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How to Start a New Nonprofit Organization in Michigan
November 21st, 2019
You want to create a brand-new nonprofit in Michigan. Where do you start?
The first thing to do for most organizations is incorporate. In other words, become a Michigan Nonprofit Corporation. To do that you will need to file Articles of Incorporation with the State of Michigan. The Articles can be completed and filed online. But beware if you want to get tax-exemption! The Michigan Articles of Incorporation do not contain some provisions that are required by the IRS for 501(c)(3) status.
In Michigan, a new nonprofit corporation needs to identify itself as either a ‘directorship’ or a ‘membership’ organization. A directorship organization has a board of directors that makes all the decisions. The board will vote on who gets to join the board. A membership organization also has a board of directors, but it is elected by the members. Generally, a membership organization receives some of its funding from the members and often its services are directed toward members.
In either a directorship or membership organization, the person (or persons) who incorporate usually appoint the very first board of directors. Michigan law requires at least three directors to conduct business. The Board will then adopt bylaws and elect officers.
The next big step is to complete the IRS application for tax exemption. Charities will use a Form 1023 – and other types of nonprofit organizations will use Form 1024. If you think that your organization will be a small operation with revenues of no more than $50,000 per year for the next few years, then you may be able to use the 1023-EZ: it is a much shorter form than the full 1023.
All of these steps have traps for the unwary. To start out well – and make sure that you are not creating problems for the future – seek the advice of an attorney who is familiar with the specific requirements for nonprofits.
Contact Nuala Holowicki at (734) 995-2500 or info@magillrumsey.com