Starting a Non-Profit

1) Select the Name of the Corporation==

1.a) Name Guidelines

When choosing a name ensure that it: \\

 * Will afford strong federal trademark protection, but will not infringe on anybody's trademark or service mark
 * Will be easy for your customers to remember
 * Will describe your products or services(often not possible and not proffered)
 * Will allow you to obtain .com, .net., .org, .biz, .info and .us domain names

1.b) Name Regulations

It will probably be easiest to just choose a name and then make sure it fits within these rules:

To check the availability of a name and for some naming and for some naming standards: \\ http://www.cc.state.az.us/divisions/corporations/filings/namingpolicy.asp

Name must abide by these Arizona rules: http://www.azleg.state.az.us/ars/10/03401.htm

1.c) Check for infringement

Use http://tess2.uspto.gov/bin/gate.exe?f=tess&state=4005:6leu8n.1.1 to search Federal database for names that aren't trademarked already

Use http://starpas.azcc.gov/scripts/cgiip.exe/WService=wsbroker1/connect.p?app=names-report.p to search Arizona database

2) Create the Non-profit organization==

2.a) Prepare the Articles of Incorporation

Example Articles of Incorporation of a Tax-Exempt Non Profit: \\ http://www.azcc.gov/divisions/corporations/filings/forms/cf0041.pdf Arizona CORPORATE FILINGS FAQ http://www.cc.state.az.us/divisions/corporations/faqmanual.asp#cf

Be sure to note that the corporation will not practice discrimination so as to be eligible for tax exemption!

2.b) Memberships

The Articles of Incorporation must state whether or not the corporation will have members. An Arizona nonprofit corporation is not required to have members. The choice to have members or not have members is a decision for the founders and depends on the nature of the proposed activities and the desires of the founders. Nonprofit corporations without members are governed by the corporation's board of directors.

If the corporation will have members, the articles of incorporation or bylaws may establish criteria or procedures for admission of members and continuation of membership. Unless otherwise provided in the articles of incorporation or bylaws, a corporation with members shall hold a membership meeting annually at a time stated in or fixed in accordance with the bylaws. A member of a nonprofit corporation is not personally liable for the acts, debts, liabilities or obligations of the corporation.

All members have the same rights and obligations with respect to voting, dissolution, redemption and transfer, unless the articles of incorporation or bylaws establish classes of membership with different rights or obligations or otherwise provide. All members have the same rights and obligations with respect to any other matters, except as set forth in or authorized by the articles of incorporation or bylaws.

A nonprofit corporation shall notify voting members of the date, time and place of each annual, regular and special members' meeting at least ten days but not more than sixty days before the meeting date.

2.c) Directors

All corporate powers are exercised by or under the authority of and the affairs of the corporation are managed by its board of directors, subject to any limitation set forth in the articles of incorporation.

If a nonprofit corporation has members, **the members elect all the directors (except the initial directors) at the annual meeting of members, unless either: (i) the articles of incorporation or bylaws provide some other time or method of election, or (ii) the articles of incorporation or bylaws provide that some of the directors are appointed by some other person or some of the directors are designated.**

If the corporation does not have members, all the directors except the initial directors are elected, appointed or designated as provided in the articles of incorporation or bylaws. If no method of designation or appointment is set forth in the articles of incorporation or bylaws, the board of directors shall elect the directors (other than the initial directors).

2.d) Officers

A nonprofit corporation shall have the officers described in its articles of incorporation or bylaws or appointed by the board of directors in accordance with the articles of incorporation or bylaws. **The bylaws or the board of directors shall delegate to one of the officers responsibility for preparing minutes of the directors' and members' meetings and for authenticating records of the corporation**. The same individual may simultaneously hold more than one office in the corporation.

2.e) Governance Issues

The general rule is that a nonprofit corporation may not make any distributions. It must keep as permanent records minutes of all meetings of its members and board of directors, a record of all actions taken by the members or board of directors without a meeting and a record of all actions taken by a committee of the board of directors on behalf of the corporation. The corporation shall maintain appropriate accounting records. The corporation or its agent shall maintain a record of its members in a form that permits preparation of a list of the names and addresses of all members and in alphabetical order by class of membership showing the number of votes each member is entitled to cast and the class of memberships held by each member.

Without the consent of the board of directors, no person may obtain or use a nonprofit corporation's membership list or any part of the membership list for any purpose unrelated to a member's interest as a member. Without the consent of the board of directors, the membership list or any part of the membership list shall not be:

• Used to solicit money or property, unless the money or property will be used solely to solicit the votes of the members in an election to be held by the corporation.
• Used for any commercial purpose.
• Sold to or purchased by any person.

Each year a nonprofit corporation must pay a $10 fee and file an annual report with the ACC that sets forth the following information that becomes available to the public:

• The names and business addresses of its directors and principal officers.
• A brief description of the nature of its activities.
• Whether or not it has members.
• A certificate of disclosure containing the information set forth in A.R.S. Section 10-3202.D.
• A statement that all corporate income tax returns required under Arizona law have been filed with the Arizona Department of Revenue.
• A statement of its financial condition consisting of one of the following documents: (i) the corporation's most recent copy of page 2, Form 99 filed with the Arizona Department of Revenue; (ii) a copy of the corporation's Charitable Organization Financial Statement as filed with the Arizona Secretary of State pursuant to A.R.S. §44-6552; (iii) a copy of the corporation's Treasurer's Report/Financial Statement prepared for the current fiscal year; (iv) a copy of the financial statement prepared for the corporation's members; or (v) a statement that the corporation conducted no business in Arizona in the past year.

2.f) Choose a Statutory Agent - Not it!

Every nonprofit corporation formed in Arizona or qualified to do business in Arizona must have and maintain a statutory agent located in Arizona. The purpose of a statutory agent is to give notice to the public of a person or entity authorized by the corporation that can be served with legal documents as the agent of the corporation. The statutory agent is the person or entity that can be served with a summons and complaint filed in a lawsuit.

The statutory agent must be one of the following:

• An individual who resides in Arizona.
• A domestic business or nonprofit corporation formed under Arizona law.
• A foreign business or nonprofit corporation authorized to transact business or conduct affairs in Arizona.
• A limited liability company formed under Arizona law.
• A limited liability company authorized to transact business in Arizona.

The corporation must notify the ACC if it changes its known place of business or statutory agent. If the statutory agent changes its street address, the statutory agent must give written notice to the corporation of the change and sign, either manually or in facsimile, and deliver to the ACC for filing a statement that includes the new address and that recites that the corporation has been given written notice of the change.

2.g) Prepare a Cover Sheet

Fill this out: http://corporations.azcc.gov/filings/forms/cfcvlr.pdf

2.h) Prepare Certificate of Disclosure

Certificate found here: http://www.azcc.gov/divisions/corporations/filings/forms/cf0001.pdf

When you file the articles of incorporation with the ACC, you must also submit a completed certificate of disclosure for nonprofit corporations. All incorporators and all people who are officers, directors or trustees at the time the articles of incorporation are filed must sign an initial certificate of disclosure and file it with the ACC. Signatures must be dated within 30 days of delivery to the ACC. When completing the certificate of disclosure: (i) check yes or no for question A, but if you check yes, you must attach to the certificate of disclosure all information requested in question B. Check yes or no for question C. If you check yes, you must attach to the certificate of disclosure all information requested in question C.

If within sixty days after delivering the articles of incorporation to the ACC any person becomes an officer, director or trustee of the corporation and the person was not the subject of the disclosures set forth in a certificate of disclosure previously filed with the ACC, the incorporator or incorporators or, if the organization of the corporation has been completed, the corporation shall sign and deliver to the ACC within the sixty day period a declaration, sworn to under penalty of law, setting forth all information required by A.R.S. Section 10-3202.D(1), regarding the person. If the incorporator or incorporators or, as applicable, the corporation do not comply with this requirement, the ACC may administratively dissolve the corporation.

2.i) Publish the Articles of Incorporation

• In a newspaper of general circulation the required number of times
• Within 60 days after the Commission files (approves) the Articles of Incorporation, you must publish a copy of the Articles in a newspaper of general circulation in the county of the known place of business in Arizona for three consecutive publications. A list of acceptable newspapers in each county will be enclosed with your approval letter and is also available on the Commission website. The corporation may be subject to administrative dissolution if it fails to publish. You do not need to file the Affidavit of Publication you will receive from the newspaper.
• Copied from the example articles of incorporation

3) Obtain Tax Exempt Status==

Being a non profit organization does not mean you are tax exempt. You have to file separately for this status.

3.a) Must meet these requirements

 *Must meet requirements set forth in the Internal Revenue Code

Non-Profit Types and Requirements for Exemption:
http://www.irs.gov/charities/nonprofits/content/0,,id=132157,00.html
Looks like we fall under the "Social Club" group.

• • Social Clubs**

Requirements for Exemption - In General: To be exempt under Internal Revenue Code section 501(c)(7), a social club must be organized for pleasure, recreation, and other similar nonprofitable purposes and substantially all of its activities must be for these purposes. A club will not be recognized as tax exempt if its charter, by laws, or other governing instrument, or any written policy statement provides for discrimination against any person based on race, color, or religion. There is an exception, however, for a club that in good faith limits its membership to members of a particular religion, to further the teachings or principles of that religion and not to exclude individuals of a particular race or color.

Personal Contact Required: An essential earmark of an exempt club is personal contact, commingling, and face-to-face fellowship. Members must share interests and have a common goal directed toward pleasure, recreation, and other nonprofitable purposes. Fellowship need not be present between each member and every other member of the club so long as it is a material part in the life of the organization. A statewide or nationwide organization that is made up of individual members, but is divided into local groups, satisfies this requirement if fellowship is a material part of the life of each local group.

Limited Membership Required: Another earmark of a social club is limited membership. A club that issues corporate memberships is dealing with the general public (the corporation's employees). **Evidence that a club's facilities will be open to the general public (persons other than members or their dependents or guests) may cause denial of exemption**. This does not mean, however, that any dealing with outsiders will automatically deprive a club of exemption.

Support by Membership Dues Required: In general, a club should be supported solely by membership fees, dues, and assessments. **A section 501(c)(7) organization may receive up to 35 percent of its gross receipts, including investment income, from sources outside of its membership without losing its tax-exempt status. No more than 15 percent of this amount may be derived from the use of the club's facilities or services by the general public or from other activities not furthering social or recreational purposes for members**. If an organization has non-member income that exceeds these limits, all the facts and circumstances will be considered in determining whether the club continues to qualify for exempt status.

Inurement Prohibited: The statute prohibits exemption if any part of the organization's net earnings inures to the benefit of any person having a personal and private interest in the activities of the organization. Inurement is not limited to overt distributions; even undistributed earnings may benefit members by decreasing membership dues or increasing the services the club makes available to its members without a corresponding increase in dues or other fees paid for club support. Fixed fee payments to members who bring new members into the club are not an inurement of the club's net earnings, if the payments are reasonable compensation for performing necessary administrative service.

3.b Must fill out this long form and meet its prerequisites

http://www.irs.gov/pub/irs-pdf/k1024.pdf

4) Public Disclosure of Information of Tax Exempt Organizations==

A tax-exempt organization is required to provide copies of its three most recent information returns, its exemption letter, and its approved application with supporting documentation, without charge (other than a reasonable fee for any reproduction and mailing costs), to persons requesting copies (with certain exceptions), unless it has made these forms widely available by publishing them on the Internet in accordance with IRS regulations.

5) Submit an affidavit of publication to the ACC

Annual Report

This annual report must be correctly filled out and submitted by the assigned due date or the corporation may be administratively dissolved or have its authority revoked by the State of Arizona. According to A.R.S. §10-1622.F, penalties accrue on business corporation annual reports which are submitted late (starting the day after the due date). Corporations must use the annual report form prescribed by the Corporation Commission. No other format is allowed.

Annual Report Instruction Sheet: http://www.cc.state.az.us/divisions/corporations/annrpts/arinstruct.asp

Non-Profit Organization

 *Have a regular meeting with possibly all members.
 *Have an agenda and set goals. 
 *Make people commit themselves to tasks. 
 *Write down minutes of the meeting and post them on a mailing list and/or Wiki. 
 *Go for the only date that works: once a week.  Weird dates like “first full-moon after the third Friday” will never work. Likewise doesn’t every other week or anything similar.

Links

Has good info about starting a non-profit in AZ and includes sample documents:
http://www.keytlaw.com/az/entities/nonprofits.htm

A more brief overview of what must be done to become a tax-exempt non profit in AZ:
http://www.hurwitassociates.com/l_s_initial_az.php

Change of statutory agent form:
http://corporations.azcc.gov/filings/forms/ll0006.pdf