Considering starting a nonprofit in Arizona? The most effective startup founders and boards follow these steps to establish their nonprofits.
Starting a nonprofit allows you to do what you love and make a difference. But how do you establish a nonprofit from the ground up? To become a legal entity and achieve tax-exempt status, what documents must you file? Follow this step-by-step guide to learn the answers.
From naming your nonprofit to recruiting a board of directors, read on to discover how to start a nonprofit in Arizona.
1. Name Your Organization
An exciting part of launching a nonprofit is choosing a name. You’ll be thrilled when you brainstorm that “perfect” name, but first consider the following:
Arizona has several naming requirements for nonprofits. The name should not state or imply that your organization operates for another motive other than the nonprofit’s real purpose. It should also be distinguishable from any local or foreign companies in Arizona. Check for name availability on the Arizona Corporation Commission’s website.
Besides meeting legal requirements, ensure the name is clear, appealing, and easy to remember. It should send a powerful message about the mission of your nonprofit.
2. Recruit a Board of Directors
The board of directors is responsible for strategic thinking in an organization. They brainstorm ideas and strategies to help an organization move toward its mission. Since this role is critical to a nonprofit’s success, recruiting the best board members is undeniably crucial.
What should you look for in a candidate?
- Mission-driven and passionate about the organization’s cause: Board directors must firmly believe in the mission in order to make impactful changes in the community.
- Critical thinker: Serving on a board requires critical thinking skills to solve complex problems and advance the organization’s mission in creative ways.
- Time and commitment: Ensure you recruit candidates who will be available for board meetings and are committed to the cause.
With the right board member interview questions, you gain insights into the candidate’s skills, experience, and passion for the organization’s mission. Use the questions below in your recruitment interview:
- What do you know about our nonprofit organization?
- How much time can you dedicate to our board?
- Why do you want to join our board?
3. File Articles of Incorporation
Articles of incorporation are like your nonprofit’s birth certificate. They are formation documents that show people your identity, why you exist, and reflect the organization’s actual practice. Visit the Arizona Corporation Commission website to fill out the articles of incorporation and file them online with the state. A $40 filing fee is required.
You must submit the articles with a Certificate of Disclosure. Seek legal guidance when filing these formation documents. The language you use in them will determine whether the IRS grants you state tax exemption status.
4. Obtain Employer Identification Number
To legally operate in Arizona, you must obtain an employer identification number (EIN). You can apply online in one session — you won’t be able to save and return at a later time to complete the application. After verification, you get your employer identification number immediately.
Alternatively, you can fill out the application form offline. Then, fax or mail it to the IRS. Expect your EIN within four business days for faxed applications and several weeks via mail.
5. Establish Governing Documents and Policies
Your nonprofit must have internal, written rules that govern the organization’s operations and decisions. These rules are called bylaws and comprise the procedure of board elections and voting. They also outline board members’ roles and responsibilities.
Since bylaws are legal documents, we recommend seeking a nonprofit lawyer to help you draft rules and policies that benefit the organization.
6. Apply for Arizona Tax Exemption(s)
Congratulations! You’ve formed a nonprofit corporation in Arizona. Next, apply to the Internal Revenue Service for tax-exempt status. The IRS will check your articles of incorporation to determine whether you qualify for tax exemption. A tax attorney will help ensure your formation documents meet the IRS requirements to be a tax-exempt organization. Once you receive your letter of determination from the IRS, mail a copy to the Arizona Department of Revenue.
Understanding the Board of Directors' Role in a Nonprofit
A board of directors serves as the brains and backbone of a nonprofit organization. Without it, short- and long-term strategic thinking would be crippled. The organization would lack the leadership and oversight to create well-informed plans and properly execute strategies.
While an unincorporated nonprofit can survive without a board of directors, the organization will miss out on opportunities to handle matters through a wide lens, move forward quickly, and make an even more significant impact on the targeted community.
Getting Started with OnBoard
You’ve established your nonprofit organization. How do you take it to the next level?
OnBoard is a powerful board intelligence software that helps boards to work more efficiently and effectively. Our advanced meeting features allow directors to surface actionable insights and coordinate board and leadership activities more easily, providing richer intelligence so you can act with confidence.
Download OnBoard’s free nonprofit board meeting minutes template to see how effective boards write their minutes.
Frequently Asked Questions
How Much Does It Cost to Start a Nonprofit in Arizona?
The standard filing fee in Arizona is $40, but you can pay more for expedited services.
Do Nonprofits Pay Property Tax in Arizona?
All properties in Arizona are taxable. However, nonprofits can apply for property tax exemption.
How Long Does it Take to Get 501(c)(3) Status in Arizona?
There’s no specific time. According to the IRS, an application for exemption is processed as fast as possible.
How Many Directors Does a Nonprofit Need in Arizona?
At least one director is required, but we recommend you have more. Having at least three directors is a good practice.
About The Author
- Gina Guy is an implementation consultant who specializes in working with nonprofit organizations get the most from their board meetings. She loves helping customers ease their workloads through their use of OnBoard. A Purdue University graduate, Gina enjoys refinishing furniture, running, kayaking, and traveling in her spare time. She lives in Monticello, Indiana, with her husband.
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