In my guide on how to start a Delaware Nonprofit Corporation, we will go through the details but before doing so. Before jumping into it, I recommend you go check out Northwest Registered Agent. They are going to help you get your Federal Tax Exemption and Nonprofit Corporation setup in the right way.
As you think about Nonprofit Corporations and all the steps below, I want you to think about just using a service to help you incorporate your Delaware Nonprofit Corporation. It’s the easy way to do this but you can still go through all the details below if you’d like.
Name Your Delaware Nonprofit Organization
The first step is to make sure you can use the name you’d like and there isn’t any other non except corporation using the name you’d like to use. You will need to go to the Delaware Secretary of State’s office website here to do a name search and determine if this is something you’re going to be able to use.
Once you’ve done that and think you’ve got the right name you will need to file the correct forms.
After you’ve done this, I highly recommend that you go to GoDaddy to get the digital version of your nonprofit name. This will be something you’ll have forever and more people are going to find you on the internet than anywhere else. Your digital address will be the most important piece of real estate you’ll have. If you’re going to have tax exempt status, it will be just as important to allow people to find you digitally so you can make sure you’re getting all the exposure you’d like to.
Choose a Registered Agent
A registered agent is someone who is responsible for getting any legal documents to the nonprofit. The documents will be served to the registered agent and then it’s their responsibility to get them to you. It’s important that you choose someone you can trust with this responsibility and also someone who is always going to be available during business hours.
The most common type of registered agent service is using a national service like Northwest Registered Agent or Harbor Compliance.
The other option is that you can also find a law firm in Delaware who can help you keep the business entity responsible and feel like you are going to continue to get the Federal Tax Exempt Status that you’re looking for. Having a Delaware Registered Agent is going to be imperative for your success (and it’s required by law) so make sure you go through and pay the right filing fee and use a service that can help if you don’t want to do it on your own.
Create your Nonprofit Board & Officers
When we think about building a nonprofit corporation, it’s important to also consider the business advice of whatever your nonprofit intends to do. The most important pieces of your nonprofit can be the board members because people run nonprofits and if you put the wrong people in place you could run into big issues down the line when dealing with Delaware Corporate Income Tax, State Tax Exemptions, State Income Tax or even just keeping the organization structure setup the right way.
Typically you’re going to find the following roles in a nonprofit corporation:
- Vice President
And then you’ll have a board of directors that helps to make decisions for the organization. The officers will be in charge of running the nonprofit on a day-to-day basis. The board of directors is going to be more like a strategic planning committee that will help you also think about fundraising too.
Develop Bylaws & Conflict of Interest Policies
Once you’ve figured out how your Delaware based organization is going to setup the board of directors, you’re going to want to setup your bylaws too. Bylaws for a non profit organization are what will help keep your organizational meeting on track and the organization’s purpose will also be setup in the right way too.
Typically you’re going to find the following bylaws for a nonprofit corporation:
- The name of the corporation
- The location of the corporation
- The registered agent of the corporation
- The purpose of the corporation
- How officers & directors are going to be elected
- What the roles & responsibilities of each position will be
You’re also going to want to develop a conflict of interest policy that will make sure you maintain compliance for your individual or business entity that you’re going to be running (whether or not it’s a nonprofit corporation).
Imagine your nonprofit is a private school and the board members are only made up of parents of the students. Do you think that could result in any conflict of interest challenges?
You’ll want to make sure that as your receiving important legal documents are making decisions for your nonprofit community that you’re following the Delaware law but also document what the potential conflict of interest might be for board members.
When you’re putting together your conflict of interest document please make sure you consider adding:
- A statement that explains what a conflict of interest is
- Definitions for terms like recusal & abstention
- How conflicts will be reported
- The process for managing conflicts of interest
- What the consequences are going to be if someone doesn’t follow the policy
Create A Fundraising Plan
If you want your Delaware nonprofit to be successful you will need a fundraising plan. That could also mean having a plan as you figure out how to start a nonprofit in Delaware. You’re going to need this piece (it’s a big one) to be successful. Getting the black and white rules setup is the easy part – it’s really more about making sure your nonprofit in Delaware has a real plan in place to raise funds. Some of the things you could might be getting your corporation granted funds or writing grants to get the financial support you need.
There are some key pieces that every fundraising plan should have and please make sure your Delaware nonprofit has a real strategy in place for each one of these.
Your organization’s story – this is what’s going to help you connect with potential donors on an emotional level. You’re going to need someone on the board that can tell this story and make it clear and easy to do so.
File Delaware Articles of Incorporation
Getting a Certificate of Incorporation is the end state of this step but in order to get a certificate of incorporation you will need to go through quite a few steps which we’ll get into. It starts with recognizing that you have to do it and as I’ve said before, you should use a professional service that can help you setup an exempt corporation.
The process to get a Delaware Certificate showing you’re a Delaware Exempt Corporation is:
- Pick a corporate name for your organization
- Have a Delaware registered agent
- File your Certificate of Incorporation with the state
- Appoint directors for your nonprofit
- Create corporate bylaws
- Get 501(c)(3) status from the IRS
The way to file your Delaware Articles of Corporation is to go onto the state site and then you can download the form.
The certificate of incorporation is going to need:
The name of your nonprofit & address
The purpose of your nonprofit in Delaware
How long the corporation will exist
The names and addresses of the incorporators
Signatures of the incorporators
The name and address of your Delaware registered agent
Your Certificate of Incorporation is going to be filed with the state and once it’s approved you will get a certified copy in the mail. Welcome to the club – you now have gone through the steps of incorporation for exempt corporation that is in Delaware! Boom!
Obtain an Employer Identification Number (EIN)
Once you’ve done all this, it’s time to get to the Internal Revenue Service (IRS Website) where you can apply for your Federal Tax Identification Number which is similar to having a social security number but for your nonprofit corporation. To get a Federal Employer Identification Number (which is an IRS requirement) you’re going to need to head over here to follow the process. Once you’ve done this, you can start tracking Federal Taxes and make sure you’re setup as a tax exempt organization that can use the Delaware Certificate of Incorporation that you were given.
Apply for 501(c)
Are you ready to get your 501 c 3 application going so you can be official? It’s not an IRS requirement but if you’re going to run a fully functioning nonprofit with a bank account and are going to be doing fundraising – get this done!
Setup a Nonprofit Bank Account
Once you’ve got all the steps above you’ll need to setup a bank account. It’s not one of the IRS requirements but if you’re going to be doing fundraising you’ll need somewhere for the funds to go. I highly recommend using Lili Banking to separate your personal assets from nonprofit assets. As one of the many Delaware nonprofits that will have a business website and most likely raising funds with a Delaware address – it’s important that you set this up the right way from the beginning.
Apply for State Tax Exemption(s)
After you’ve got your 501 c 3 status from the IRS, it’s now time to apply for state tax exemption in Delaware. You’ll want to check with your state on how to do this but generally, you’ll need to file a form with the state and provide them your 501 c 3 determination letter that you received from the IRS.
Register for Charitable Solicitation (Fundraising)
If you’re going to be doing any fundraising in Delaware, you’ll need to register with the state. The Delaware Division of Corporations handles this and you can get started here. You’ll likely need to file a form and pay a fee but once you’re registered, you’re good to start raising money!
Obtain Other Business Licenses & Permits
Depending on your nonprofit’s activities, you may need to obtain other licenses and permits. The best way to find out is to contact your city or county government offices to inquire.
How much does it cost to start a nonprofit in Delaware?
The filing fee for the Certificate of Incorporation is $90. You will also need to pay a $35 franchise tax, which is due when you file your annual Report of Condition and Income (RCI).
How many board members are required for a nonprofit in Delaware?
There is no minimum or maximum number of board members required in Delaware.
Why do nonprofits incorporate in Delaware?
Delaware has a reputation for being business friendly, and it is often considered the best state in which to incorporate. The state has a modern corporation law that is flexible and easy to navigate, and there are no minimum capital requirements. In addition, Delaware has a Court of Chancery, which specializes in corporate law and provides an efficient way to resolve conflicts.