Considering starting a nonprofit in Pennsylvania? The most effective startup founders and boards follow these steps to establish their nonprofits.
Establishing a nonprofit organization brings your world-changing idea to reality. You get a chance to make an impactful difference in your community and society at large.
However, launching a nonprofit in Pennsylvania from scratch can be daunting, especially if it’s your first time. You must follow a specific procedure to legalize your organization and enjoy nonprofit tax benefits, including filling crucial nonprofit board positions.
Follow this step-by-step guide to starting a nonprofit in Pennsylvania from the ground up. You’ll also discover how to hold effective meetings after setting up your organization.
1. Name Your Organization
Choose a suitable name for your nonprofit that’s creative, easy to remember, and embodies your organization’s identity. Most importantly, it should follow federal and Pennsylvania regulations.
According to the Pennsylvania Department of State, the name must be different from any other organization registered with the state. And depending on your business structure, the organization’s legal name should contain abbreviations, such as “incorporated,” “LLC,” or “Ltd,” to portray the status of your nonprofit.
If you want to register your organization at the federal level, browse the U.S. Patent and Trademark database to ensure your preferred name isn’t already taken.
2. Recruit a Board of Directors
To recruit the right directors, use a board skills matrix to identify what you require in a board member and track potential candidates’ skills, capabilities, and characteristics. Only recruit directors with the expertise and qualities you currently need to lift your nonprofit off the ground.
Follow these best practices when recruiting board directors in your organization:
- Dig deeper: Approach your board director process with a wide lens. Instead of simply choosing candidates based on their work experiences and educational background, focus on how they respond to your board member interview questions.
- Focus on diversity: Diversity is one of the foundations of an effective board. Target board directors with varying work styles, backgrounds, and educational experiences. The goal is to have different perspectives to strengthen the board’s problem-solving capabilities.
Look for these qualities when filling out vacant nonprofit board positions in your organization:
- Thoughtful team player: You want a critical thinker on your board who understands they are just one player in a team that’s looking to bring change in something bigger than themselves.
- Passionate: A board director’s most important quality is a strong connection to your organization’s mission and cause. After all, one must be completely dedicated to a cause to make impactful changes.
- Flexible: Between work and family commitments, many potential board directors might not have the time to make a difference for your nonprofit properly. Recruit board directors who have enough time for your organization and are determined to make a difference.
We recommend having at least three board members: the chairperson, secretary, and nonprofit treasurer. This prevents one person from handling the responsibilities of three senior positions on a board.
3. File Articles of Incorporation
The articles of incorporation is a comprehensive legal document showing the basic outline of your nonprofit. The most common information in this document is the organization’s name, purpose, and directors.
Filing the articles of incorporation officially establishes your nonprofit as a legal entity. But that doesn’t give your nonprofit, tax-exempt status (see step 6). File your articles of incorporation online with the Bureau of Corporations and Charitable Organizations. Expect to pay a $125 filing fee.
You must file a docketing statement together with your articles of incorporation. It’s a supplemental form used to create a new entity in Pennsylvania. Furthermore, Pennsylvania law requires you to advertise the intent to file or the actual filing of articles of incorporation in two newspapers. The advertisement must have your organization’s name and a statement that your organization has been incorporated under the nonprofit laws.
4. Obtain Employer Identification Number (EIN)
Obtaining an employer identification number is free; you should do it right after registering your business. The IRS uses the EIN to identify your organization and keep track of its tax account.
You will need the EIN to open bank accounts for your organization, apply for tax-exempt status, and file yearly tax forms with the IRS.
There are two ways to get an employer identification number:
- Get it online: The IRS will issue you the number immediately after applying.
- Fill out the EIN form and mail or fax it to the IRS.
Online application is the fastest and easiest way to obtain an EIN. Mailing the form to the IRS results in a waiting time of several weeks before getting your EIN.
5. Establish Governing Documents and Policies
Every nonprofit needs rules that outline how it is governed. Board bylaws lay out governance rules and policies. Bylaws guide directors’ decision-making processes. The following are the key components included:
- Responsibilities and powers of directors
- Organization’s purpose statement
- Board structure, including how the board is organized and term limits
- Voting rules, including how many members must be available for voting to occur
- Amending bylaws procedures
- Conflict of interest policy
Bylaws are the lifeblood of your organization because they determine the path to follow as you pursue your mission. For this reason, it’s best to hire a competent nonprofit attorney before finalizing your bylaws. Doing so ensures all essential provisions are included and written for the organization’s best interests.
6. Apply for Pennsylvania Tax Exemption(s)
Nonprofit status in Pennsylvania can make your organization qualify for particular benefits, such as property, income, and sales tax exemptions. To be exempt from state taxes, your organization must meet specific requirements and fill out a REV-72 form with the Pennsylvania Department of Revenue.
To obtain federal tax-exempt status, your nonprofit corporation must meet IRS requirements. You can use one of the three IRS forms to obtain the tax exemption status: Form 1023, Form 1023-EZ, and Form 1024. Check IRS guidelines to determine which of these three forms you should fill out to achieve tax-exempt status.
Effective Boards Rely on OnBoard
OnBoard is a powerful board portal that empowers nonprofit boards to move faster, collaborate seamlessly, and achieve more satisfying results. Leverage OnBoard to hold effective meetings and streamline governance.
To learn more about how OnBoard can help power your nonprofit board, download our board meeting agenda template to see how effective nonprofit boards organize their meetings. Then, schedule a free demo to learn more.
Frequently Asked Questions
How Much Does it Cost to Start a Nonprofit in Pennsylvania?
You will pay $125 to file the Articles of Incorporation. Other additional charges may apply. If you have any questions about starting a nonprofit, contact the Pennsylvania Bureau of Charitable Organization at (717) 783-1720.
How Many Board Members are Required for a Nonprofit in Pennsylvania?
At least one person on the board is required for a nonprofit in Pennsylvania. However, it's better to have a minimum of three directors to handle the senior responsibilities in a board (chair, secretary, and treasurer).
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.
- Board Management SoftwareNovember 14, 2023What is a 501c3? (Overview, Definition, and Examples)
- Board Management SoftwareOctober 31, 20235 Amazing Annual Report Examples
- Board Management SoftwareOctober 30, 2023How to Prepare a Nonprofit Annual Report (Step-by-Step)
- Board Management SoftwareJune 26, 2023What is Fiduciary Liability Insurance? (Overview, Definition, and Examples)