How to start a North Carolina nonprofit

Start by doing research. Is your nonprofit serving a mission in the community? And do you have the means to maintain it? Then make your case: write your mission statement, think about a name, and select your directors carefully. After that, all there’s left to do is file. 

Advantages and disadvantages of having a North Carolina nonprofit organization

A nonprofit is an entity or association created to promote and maintain the well-being and greater good of a community, in which profits (or surplus) are directed towards the business and mission rather than divided among the owners and shareholders. Here are the pros and cons of having one in North Carolina:
 

PROS	CONS
Your nonprofit's assets and property belong to the corporation. In the event of creditors' claims or lawsuits, only these assets are vulnerable. Claims and lawsuits can't attach to the personal property of trustees, officers, or managers. Nonprofits may qualify for several forms of tax exemption.	Planning a nonprofit involves significant time and effort. If control, independence, and autonomy are important to you, nonprofit status might not be right for you.

How to form a nonprofit in North Carolina

1. Developing a business plan for your North Carolina nonprofit

• Define the purpose and goals of the organization.
• Research the issues and determine what resources you have and need.
• Establish your priorities.
• Market your idea to possible volunteers and board members.
• Create a budget and timeline.

2. Writing a mission statement 

A mission statement clarifies your goals and explains how you plan to meet them. As a guideline, describe what, where, when, and how your nonprofit's purpose will be met, as well as who is going to help your nonprofit meet it. It may take a few tries to narrow your ambitions down into a workable plan.

Although you're creating a nonprofit because you want to give back to your community, you still have to meet certain requirements to protect yourself and to ensure that you achieve your organization's goals. When you create a mission statement, you can explain your organization's purpose. Consider what problem or issue your organization wants to address, then focus your statement on including the efforts and values that will guide your nonprofit to these goals.

3. Choosing a unique name 

Your nonprofit's name must be distinguishable from existing names registered with the North Carolina Secretary of State. This means it shouldn't be the same as or too similar to another organization's name. The name should also not be misleading to the public – it must accurately reflect the nature and purpose of your organization.

4. Filing your Articles of Incorporation in the state of North Carolina

This is the legal document that brings the business to life. It includes important information like the nature of the company and the location of the corporate headquarters. Once accepted, the corporation becomes its own legal entity.
 

Other forms and requirements for North Carolina nonprofits: File an application to reserve a business entity name with the Department of Secretary of State, if applicable. File Nonprofit Corporation's Designation of Principal Office Address with the Department of Secretary of State. If yours is an out-of-state corporation, you must file an application for a Certificate of Authority, along with a Certificate of Existence authenticated by the Secretary of State in the state where you initially registered. If you plan to solicit contributions, you must apply for a license annually with the Department of the Secretary of State, Solicitation Licensing Section. To obtain status as a 501(c)(3) corporation with exemption from federal income taxes, nonprofits must file Form 1023, Application for Recognition of Exemption with the IRS. To retain tax exemption, file Form 990-N, Form 990-EZ, or Form 990 with the IRS, based upon your annual gross income receipts. Nonprofits must submit a completed questionnaire, a copy of their Articles of Incorporation, and their bylaws to the North Carolina Department of Revenue to obtain tax exemption from state franchise and income taxes.

5. Applying for grants and loans in North Carolina 

Grants and loans from federal, state, and private sources are a major source of funding for North Carolina nonprofits. A not-for-profit corporation is responsible for complying with grant requirements and keeping appropriate records. It's important for nonprofits to keep money received from grants separate and apart from the nonprofit's general fund. A good reputation in administering grant monies helps nonprofits obtain more funding from these sources. 

What to do after forming a nonprofit organization in North Carolina

After forming your North Carolina nonprofit organization, you must follow specific guidelines to retain your status:

• Designate a principal office address with the Secretary of State.
• File a charity registration with the Department of Revenue if you plan on soliciting contributions from the public.
• Prepare Nonprofit Bylaws. Initial bylaws must be adopted by your incorporators or your board of directors.

North Carolina nonprofit resources

1. NC Center for Nonprofits: Here you can find training information, forums, job boards, publications, pro bono programs, information on how to form a 501(c)(3) entity, and a helpline.
2. WNC Nonprofit Pathways: Pathways supports Western North Carolina's nonprofits with fund development, financial management, board and governance, evaluations, legal compliance, and human resource management information.
3. North Carolina Network of Grantmakers: The Grantmakers' website offers social media tools, reports, and blogs to promote information sharing between nonprofits and funders.

Still have questions? Learn more about how to register your own nonprofit with Rocket Lawyer and get started today!
 

Key takeaways Starting a nonprofit takes planning, like creating a mission statement, picking a name, and choosing responsible directors to lead the group. There are good things about having a nonprofit in North Carolina, like tax breaks and protection from personal lawsuits, but it also comes with extra paperwork and public financial records. After forming a North Carolina nonprofit, it’s important to stay organized, follow state laws, and stay focused on helping the community to keep your nonprofit status.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is a nonprofit organization?
• How to start a nonprofit organization
• How are nonprofits taxed?
• How to get 501(c)(3) tax-exempt status
• How to register a nonprofit by state