Non-profit Organization Formation
Forming a Non-profit Organization
Unlike for-profit companies, non-profits are organized for the benefit of the public and cannot operate for profit. Non-profits are formed under state law and can be organized as corporations, unincorporated associations, trusts, and, under certain circumstances, as limited liability companies (LLCs). As with for-profit companies, the choice of entity has corporate and tax law implications, and some types of entities offer protection from personal liability for directors, officers, and members of the non-profit. Depending on the choice of entity, different legal documents are needed, including the non-profit charter, operating agreement, by-laws, and others. These various documents set forth the roles, rights, and obligations of those involved in the non-profit and the rules and procedures governing its operations. An experienced business attorney is essential in drafting these documents to ensure they comply with the applicable laws and to avoid future internal disputes and liability to third parties. The attorney can advise regarding best practices for non-profit formation as well as draft appropriate policies and procedures to protect the non-profit and minimize problems.