officers with protection from liability.
- Some North Dakota 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 maintain 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 Nonprofit
- You must submit Articles of Incorporation to the Business Division of the Secretary of State to form and operate a non-profit in North Dakota.
- If your corporation is a 501(c)(3) nonprofit, submit Form 1023, Application for Recognition of Exemption, to the Internal Revenue Service.
- 501(c)(3) nonprofits that are exempt from federal tax are also automatically exempt from the North Dakota income tax.
- Nonprofits are not generally exempt from sales tax in North Dakota.
How to Retain Your Nonprofit Status
After forming your not for profit organization, you must meet specific guidelines to retain your nonprofit status.
- Nonprofit corporations must file annual reports with the North Dakota Secretary of State by Sept. 1 of each year.
- 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 North Dakota Nonprofit
- The filing fee for North Dakota Articles of Incorporation is $30.
- The filing fee for annual reports is $10.
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 about how gifts will be used.
Nonprofits operate for public purposes with public support, so information regarding your 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 North Dakota 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.
North Dakota & National Nonprofit Resources
North Dakota Association of Nonprofit Organizations: NDANO provides training, networking, information, discounts and advocacy for North Dakota nonprofits.
National Council of Nonprofits: This national organization offers resources for starting and maintaining a nonprofit organization.
North Dakota Secretary of State: The Secretary of State's website has regulations, requirements, forms and other information about beginning and maintaining nonprofit corporations in North Dakota.
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.