How to Start a Nonprofit in Georgia: Your Step-by-Step Guide

1. Habitat for Humanity: “Seeking to put God’s love into action, Habitat for Humanity brings people together to build homes, communities, and hope.”
2. World Wildlife Fund (WWF): “To conserve nature and reduce the most pressing threats to the diversity of life on Earth.”
3. Doctors Without Borders: “Doctors Without Borders provides assistance to populations in distress, to victims of natural or man-made disasters, and to victims of armed conflict.”

The aim is to create a mission statement that resonates with your intended audience, clearly communicates the purpose and values of your organization, and differentiates you from other nonprofits. These examples are intended to provide some inspiration and guidance in crafting your own mission statement.

2 – Laws and Regulations for Nonprofits in Georgia

Georgia Nonprofit Corporation Code

Georgia Nonprofit Corporation Code, officially known as the “Georgia Nonprofit Corporation Act” (Official Code of Georgia Annotated, Title 14, Chapter 3), sets the legal framework for the formation, operation, and dissolution of nonprofit corporations in the state.

Key aspects of the Georgia Nonprofit Corporation Code include:

1. Formation: Nonprofits are created by filing articles of incorporation with the Georgia Secretary of State. The articles of incorporation must include specific information such as the name of the nonprofit, the registered agent’s name and address, and a statement of purpose that aligns with 501(c)(3) requirements if the nonprofit intends to apply for this status.
2. Board of Directors: The code establishes a minimum number of directors at one, but the corporation’s bylaws can increase this number. It also outlines the roles and responsibilities of the board and the procedures for meetings and decision-making.
3. Bylaws: The code requires each nonprofit to adopt bylaws that govern the nonprofit’s internal management and operations. Bylaws do not need to be filed with the state but must be kept in the organization’s records.
4. Membership: Nonprofits may have members, but it is not a requirement under Georgia law. The rights and responsibilities of members, if there are any, must be outlined in the bylaws.
5. Reporting: Nonprofits must file an annual report with the Secretary of State providing updated contact information and details about the nonprofit’s officers and registered agents.

Key Regulations and Legal Requirements

In addition to the requirements set out in the Georgia Nonprofit Corporation Code, nonprofits in Georgia must also adhere to several other key regulations and legal requirements:

1. Tax Exemption: To obtain federal tax-exempt status, nonprofits must file Form 1023 or 1023-EZ (for smaller nonprofits) with the Internal Revenue Service (IRS). Georgia nonprofits can also apply for state tax exemption by submitting an ST-5 form to the Georgia Department of Revenue.
2. Charitable Solicitation: Nonprofits that intend to solicit donations may need to register as a charitable organization with the Georgia Secretary of State. There are some exceptions to this requirement, and nonprofits should consult the Secretary of State’s website or legal counsel to determine if they need to register.
3. Employment Laws: Nonprofits that have employees must comply with state and federal employment laws. This includes withholding income taxes, paying unemployment insurance taxes, and complying with minimum wage and non-discrimination laws.
4. Licenses and Permits: Depending on the nonprofit’s activities, it may need to obtain certain licenses or permits. For example, if the nonprofit plans to sell goods to raise funds, it may need a seller’s permit.

Navigating the legal landscape for nonprofits in Georgia can be complex, but it is crucial to ensure the sustainability and compliance of your organization. As laws and regulations can change, it’s important for nonprofits to periodically review their compliance with state and federal laws and seek legal advice when necessary.

3 – Choose a Name

The name of your nonprofit is often the first impression that people get of your organization. It communicates who you are, what you do, and can even evoke an emotional response. Choosing the right name is vital as it can influence your brand recognition, credibility, and overall image. A memorable and meaningful name can make it easier for people to connect with your cause, help attract donors, and assist in public relations and marketing efforts.

Legal Requirements and Restrictions

The Georgia Nonprofit Corporation Code requires your nonprofit’s name to be distinguishable on the Secretary of State’s records from any other registered entity in Georgia. This means it must be unique and not too similar to the names of other businesses or nonprofits in the state.

Also, the name of your nonprofit must include one of the following terms or abbreviations: “Corporation”, “Incorporated”, “Company”, “Limited”, or an abbreviation of one of these terms (like “Corp.”, “Inc.”, “Co.”, or “Ltd.”). These indicate that your organization is a corporation.

Moreover, certain words may be banned or limited, like those implying the organization is a financial institution or has government agency affiliation unless you obtain appropriate permissions.

To check if your chosen name is available, you can conduct a search on the Georgia Secretary of State’s Corporations Division website.

Tips for Brainstorming and Selecting a Suitable Name

1. Keep it Simple: A name that is easy to spell, pronounce, and remember will be more effective. Avoid acronyms, numbers, or words that may be confusing.
2. Reflect Your Mission: The name should reflect the purpose of your nonprofit or give some idea of what your organization does.
3. Consider Your Audience: Think about who you are trying to reach. A name that resonates with your target audience will be more impactful.
4. Check Availability: As mentioned, the name must be unique in Georgia. Check for web domain availability as well if you plan to create a website for your nonprofit.
5. Ask for Feedback: Get input from others. Run the name by different people to get their impressions and ensure there are no negative connotations that you might have missed.
6. Think Long-Term: Consider whether the name will still be relevant as your organization grows or if it expands to other areas.

Choosing the right name is a thoughtful process. It plays a pivotal role in your nonprofit’s identity and should align with your mission, audience, and long-term vision.

4 – Create Bylaws

Bylaws are internal legal documents that provide a framework for the governance and operation of your nonprofit organization. They set out rules and procedures for things such as board meetings, elections of directors, the handling of financial matters, and more.

Bylaws are vital for several reasons. They are:

1. Guide Governance: Bylaws provide guidance and structure for your organization’s board of directors on how to conduct meetings, make decisions, and manage the nonprofit.
2. Ensure Legal Compliance: Bylaws help your nonprofit comply with federal and state laws. They ensure the board understands its responsibilities and the legal obligations of the organization.
3. Resolve Conflicts: Bylaws can help to prevent or resolve internal conflicts and misunderstandings by providing clear procedures for addressing disputes and making decisions.
4. Protect the Organization: By providing a clear structure for governance, bylaws help to protect the organization and its directors from potential legal challenges.
5. Demonstrate Accountability: Having clear bylaws can demonstrate to donors, members, and the public that your organization is committed to accountability and good governance.

Key Elements to Include in the Bylaws

While bylaws can vary greatly from one nonprofit to another, they typically include several key elements:

1. Name of Organization: This should match the name in your articles of incorporation.
2. Purpose of the Organization: This should align with the mission statement and the purpose stated in your articles of incorporation.
3. Members: The bylaws should describe members’ rights, joining and leaving procedures, meeting conduct, and voting operations if your nonprofit has members.
4. Board of Directors: Detail the board’s size, director election or appointment process, terms, roles, responsibilities, and meeting procedures.
5. Officers: Explain officers’ roles (e.g., President, Secretary, Treasurer), duties, and selection process.
6. Committees: Describe the purpose of committees, their formation process, and powers and limitations, if your nonprofit will have committees.
7. Conflict of Interest Policy: A policy to manage situations where a board member’s personal or business interests could conflict with those of the nonprofit.
8. Amending Bylaws: Procedures for how the bylaws can be changed in the future.
9. Dissolution Clause: Procedures for dissolving the nonprofit, including the distribution of assets, as required by the IRS for tax-exempt organizations.

Best Practices for Drafting Bylaws

1. Seek Legal Help: Consider seeking assistance from an attorney experienced in nonprofit law to ensure that your bylaws are legally sound and align with federal and state laws.
2. Involve Key Stakeholders: Include input from your board of directors, staff, and other key stakeholders to ensure that the bylaws reflect the needs and realities of your organization.
3. Be Clear and Specific: Clarity is essential in bylaws. Avoid using ambiguous language and ensure that procedures and rules are defined explicitly.
4. Keep it Flexible: While bylaws should provide a clear structure, they should also allow for some flexibility to adapt to the changing needs of your organization. Avoid overly specific details that may need frequent updating.
5. Review and Revise Periodically: After establishing your bylaws, conduct regular reviews (e.g., annually) and make necessary updates reflecting your organization’s growth and evolution.

Bylaws act as your nonprofit’s guide, warranting careful crafting. They lay the foundational rules and procedures, promoting effective governance and legal compliance.

5 – Form a Board of Directors

A board of directors plays an integral role in the governance and success of a nonprofit organization. They hold legal and ethical duties to make decisions on behalf of the organization and are responsible for overseeing the organization’s activities. Here’s why having a board is crucial:

1. Legal Requirement: In Georgia, as well as many other states, it is a legal requirement for a nonprofit to have a board of directors.
2. Governance: The board provides strategic leadership, guides the organization’s mission, and makes major decisions.
3. Stewardship: The board ensures responsible use of assets, ensures financial accountability, and assists in fundraising efforts.
4. Accountability: The board holds the organization accountable to its mission, to donors, and to the public.
5. Risk Management: The board assesses risks and establishes policies to manage them.

Guidelines on the Composition of the Board

When forming a board of directors for a nonprofit, consider the following:

1. Composition: The Georgia Nonprofit Corporation Code requires a minimum of one director, but it’s generally best practice to have at least three to facilitate decision-making and diverse perspectives. The board should ideally be comprised of individuals with a range of skills and expertise relevant to your organization’s mission.
2. Roles: The roles within a board typically include a Chair or President, Vice-Chair or Vice-President, Secretary, and Treasurer. The Chair leads the board and ensures it functions effectively; the Vice-Chair supports the Chair and often succeeds them; the Secretary is responsible for meeting minutes and official records; the Treasurer oversees the organization’s financial management.
3. Responsibilities: Board members have legal and fiduciary responsibilities including the duty of care (making decisions in the best interest of the organization), the duty of loyalty (putting the interests of the nonprofit before personal interests), and the duty of obedience (ensuring the organization complies with laws and its mission). They must be ready to take part in strategic planning, policy development, fundraising, financial oversight, and hiring and evaluating the executive director.

Best Practices for Selecting Board Members

1. Define What You Need: Identify the skills, experience, and diversity you need on your board to support your organization’s mission and goals. This could include expertise in areas like finance, law, fundraising, marketing, or industry-specific knowledge.
2. Develop a Recruitment Process: This might involve applications or nominations, interviews, and a review process. Be clear about the expectations and commitments of board service.
3. Look for Passion: While skills and experience are important, it’s also crucial to recruit board members who are passionate about your mission and willing to commit time and effort to your organization.
4. Diversity Matters: A diverse board will bring different perspectives, experiences, and ideas, which can strengthen decision-making and better represent the community you serve.
5. Check References and Conduct Background Checks: This is especially important if board members will be handling finances or sensitive information.
6. Provide Training: Once selected, new board members should be provided with training and orientation to understand their roles and responsibilities.

Forming a competent, committed, and diverse board of directors is key to the effective governance and success of your nonprofit. The board carries significant legal and ethical responsibilities and plays a strategic role in leading the organization.

6 – File Articles of Incorporation

The Articles of Incorporation, also known as the certificate of incorporation or corporate charter, is a document that legally establishes your nonprofit as a corporation in the state of Georgia. Once approved, this document officially forms your nonprofit corporation and you file it with the Georgia Secretary of State’s office.

Preparing and Filing Articles of Incorporation

1. Prepare the Document: The Articles of Incorporation must include specific information, which is discussed in the next section. It’s wise to have an attorney or a professional experienced in nonprofit law review the document to ensure it complies with Georgia’s requirements.
2. Submit for Filing: After preparation, submit the document to the Georgia Secretary of State’s Corporations Division.
3. Wait for Approval: After submission, the state will review the Articles of Incorporation. If everything is in order, the state will approve the document, officially establishing your nonprofit as a corporation.

Key Information to be Included

The Georgia Nonprofit Corporation Code requires certain information to be included in the Articles of Incorporation:

1. Name of the Nonprofit: As previously discussed, the name of your nonprofit must be unique and meet Georgia’s requirements.
2. Registered Agent and Office: The registered agent, either a person or a business entity, receives legal documents for your nonprofit.
3. Purpose: Provide a brief description of the nonprofit’s purpose. If you’re applying for IRS 501(c)(3) tax-exempt status, ensure the purpose meets IRS requirements.
4. Membership: State if your nonprofit will have members.
5. Board of Directors: List the nonprofit’s initial directors or describe their selection method.
6. Provisions for Dissolution: The Articles should include a statement of what will happen to the nonprofit’s assets upon dissolution. For 501(c)(3) organizations, the IRS requires a clause stating that assets will be distributed for tax-exempt purposes.
7. Incorporator(s): The name and address of each incorporator. An incorporator is a person or entity preparing and filing the Articles.
8. Duration: If the nonprofit is not intended to exist perpetually, the duration of its existence should be stated.

Remember, the process and requirements for filing the Articles of Incorporation can change, so it’s important to verify current procedures on the Georgia Secretary of State’s website or consult with an attorney or professional experienced in nonprofit law.

7 – Obtain an Employer Identification Number (EIN)

The Internal Revenue Service (IRS) assigns a unique nine-digit number to businesses operating in the United States. The Employer Identification Number (EIN), or Federal Tax Identification Number, is this specific number. It serves to identify a business entity for tax purposes, much like an individual’s social security number. For nonprofits, an EIN is vital. They need it for various tasks, such as opening a bank account, applying for tax-exempt status, and filing tax returns.

Step-by-Step Guide

1. Determine Your Eligibility: The IRS has some stipulations for applying for an EIN online. You must have a valid Taxpayer Identification Number (Social Security Number, EIN, or Individual Taxpayer Identification Number) to apply, and you can apply for one EIN per day.
2. Understand the Online Application: You must complete the online application in one session; you cannot save and return it at a later time. The session expires after 15 minutes of inactivity.
3. Apply Online: Go to the IRS website and fill out the EIN Assistant. The IRS prefers this method, and you get your EIN immediately after application completion.
4. Complete the Necessary Information: They’ll ask for your nonprofit’s information. This includes its legal name, the responsible party’s name, and mailing address. They’ll also inquire about your nonprofit’s nature and anticipated activities.
5. Submit the Application: Once you’ve filled out the required information, you can review your answers, make corrections if necessary, and then submit the form.

What to Do Once You’ve Obtained Your EIN

Once you receive your EIN from the IRS, it’s crucial to keep a record of it in a safe place. Here are the next steps:

1. Use the EIN to Open a Bank Account: Most banks require an EIN to open a business account.
2. Apply for 501(c)(3) Tax-Exempt Status: If you wish to have your nonprofit recognized as a tax-exempt organization, you will need the EIN to complete IRS Form 1023 or 1023-EZ (the Application for Recognition of Exemption).
3. File State and Federal Returns: Use the EIN on all tax filings, including federal Form 990 and state tax returns or exemption applications.
4. Include the EIN in Official Documents: Any official documents, such as contracts or grant proposals, should include your nonprofit’s EIN.
5. Communicate with the IRS: The EIN will be used in any future communications with the IRS.

Remember, your EIN is a key identifier for your nonprofit, much like your social security number is for you  – personally. Keep it safe, but have it readily available when conducting official business or filing necessary forms.

8 – Apply for Tax Exemption

Nonprofit organizations that operate for the public good can apply to be recognized as tax-exempt by the IRS and by the state. This exempts the organization from paying corporate income tax on income generated from activities related to the organization’s exempt purpose. Most commonly, nonprofits apply for 501(c)(3) status, which also allows donors to make tax-deductible contributions to the organization.

How to Apply for Federal Tax Exemption Status

1. Determine Your Eligibility: Ensure your organization is eligible for 501(c)(3) status. It must be organized and operated exclusively for exempt purposes as defined by the IRS, and none of its earnings may inure to any private shareholder or individual.
2. Prepare Your Application: Prepare IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, or Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. Smaller nonprofits may be eligible to file the shorter 1023-EZ.
3. Gather Required Information: This includes your nonprofit’s EIN, organizing documents (like the Articles of Incorporation), and bylaws. You’ll also need to provide a detailed narrative of your organization’s proposed activities, financial data, and more.
4. Submit the Application: Submit your application online through the IRS’s Pay.gov system, along with the user fee.
5. Await the IRS Decision: After you’ve submitted your application, the IRS will review it and may request additional information. If the application is approved, you’ll receive a determination letter stating that your organization is tax-exempt under section 501(c)(3).

Applying for State Tax Exemption in Georgia

In addition to federal tax exemption, Georgia nonprofits can also apply for state tax exemptions:

1. Sales and Use Tax Exemption: Nonprofits in Georgia can apply for exemption from state sales tax for purchases related to their nonprofit work. To apply, file Form ST-5, Sales Tax Certificate of Exemption, with the Georgia Department of Revenue.
2. Property Tax Exemption: For properties used exclusively for their exempt purpose, nonprofits can apply for a property tax exemption. Submit the application to the county tax assessor’s office.
3. Income Tax Exemption: After the IRS recognizes a nonprofit as tax-exempt, the organization automatically gains exemption from Georgia’s corporate income tax. However, you need to submit a copy of the IRS determination letter to the Georgia Department of Revenue.

Applying for tax-exempt status is a significant step for any nonprofit as it not only provides tax relief to the organization but can also make it more attractive to potential donors. Always consult with a professional or an attorney to ensure all paperwork is correctly completed and filed.

9 – Obtain Necessary Licenses and Permits

Nonprofits, just like for-profit businesses, may need a variety of licenses and permits to legally operate in Georgia. The necessary licenses and permits depend on several factors. These include your nonprofit’s activities, whether you have employees, and your operating city or county.

Common Licenses and Permits

1. Business License: Required by some cities or counties for any entity conducting business within their jurisdiction.
2. Charitable Solicitation Registration: If your nonprofit will be soliciting donations in Georgia, it must register with the Secretary of State’s Charities Division.
3. Professional Fundraiser Registration: If you hire a professional fundraiser, they must be registered with the state.
4. Building Permit: If you plan to construct or renovate a facility, you might need a building permit from your local city or county.
5. Health Permits: If you’re preparing or serving food, you may need a health permit.
6. Employment-Related Permits: If you have employees, you’ll need to comply with employment-related regulations, which could include worker’s compensation insurance, unemployment insurance tax, and more.

Process for Obtaining These Licenses and Permits

The process for obtaining licenses and permits will vary depending on the type of license or permit required:

1. Business License: Reach out to your local city or county government to check if you need a business license and learn the application process. This typically involves filling out an application form and paying a fee.

2. Charitable Solicitation Registration: To register for charitable solicitation, complete the Charitable Organization Registration Statement form and submit it to the Georgia Secretary of State’s Charities Division. The form requires information about your nonprofit and its finances.
3. Professional Fundraiser Registration: A professional fundraiser must complete a separate registration process, which involves completing a registration form and providing additional documents.
4. Other Permits: Contact the relevant state, city, or county department to determine the process for obtaining other necessary permits.

Ongoing Compliance Requirements

Once you’ve obtained the necessary licenses and permits, it’s essential to stay compliant with any ongoing requirements:

1. Renewals: Many licenses and permits must be renewed periodically. Make note of all renewal deadlines to avoid lapses.
2. Reporting: Certain permits and licenses may require you to submit periodic reports or maintain specific records.
3. Updates: If there are any changes to your nonprofit’s operations, address, or other key information, you may need to update your license or permit information.
4. Regulatory Compliance: Be aware of any regulations related to your licenses or permits and ensure your nonprofit remains in compliance.

Managing the licenses and permits required for your nonprofit can be complex, but it’s a crucial part of operating your nonprofit legally. It’s always a good idea to consult with a professional or attorney to ensure you’re meeting all necessary requirements.

Conclusion