and Peace of Mind
Many businesses and organizations operate not to earn revenue but to provide a benefit to society as a whole. Not-for-profit organizations operate under a different set of rules than other businesses, and if they fail to abide by such rules, it could jeopardize their not-for-profit status and the advantages that come along with it. Forming and maintaining a not-for-profit organization is a complicated process, and it is smart for anyone with questions regarding New York’s laws and regulations that pertain to not-for-profit organizations to speak with an attorney. Patrick McGlashan of McGlashan Law, P.C. is an experienced New York non-profit attorney who provides legal counsel to many charitable and healthcare organizations, and he can assess your goals and needs and advise you of your options for seeking your desired outcome. Mr. McGlashan’s office is located in Manhattan, and he frequently provides legal services to not-for-profit entities in Manhattan and throughout New York.
New York’s Not-for-Profit Corporation Law sets forth the requirements for forming a not-for-profit corporation. Notably, while not-for-profit corporations can be formed as charitable or noncharitable organizations, they cannot be formed for financial gain or profit. Further, no income, profit, or corporate assets can be distributed to any of the not-for-profit corporation’s members, officers, or directors unless the Not-for-Profit Corporation Law permits it.
Parties that wish to create a not-for-profit organization must complete a Certificate of Incorporation and file it with the Department of State. The Not-for-Profit Corporation Law restricts what words or phrases may be used in the name of a not-for-profit corporation and requires that the Certificate of Incorporation include a statement that the corporation is a corporation as defined by the Not-for-Profit Corporation Law. The Certificate of Incorporation must also state the specific purpose for which the corporation was formed or a general statement indicating that it was formed for a purpose for which corporations may be organized under the Not-for-Profit Corporation Law.
Forming a not-for-profit organization does not automatically exempt the organization from having to pay income or property tax. Instead, they must apply for tax-exempt status, which is a crucial step in ensuring their financial stability.
Not-for-profit organizations typically qualify for charitable status under Section 501(c)(3) of the Federal Tax Code. Specifically, among other entities, religious, education, scientific, charitable, and literary organizations qualify as Section 501(c)(3) non-profit organizations. A not-for-profit organization seeking tax-exempt status must IRS Form 1023. It is crucial to do this as soon as possible after incorporation, as once the tax-exempt status is approved, it will apply retroactively to the time when the Articles of Incorporation were filed for up to 27 months.
Although the goal of non-profit organizations is not to earn a profit, they nonetheless need revenue to operate. As a result, they typically apply for private and public grants, hold fundraisers and solicit donations. Most charitable organizations must register with the Attorney General’s Charities Bureau before soliciting funds from donors.
Additionally, under New York law, some not-for-profit organizations must file Funding Disclosure Reports with the Department of State when they receive in-kind donations that are worth more than $10,000, and they are obligated to file a Source of Funding Report with the Commission on Ethics in Lobbying and Government.
Not-for-profit organizations must be formed and managed differently than for-profit businesses, and it can be difficult for people to understand the intricacies of New York’s not-for-profit laws without the assistance of a lawyer. If you have questions about whether your company qualifies for not-for-profit status or need help with a legal issue relating to a not-for-profit organization, it is in your best interest to consult an attorney. Patrick McGlashan, the founder and managing attorney of McGlashan Law Firm, P.C., is a capable attorney who understands the complexities of New York’s non-profit laws, and if you hire him, he will work tirelessly on your behalf. Our office is in Manhattan, and we frequently aid people with not-for-profit matters in Manhattan and throughout New York. You can reach us to set up a confidential consultation by using our online form or calling us at (212) 203-8738.