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Not-for-Profit Requirements - NFP 102.10 -Articles of Incorporation

Not-for-profit requirements are very different from a C or S corporation (form NFP102.10). Tax exempt entities must report to the Illinois Attorney General’s charity department for additional filings and accounting regulations.

This topic will address the following questions:

  • How are not-for-profit requirements different from a regular corporation if the entity is not tax-exempt?
  • Can a Not-for-profit have one director such as in a C or S Corp?
  • What purpose is acceptable for a not-for-profit corporation?
  • How does my company become tax-exempt?

Not-for-Profits Requirements - Form NFP 102.10 Background:

Not-for-profit requirements (form NFP 102.10) are quite different from the information required when forming a for-profit corporation. Those differences are reflected in the corporate name, the general-purpose clause, the State Board of Director requirements, and the lack of shareholders and stock issuance.

If you are contemplating this type of business entity and intend to file for exempt status with the IRS, I recommend that you find a reliable accountant to navigate the IRS Code and a reputable attorney that you can consult about the language required by the Illinois Secretary of State and the IRS. You will be working with Illinois statutes and the Internal Revenue Code and in some instances, you will have to cite the Liquor Control Act. If you are not a tax attorney or an accountant, this process can be somewhat intimidating.

It is not impossible to prepare the state and tax documents yourself, however, the IRS will be exacting in the language that is presented to them on behalf of your company’s request for exemption. The language set forth in the Articles of Incorporation for your NFP will need to mirror the requirements of the IRS as well as setting forth the description of the limitations imposed by law on the NFP.

If you are looking to educate yourself on the IRS exemption process I would recommend reading the following IRS publications: Publication 557 (06/2008), Tax-Exempt Status for Your Organization, and Chapter 25 – Exempt Organizations Determinations Manual: These two publications together with the 29 page IRS Form 1023 that is required by the IRS to apply for tax-exempt status, may just send you running to an accountant or tax attorney.

Not-for-Profit Requirements - Instructions: Form NFP 102.10 - Articles of Incorporation

Numbered items in the article below correspond to the numbered questions on the form. Unless indicated as optional, all questions must be completed.

  1. Company Name. Not-for-Profit requirements on the Form NFP 102.10 includes having one of the following endings: Corporation, Incorporated, Company, or Limited and may be an abbreviation of any of those endings. If the corporate name implies the corporation may be organized for any purpose other than the acceptable specific purpose as set out in the purpose clause, you will be required to include NFP in the corporate name.

  2. Registered Agent. The Not-for-profit requirements for the address of the initial registered office and its initial Illinois registered agent. (This is where we hope you will use our services; we are the most reasonably priced and reliable agent representation for Illinois on the web!) are the same as a corporation.

  3. Number of Directors. List the number of directors constituting the first board of directors and their names and addresses. (Illinois requires a minimum of 3 directors for a NFP corporation).
  1. Purpose. Each company must specify a purpose for the organization. The State of Illinois requires the purpose clause to be specific, unlike the for-profit corporation requirements that allow for a general purpose, the Not for Profit requirements for the purpose clause must be focused and to the point. Once you pinpoint your purpose a more descriptive narrative can be included. The following list of categories is authorized by the Illinois Secretary of State as an acceptable purpose(s) for the formation of NFP corporations:

The following categories are authorized by the Illinois Secretary of State as an acceptable purpose(s) for the formation of NFP corporations:

1) Charitable;
2) Benevolent;
3) Eleemosynary;
4) Educational;
5) Civic;
6) Patriotic;
7) Political;
8) Religious;
9) Social;
10) Literary;
11) Athletic;
12) Scientific;
13) Research;
14) Agricultural;
15) Horticultural;
16) Soil improvement;
17) Crop improvement;
18) Livestock or poultry improvement;
19) Professional, commercial, industrial or trade association;
20) Promoting the development, establishment or expansion of industries;
21) Electrification on a cooperative basis;
22) Telephone service on a mutual or cooperative basis;
23) Ownership and operation of water supply facilities for drinking and general domestic use on a mutual or cooperative basis;
24) Ownership or administration of residential property on a cooperative basis;
25) Administration and operation of property owned on a condominium basis or by a homeowner association;
26) Administration and operation of an organization on a cooperative basis producing or providing goods, services or facilities primarily for the benefit of members who are consumers of such goods, services or facilities;
27) Operation of a community mental health board or center organized pursuant to the Community Mental Health Act for the purpose of providing direct patient services;
28) Provision of debt management services as authorized by the Debt Management Service Act;
29) Promotion, operation and administration of a ridesharing arrangement as defined in Section 1-176.1 of the Illinois Vehicle Code;
30) Administration and operation of an organization for the purpose of assisting low-income consumers in the acquisition of utility and telephone services;
31) Any purpose permitted to be exempt from taxation under Section 501(c) or 501(d) of the U.S. Internal Revenue Code, as now in or hereafter amended;
32) Any purpose that would qualify for tax-deductible gifts under Section 170(c) of the U.S. Internal Revenue Code, as now or hereafter amended (Any such purpose is deemed to be charitable under subsection (a)(1) of this Section.); and
33) Furnishing natural gas on a cooperative basis.

Not-for-profit requirements deem that if the NFP is organized to function as a club, you must include a statement that the corporation will comply with the State and local laws and ordinances relating to alcoholic liquors. And, if a Not for Profit is organized as a tax-exempt charitable organization, there may be additional registrations required by the Attorney General’s office.

5. Other. If you are applying for tax-exempt status with the IRS you will be required to elaborate on your purpose clause and provide the limitations imposed by law on tax-exempt organizations. This section must be written in compliance with the IRS Code and weighs heavily in the determination of your tax-exempt status.

6. Incorporator. The name and address of each of your incorporators (Incorporator(s) refers to the person(s) filling out and filing the Articles of Incorporation forms for you).

* Other registrations may be required in Illinois for NFP entities depending on their tax-exempt status with the IRS once your company is on file with the Illinois Secretary of State. Entities formed as Charitable Organizations are required to file documentation with the Attorney General’s Office of Charity Registrations. Follow this link to their site and forms: http://www.illinoisattorneygeneral.gov/charities/reg_reports.html.