I recently did some research on how to set up a membership organization that is national in scope, specifically whether it’s very different than setting up a local non-profit.
What I found is that there’s not a lot of difference. Every non-profit is a corporation, and is incorporated in a specific state – just as for-profits are incorporated in a particular state even though they operate in many locations. So the incorporation process is the same as for local non-profits. The incorporation purpose will have to include reference to national activities so you have the legal ability to work on that level, just as the application for tax-exempt status will have to state clearly what the association will do and its scope.
Obviously, the IRS has a lot of information especially in its section about professional/trade associations, which is the kind of entity you want to establish under Section 501(c)(6) of the Tax Code.
Where the national vs. local issue comes in is when you get to fundraising. Any non-profit that raises funds has to register with the state’s attorney general’s office or whatever other entity oversees non-profit activities – most often it is the attorney general that has a Charities Registration Bureau. Registering across state lines is advisable for any non-profit that is national in scope – but only if you intend to raise money. There is a cost associated with registering that varies state by state, but usually is in the $100 to $500 range.
Here are sites that provide useful information:
- Www.associationexecs.com has information and resources about creating an association.
- The American Society of Association Executives appears to be most useful; check out the Knowledge Center.
- GuideStar has various articles on legal issues, as well as other topics of interest on non-profits.
- The Alliance for Nonprofit Management has information on financial management and many other topics.
- Charity Channel has lots of terrific resources, including this article on legal issues.
