Question: Where Should We Incorporate Our Nonprofit?
A reader asked this question:
My group has been meeting for about 2 years and is ready to incorporate and begin receiving and distributing grant monies. However we have no business office or one particular state we work in. All members live in different states (a couple in different countries) and we meet at conferences or at member institutions 2-3 times per year when we need to work face to face. I've been told that Delaware is the best state for corporations. Any opinions? Does this include for non-profits? I'm just not sure how I should go about choosing a state to file in. Thanks.
Answer:
I asked Ellis Carter of CharityLawyer for her take on this question. Carter, an Arizona lawyer specializing in nonprofit law, replied:
The corporation should be incorporated somewhere that is connected to its activities. Consider where the board members reside, where funds are raised, and where events are held. If there is no clear connection to any particular state, the second criteria I would consider is a state that does not over-regulate nonprofits. California and New York are examples of states that subject nonprofits to incredible regulation. In my experience, Delaware, Nevada, Arizona and Wisconsin impose fewer regulations on nonprofits. There are surely other jurisdictions that fall into this category but my response is based on states where we have experience.
Remember that incorporation at the state level is the first step toward becoming an IRS registered nonprofit.
More About Incorporation:
- Nonprofit Incorporation - an Overview
- How To Incorporate as a Nonprofit: A Check List
- How to Start a Nonprofit Step 3: State Forms -- National Council of Nonprofits
