Different nonprofit organizations in the nonprofit sector vary in their purpose or cause. However, they all have one thing in common: they aim to meet an unfulfilled need in the natural world or for humanity.
Additionally, nonprofit organizations are not profit-focused like for-profit companies but instead are focused on the greater good of the community. The state of New Hampshire has approximately 5,600 nonprofit organizations.
Some of the organizations striving for the greater good of mankind include LostNMissing, Inc, Journeys In Education Inc and The Water Project Inc. Nonprofit organizations have credibility with the government and experience financial privileges such as limited liability protection, U.S. Postal Service discounts, and access to both government and private funding.
Forming a nonprofit in New Hampshire could take anywhere between two weeks to three months, provided you have all your paperwork in order.
To give you an idea of how to go about starting a nonprofit in New Hampshire, read through the following step-by-step guide.
1. Select a name for your organization
The first step in the process of starting a successful nonprofit in New Hampshire is deciding on a name for your nonprofit.
When choosing the name, keep in mind that it must comply with state requirements, and the nonprofit needs a name that is easily discoverable by potential sponsors and donors.
Additionally, the organization’s name should not suggest in any way that it was formed for reasons aside from what is declared in the nonprofit’s Articles of Agreement.
For comprehensive rules on naming a New Hampshire-based nonprofit, refer to the New Hampshire statutes.
Alternatively, a name search may be done on the state of New Hampshire website. If you’re thinking of creating an online platform for your nonprofit, also check the web domain availability of the name.
2. Nominate a New Hampshire registered agent
Registered or resident agents have the responsibility of receiving legal notices on behalf of your New Hampshire organization. Therefore, every organization must appoint a resident agent.
The requirements for being appointed as a resident agent include:
- Being a resident of the state of New Hampshire and having a physical address in New Hampshire
- Being at least 18 years of age
- Being able to maintain normal business hours
- Consenting to the appointment of a resident agent
3. Recruit your board members
Another essential step in the process of forming a New Hampshire nonprofit includes recruiting an incorporator, directors, and officers for your nonprofit organization.
You’ll need to select one incorporator who is responsible for signing the Articles of Incorporation.
Thereafter, you’ll need to select a minimum of five directors to be on your Board of Directors, as per New Hampshire law. The five directors should also be five voting members who do not belong to the same immediate family and are not related by either marriage or blood.
Additionally, they do not need to be residents of New Hampshire or members of the nonprofit.
Lastly, you are required to nominate officers. The officers must fulfill the roles of president and secretary, and both of these positions cannot be held by the same person.
4. Consent to bylaws and conflict of interest policy
While you are not required to file a copy of the nonprofit’s bylaws, it is required in order to register your nonprofit organization in New Hampshire. Therefore, preparation and adoption of the bylaws is an important step in this process.
The bylaws are your nonprofit’s rules and operating procedures set in place to ensure that everything runs smoothly.
The Conflict of interest policy is something that your nonprofit will also need to compile and is basically a collection of rules set in place ensuring that decisions made by the board of directors or officers are always in the best interest of the nonprofit and never to advance the personal agendas of the nonprofit members or stakeholders.
The bylaws should preferably be adopted during the nonprofit’s first board meeting when the directors, officers, and the incorporator are officially appointed.
5. Select a New Hampshire nonprofit startup corporation structure
There are three types of organizational structures or types of nonprofits available in the state of New Hampshire. These are:
- Unincorporated Associations: These associations are neither corporations nor trusts and are known as unincorporated associations. Certain fraternal groups may be organized in this manner. Nonprofits choosing this entity structure do not need to file with the Secretary of State.
However, the Charitable Trusts Unit requires registration in the form of a written Constitution or charter describing the charity’s mission and providing ample guidance for the organization’s mission or operation.
- Trusts: All trusts formed in the state of New Hampshire are overseen by the New Hampshire Trust Code, RSA chapter 564-B. You do not need to file with the Secretary of State when choosing to register your nonprofit as a trust, but they are created by will, and you must file periodic accountings with the New Hampshire Circuit Court, Probate Division.
- Nonprofit Corporations: Nonprofit Corporations are the most common types of charitable organizations in most states. In the state of New Hampshire, nonprofit corporations must file the Articles of Agreement by completing and filing Form NP-1 with the Secretary Of State.
6. Prepare and file nonprofit Articles of Incorporation
In order to register your New Hampshire nonprofit, you need to file the Articles of Agreement with the state. In order to obtain eligibility for 501(c)(3) tax exemption, the Articles of Agreement must include the following information:
The purpose of your organization or the reason for its existence must be clearly stated in your Articles of Agreement. Think of this as your mission statement.
All nonprofits have assets, resources, or possessions. You must clearly state what your nonprofit’s possessions are being used for and what will happen to those resources in the event of dissolution. In addition to the specific language mentioned above, the Articles of Agreement must contain some other information such as:
- Your New Hampshire nonprofit’s name
- Your New Hampshire nonprofit’s registered agent’s name and address
- Your New Hampshire nonprofit’s incorporator name and address
- Your New Hampshire nonprofit’s name and addresses of the first Board of Directors
Your organization will need to complete and file Form NP-1 and then submit it to the New Hampshire Secretary of State-Corporations Division.
You may file the Articles of Agreement online, and the turnaround time is 10 to 14 business days.
Your Articles of Agreement require at least five signatures, and the signed originals must be submitted to the state.
7. File an initial report
New Hampshire nonprofits do not need to file an initial report.
8. Secure an EIN (Employer Identification Number)
An Employer Identification Number is something that every nonprofit will need to apply for. It’s also referred to as an EIN and is considered an SSN or Social Security number for your organization.
This number is used by the IRS to identify business entities in the state. However, an EIN is necessary in order to open a bank account for your nonprofit, apply for federal tax exemption, and submit 990 returns to the IRS.
Once you’ve completed the form or template, you may file it on the IRS website. When applying for an EIN online, you’ll receive it immediately, provided you’ve printed it out prior to closing the session. This is because the IRS website is only available during certain hours.
Further reading and guidance can be obtained from the IRS Pub 1635.
9. Apply for federal tax exemption
You will need to apply for federal tax exemption regardless of which state you’re forming your nonprofit organization in. However, prior to applying for federal tax-exempt status under the Internal Revenue Code, the nonprofit will need to meet the following requirements:
- Your nonprofit must have elected a total of five directors who are not associated by marriage or blood
- Your nonprofit must already have filed the Articles of Agreement
- Your nonprofit must have already filed the Conflict of interest policy and bylaws
- Your nonprofit must have already obtained an EIN
In order to obtain federal income tax exemption, you need to file IRS Form 1023. If you plan to run a small business organization, feel free to complete and file IRS Form 1023-EZ, a short and simple application.
Once you’ve completed the relevant form, feel free to file it on the Internal Revenue Service website.
After submitting your application to the IRS, they will review and approve your application provided there are no problems with the information you’ve competed in the forms.
If your application is approved, they’ll send you a determination letter. The letter will state that your corporation is one of the existing organizations that are not liable for federal taxes under section 501(c)(3).
10. Apply for New Hampshire state tax exemption
Once you’ve received the IRS determination letter, there’s no need to apply for any other state tax exemptions. This is because your IRS determination letter automatically makes you exempt from state and corporate income tax.
11. Other applicable permits and licenses
There’s no need for a statewide business license in order to operate your New Hampshire nonprofit. However, depending on your location and services, more certifications or permits may be required. Feel free to check with your local licensing office to determine whether your business requires additional licenses and permits.
Additional state registration and reporting requirements
Your Hampshire nonprofit will need to obtain 501(c)(3) tax exemption from the IRS before accepting charitable solicitation, tax-deductible donations from government or private foundations, or taking part in fundraising activities. In order to do this, your nonprofit must register with the New Hampshire Attorney General, Charitable Trusts Unit. Thereafter, you are free to raise funds for your mission.
12. Submit an annual report
New Hampshire nonprofits must submit a report to the Secretary of State every five years, or no later than December 31st. This ensures that your contact information is up-to-date with the state. Prior to the due date for the report, you’ll receive a reminder via email.
Please note that your organization may be revoked or dissolved if you fail to submit the report by the due date. The nonprofit report may be submitted online with the New Hampshire Department of State.
Costs of starting a new nonprofit in New Hampshire
The following filing fees apply to all New Hampshire nonprofits:
- Articles of Agreement: $30
- Federal tax exemption or 501(c) application: $275 or $600 IRS fee
- New Hampshire charitable registration: $25
After you’ve started your nonprofit, there are a few necessary steps that you should take to keep your organization running smoothly. Let’s take a closer look at them below:
Open a business bank account
- Maintain accounting and tax filing
- Ensure that your personal assets are kept separate from your nonprofits’ assets
To open a bank account, you will need to provide:
- Your EIN
- A copy of your articles of incorporation
- A copy of your organization’s bylaws.
Hire a business accountant
- Simplify payroll and bookkeeping
- Prevent your nonprofit from avoiding penalties and tax errors
- Manage your nonprofit’s funding
- Focus on growing your nonprofit
- Manage risks
You may opt for General liability, Personal liability, or Worker’s compensation insurance.
Build a website
As we mentioned earlier, you may want to create a website for your organization to legitimize your business or give it more credibility. A dedicated website is also one of the best ways to share your nonprofit’s vision, mission, and story with supporters. Consequently, it’s also a great way to announce upcoming events and goals.
Sign legal documents
One aspect that tends to get overlooked is signing legal documents in your personal capacity instead of as an authorized representative of your nonprofit.
If you’ve appointed yourself as a registered agent of the nonprofit, then the following tips will help avoid personal liability:
- State the registered name of your nonprofit
- Use your name and signature
- State your position/role in the organization as its authorized representative
When signing legal documents on behalf of the nonprofit, it is important that you do so in your capacity as the registered agent, as opposed to your capacity as an individual.
Example: Instead of signing your name only, state the name of the nonprofit and then your name and position within the organization before signing.
In order to be an exempt organization in the state of New Hampshire, all public charities must apply for federal tax exemption with the Internal Revenue Service, under the Internal Revenue Code, section 501(c)(3). You may also refer to the IRS compliance guide to ensure that your organization complies with applicable laws and remains in good standing with the state.
All nonprofit organizations or New Hampshire charities are required to register with the Charitable Trusts Unit. All out-of-state charities who plan on accepting donations from New Hampshire citizens are also required to register with the Office of the Attorney General Charitable Trust Unit. The only organizations that are exempt from registering with the CTU are churches.
Charitable organizations or charities are any organization that has applied for federal tax exemption and received their IRS determination letter. Additionally, all charities that are formed for tax-exempt purposes such as educational, scientific, environmental conservation, or civic purposes are considered public charities. Ultimately, if the purpose of the organization is charitable in nature, then it is considered a public charity.
You need to contact several government agencies starting with the New Hampshire Secretary of State, Corporate Division. Next, you need to contact your town or city clerk where the organization is based on filing a copy of your Articles of Agreement. Thereafter, you need to contact the Internal Revenue Service to apply for recognition as a tax-exempt organization. You’ll also need to register with the New Hampshire Attorney General, Charitable Trusts Unit.
When fundraising for an individual, as much as the cause is charitable in nature, it’s not considered a charity. Therefore, when accepting donations, the money is not tax-deductible, and it must be claimed as ordinary income. Additionally, the funds need to be held in your personal bank account, and you need to provide information such as your Social Security number and could potentially be held liable for any lost funds. If you plan on assisting an individual by raising funds, it’s best to seek legal advice to find out how you should best proceed.