Articles of Incorporation
The exact corporate nonprofit name, including abbreviations, punctuation, etc., must be used consistently in all documents filed with the Secretary of State. The corporate nonprofit name should not contain any language stating or implying that the nonprofit is organized for a purpose other than that permitted by the SC nonprofit statute and its articles of incorporation.
The most important part of the articles of incorporation is the purpose clause. Proper drafting of the articles of incorporation are critical to nonprofits which will seek tax-exempt status with the IRS, and, in particular, with 501(c)(3)s. Nonprofits are required to file their articles and bylaws with their tax exempt application to IRS. The nonprofit, which intents to seek 501(c)(3) status, will need to take particular care in preparing the statement of purpose, and add prohibitions against private inurnment and lobbing, as well as a requisite dissolution clause, in the optional provisions.
Bylaws: Key Provisions to Include
Every nonprofit corporation must have bylaws. This is the document that spells out in detail the nonprofit corporation's purpose, its operating rules and operational structure. For a nonprofit corporation, the bylaws are especially important and must be submitted to the IRS when applying for the tax exemption.
To that end, the bylaws, tailored specifically for the nonprofit, must be drafted and adopted by the board of directors. Without a good set of bylaws, the directors, officers, members, committees, advisory boards, and other agents of the corporation may have inadequate understanding of how authority flows through the organization. South Carolina requires a minimum of three board member; however, most nonprofits generally have between five and seven board members.
Directors and Officers
Unless the nonprofit corporation has dispensed with a board of directors, each nonprofit corporation shall have a board of directors.
Duties of Directors
The board of directors of the nonprofit is responsible for the exercise of all corporate powers and the internal affairs of the nonprofit corporation, except as otherwise provided in the articles of incorporation.
Qualification of Directors
A director or board member of a nonprofit corporation need not be a resident of South Carolin or a member of the corporation, unless required by the articles of incorporation and/or bylaws. The articles of incorporation or bylaws may prescribe any qualifications for directors.
Number of Directors
The board of directors shall consist of one or more persons. The articles of incorporation or bylaws may specify or fix the actual number; or they may establish a range for the size of the board of directors by fixing a minimum and maximum number of directors.
Appointment vs. Election of Directors
If the nonprofit corporation has members entitled to vote for directors, then an annual meeting must be held to elect the directors. The initial board of directors shall serve until the first directors are elected at the first annual meeting. If the corporation does not have members entitled to vote for the directors, then all directors may be appointed, designated or elected, as provided in the articles of incorporation or bylaws.
Terms of Directors
Except as otherwise provided in the articles of incorporation or bylaws, the term of a director shall be one year and directors may serve successive terms.
Compensation of Directors
Unless the articles of incorporation provide otherwise, a board of directors may fix the compensation of directors.
Mission Statement
While not required by law, a Mission Statement is an essential tool for a nonprofit corporation. It focuses the operations employed by the board members and the officers, as well as, the overall activity of the nonprofit.