How to Form a Delaware Nonprofit Corporation

The steps to form a 501(c)(3) nonprofit corporation in Delaware.

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Most nonprofits are 501(c)(3) organizations, which means they are formed for religious, charitable, scientific, literary, or educational purposes and are eligible for federal and state tax exemptions. To create a 501(c)(3) tax-exempt organization, first you need to form a Delaware corporation, then you then apply for tax-exempt status from the IRS and the State of Delaware. Here are the details.

1. Choose who will be on the founding board of directors for your nonprofit corporation.

In Delaware, your nonprofit corporation must have at least one director.

2. Choose a name for your Delaware nonprofit corporation.

The name of your nonprofit corporation cannot be the same as the name of another nonprofit corporation on file with the Delaware Department of State. To see if your proposed name is available, you can search Delaware’s name database at www.state.de.us/corp/default.shtml.

In Delaware, your nonprofit corporation name must include one of following: "Association," "Company," "Corporation," "Club," "Foundation," "Fund," "Incorporated," "Institute," "Society," "Union," "Syndicate," "Limited"; or "Co.," "Corp.," "Inc.," "Ltd."

3. Prepare and file your nonprofit certificate of incorporation.

You will need to create and file a nonprofit certificate of incorporation with the Delaware Department of State. The certificate of incorporation needs to include basic information such as your nonprofit’s name, your nonprofit’s statement of purpose, certain provisions required for state and federal tax-exempt purposes, and the name and address of your registered agent (the person to whom legal notices should be sent).

The Delaware Department of State should have a nonprofit certificate of incorporation form -- either a fill-in-the-blank form or a sample on which you can base your certificate. To ensure that you’ll receive 501(c)(3) tax-exempt status when you apply with the IRS, you'll need to include specific language to ensure that you'll receive tax-exempt status, such as a clause dedicating the nonprofit's assets to another 501(c)(3) nonprofit organization should your nonprofit end. Your state form may include these provisions already, but if yours doesn’t, consult a legal self-help guide such as How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo), to make sure your certificate complies with Delaware's nonprofit laws.

4. Prepare bylaws for your Delaware nonprofit corporation.

You’ll need to prepare bylaws that comply with Delaware law and contain the rules and procedures your corporation will follow for holding meetings, electing officers and directors, and taking care of other corporate formalities required in Delaware. For more information, see Nolo’s article Nonprofit Formation Documents: Articles of Incorporation, Bylaws, and Organizational Minutes, or, for help creating your bylaws, see Nolo’s book How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo). Your bylaws do not need to be filed with the Delaware Department of State -- they are your internal operating manual.

5. Hold a meeting of your board of directors.

Your first board meeting is usually referred to as the organizational meeting of the board. The board should take such actions as:

  • approving the bylaws
  • appointing officers
  • setting an accounting period and tax year, and
  • approving initial transactions of the corporation, such as the opening of a corporate bank account.

After the meeting is completed, minutes of the meeting should be created.

6. Set up a corporate records binder.

You should set up a corporate records binder for your nonprofit to hold important document such as your certificate of incorporation, bylaws, and minutes of meetings. For more information, as well as minutes forms, consent forms, and other resolutions, see Nonprofit Meetings, Minutes & Records, by Anthony Mancuso (Nolo).

Now that you have created your nonprofit corporation, you can obtain your federal and Delaware state tax exemptions. Here are the three steps you must take to obtain your tax-exempt status:

1. File your Form 1023 federal tax exemption application

To obtain federal tax-exempt status, you need to complete and file IRS Form 1023 with the IRS. This long and detailed form asks for lots of information about your organization, including its history, finances, organizational structure, governance policies, operations, activities, and more. For more information, see Nolo's article How to Obtain 501(c)(3) Tax-Exempt Status for Your Nonprofit, or for line-by-line instruction on how to complete the form, see How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo).

2. Obtain your Delaware state tax exemption

Once you have your federal tax exemption, you need to obtain your Delaware state tax exemption. This may include exemptions from income, property, sales, and other state taxes. Delaware’s tax agency will have a form you need to file to obtain your state tax exemption.

3. Other state reporting and registration requirements

Delaware does not require nonprofits to register with the state before soliciting contributions from state residents. You may have to register your nonprofit in other states before you engage in any out-of-state solicitations.

Updated by: , J.D.

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