Wednesday, March 10, 2021

Forming A Not-For-Profit Entity in New York

As a young attorney, I became very active in my local community. I joined my local civic association and found, to my surprise, that it had not applied for tax exemption from the government. This hampered the organization's ability to obtain government grants that would have allowed the association to better serve our neighborhood. 

But, this was only my introduction to non-profits. Soon, I explored creation of not-for-profit entities in New York for other projects that interested me, including political committees. I basically took a crash course in both NY not-for-profit law and federal tax exemption. 

So, I thought it would be beneficial to share some of the introductory information I learned both on not-for-profit formation here in New York, and then a similar introduction to the complexities of obtaining tax exemption for a New York not-for-profit entity. 

 Here is a not-so-quick introduction of how to start a nonprofit corporation in New York.

A 501(c)(3) organization, which are formed for religious, charitable, scientific, literary or educational purposes, is eligible for federal and state tax exemption.  But before you can have a tax exempt organization, you need to create an organization in New York.  Here is what you need to do to create a organization in New York.


Choose Directors: Choose 3 initial directors over the age of 18, preferably people who live in New York.

Select a Name: Choose the name of your nonprofit corporation that is distinguishable from the name of any other corporation.  To assist you, New York's Department of State has a business name search database of New York businesses to determine whether your name is available.

Select the Address: Determine the address and location of your New York nonprofit to create a Certificate of Incorporation to be filed with the State of New York.

Articulate the purpose of your nonprofit for your Certificate: This can be tricky because it must contain more than what your nonprofit's purpose actually is. An insufficient statement of purpose that does not meet either state or federal requirements will delay creating your organization and obtaining tax exemption. Your attorney should have boilerplate language available for you to utilize that should pass all levels of scrutiny.

Prepare bylaws: Before you file your certificate, you will need to have bylaws that comply with New York law that contain rules and procedures for holding meetings, electing officers and other corporate formalities that your nonprofit will need to follow. While you need not file your bylaws, they will be needed later on when you file for tax exemption.

Set up a Records Binder: Your New York attorney should organize your important documents and provide a record binders for future documents like minutes, resolution and other important documents that will be accumulated over the time your New York nonprofit is operating.

Select the Type of Nonprofit: Determine the type of nonprofit you are filing, as defined by the law:

Type A nonprofits are formed for any lawful non-business purpose or purposes including, but not limited to, any one or more of the following non-pecuniary purposes: civic, patriotic, political, social, fraternal, athletic, agricultural, horticultural, animal husbandry, and for a professional, commercial, industrial, trade or service association;

Type B nonprofits are formed for any one or more of the following non-business purposes: charitable, educational, religious, scientific, literary, cultural or for the prevention of cruelty to children or animals;

Type C nonprofits are formed for any lawful business purpose to achieve a lawful public or quasi-public objective, which must be explained in a separate statement identifying the lawful public or quasi-public objective which each business purpose of the corporation will achieve;  

Type D nonprofits are formed when authorized by any other corporate law of New York for any business or non-business, or pecuniary or non-pecuniary, purpose or purposes specified by such other law, regardless of whether its purposes are also with Type A, B or C.


Your New York attorney will, also, likely request other documents for the processing of the non-profit incorporation.  No worries, with a proactive attorney, most formations go smoothly.

Obtaining tax exemption? That's an entirely different story altogether. 

Gene Berardelli is a street-smart attorney with with over fifteen years of experience in civil and commercial litigation. Gene has achieved several career achievements, including successfully settling a seven-figure personal injury claim, successfully arguing before the New York State Appellate Division and successfully representing clients in trial litigation, mediations and arbitrations against such recognizable entities as the City of New York, New York City Transit Authority, JPMorgan Chase, TD Wealth Management Services, Inc., The Long Island Railroad, and Macy*s. Gene is also a noted New York Election Law expert who has had his opinions cited in scholarly works and published in news and feature articles.


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