- Creation and Organizational Documents: Created by filing Articles of Incorporation in compliance with the North Carolina Nonprofit Corporation Act.
- Management: A Nonprofit Corporation is controlled by its members and managed by a board of directors elected and acting under authority of the Articles of Incorporation and Bylaws of the Nonprofit Corporation.
- Limited Liability Characteristics: Members of a Nonprofit Corporation are not, as such, personally liable for the acts, debts, liabilities, or obligations of the corporation.
- Tax Characteristics: Subject to qualification and compliance with the applicable provisions of the Internal Revenue code, Nonprofit Corporations generally pay no income tax.
- Termination: Nonprofit Corporations are unaffected by the death or withdrawal of a member. Nonprofit Corporations are dissolved by compliance with the Nonprofit Corporation Act, either voluntarily, administratively, or judicially. G.S. 55-14-01 to 55-12-40.
If the nonprofit entity will be soliciting funds, you may also be interested in learning about applying for a charitable solicitation license.
Designation as a Charitable or Religious Corporation
A corporation which is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code is called a “charitable or religious corporation” in the North Carolina Nonprofit Corporation Act.
This term also includes a corporation which is organized exclusively for one or more purposes specified in Section 501(c)(3) and which must distribute its assets upon its dissolution to another “charitable or religious corporation” or to the United States or another state.
If you intend to apply for IRS federal tax exemption as a charitable organization, your articles of incorporation must contain a required purpose clause and a dissolution of assets provision. Sample statements can be found on Form N-14 in the listing of nonprofit forms under Business Registration using the above Forms Link.
Valuable information on 501(c)(3) qualification is on the IRS website (www.irs.gov) It includes sample statements for the IRS application. Click the “Charities and Nonprofits” link and then the Life Cycle of a Public Charity link.
Also, some nonprofit corporations that plan to solicit the public for charitable contributions whether “monetary” or “gift in kind” may be required to seek an exemption or obtain a license prior to soliciting. More information can be found under Charitable Solicitation and Licensing at frequently asked questions..