How to start a Pennsylvania 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 Pennsylvania 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 Pennsylvania:
 

PROS

CONS

Pennsylvania not-for-profits are exempt from Pennsylvania income tax. Nonprofit corporations provide their shareholders, directors, and officers with protection from liability Some Pennsylvania nonprofits have advantages in fundraising, especially 501(c)(3) nonprofits. A nonprofit 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 nonprofits are good for managing a large number of members, they're not a good choice if you want to retain personal control over your organization. Nonprofits require more time and money to create and maintain than sole proprietorships or partnerships. Grants from some federal and state government organizations may require nonprofit status.

How to form a nonprofit in Pennsylvania

1. Developing a business plan for your Pennsylvania 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 Pennsylvania 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 Pennsylvania

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 Pennsylvania nonprofits: Your nonprofit must publish either the intent to file, or the actual filing, of its Articles of Incorporation in two newspapers. Proof of publication should be kept with your nonprofit's minutes. If your corporation is a 501(c)(3) nonprofit, submit Form 1023, Application for Recognition of Exemption, to the Internal Revenue Service. To obtain exemption from Pennsylvania corporation and sales taxes, file copies of your IRS exemption letter, your Articles of Incorporation, bylaws, current financial statement, and Form REV-72 with the Pennsylvania Department of Revenue, Bureau of Business Trust Fund Taxes. Nonprofit organizations must also register with the Pennsylvania Bureau of Charitable Organizations within 30 days of receiving $25,000 in contributions. Include Form BCO-10 with your registration, as well as copies of your IRS exemption letter, Articles of Incorporation, bylaws, and IRS Form 990.

5. Applying for grants and loans in Pennsylvania 

Grants and loans from federal, state, and private sources are a major source of funding for Pennsylvania 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 Pennsylvania

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

• Nonprofit corporations must file annual statements with the Corporation Bureau of the Pennsylvania Department of State.
• Nonprofits must file a Decennial Report of Continued Existence with the Department of State Corporations Bureau every 10 years.
• A nonprofit corporation should maintain complete books and records of accounts, as well as minutes of corporate meetings, at its registered office.
• 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.

Pennsylvania nonprofit resources

1. Pennsylvania Association of Nonprofit Organizations: PANO provides training, networking, information, discounts, and advocacy for Pennsylvania nonprofits.
2. National Council of Nonprofits: This national organization provides resources for starting and maintaining a nonprofit organization.
3. Pennsylvania Department of State: This site offers regulations and guidelines for starting and maintaining nonprofits in Pennsylvania.

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 Pennsylvania, like tax breaks and protection from personal lawsuits, but it also comes with extra paperwork and public financial records. After forming a Pennsylvania 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