Delaware Non-Profit (Exempt) Corporations
Not-for-Profit Corporations (aka “Non-Profit”, “Non-Stock Corporation” or “501(c)3” or "501c3")
- When we use the term “Not-for-Profit Corporation ” we are typically referring to a Chartered Charitable or Religious Organization. A Not-for-Profit Corporation is not “tax-exempt” until it has been granted Tax Exempt status by the IRS after filing form 1023. To be Tax Exempt, the Corporation must meet specific requirements:
- Typically, the Corporation does not authorize or issue shares of stock.
- The Corporation is organized and operated exclusively for Religious, Educational, Charitable, Scientific or Literary purposes, or for Testing for Public Safety, to Foster National or International Amateur Sports Competition, or for the Prevention of Cruelty to Children or Animals
- No part of the net earnings of a section 501(c)(3) organization may, by practice or custom, benefit a person having a personal and private interest in the activities of the organization, such as the creator of the Corporation or the creator's family.
- The organization is restricted in how much political and legislative (lobbying) activities they may conduct. Political Organizations usually file under an exemption other than 501(c)3.
- DBI will draft your Certificate of Incorporation with the appropriate language and file your Certificate of Incorporation in the same manner that a For-Profit Stock Corporation is filed. After the Not-for-Profit Corporation is registered by us, you will then need to apply to the IRS for Tax Exempt Status. For more information about Tax Exempt Status see the IRS publication “Tax Exempt Status for Your Organization”.
How are Not-for-Profit Corporations Managed?
- The managers of a Not-for-Profit Corporation are typically known as the Board of Trustees.
- The powers and responsibilities of the Board of Trustees are outlined in the Not-for-Profit Corporation’s By-Laws together with specifications on how the Trustees will be elected and how long they will serve.
- The duties of the Trustees will typically include overseeing the operation of the organization to ensure that the purpose of the Charitable Organization is upheld; managing the receipt of donations; investment and management of assets and operating funds; budgeting; and project planning.
How are Not-for-Profit Corporations Taxed in Delaware?
- Not-for-Profit Corporations are exempt from paying Delaware Franchise Tax and pay a reduced annual report filing fee.
- Annual Reports are due before March 1st of each year and are filed online at www.corp.delaware.gov.
Certificate of Incorporation
- The following information will be included on the Certificate of Incorporation of a Not-for-Profit Corporation :
- The name of the Corporation
- The name and complete address of the Delaware Registered Agent
- The Purpose Statement setting forth purposes in keeping with those listed as eligible by 501(c)3 and barring those activities or practices restricted under 501(c)3
- A statement that the Corporation shall have no shares of stock
- The name and address of the Incorporator and the name and address of the Initial Director. Not-for-Profit Corporations are not permitted to file an Anonymous Certificate of Incorporation.
- The signature of the Incorporator