How to Start a Nonprofit in Oregon
The idea of helping others in your community may be exciting, but understanding how to start an Oregon nonprofit can also be overwhelming. FindLaw provides you with the resources for starting a nonprofit corporation. Simply follow the steps below for a step-by-step guide to creating a nonprofit in Oregon.
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Step One: Name Your Nonprofit
Oregon requires every nonprofit organization to be registered with a unique name. To ensure that your nonprofit's name is unique, you should conduct a business name search on the Oregon Secretary of State's website.
The State of Oregon has naming requirements for nonprofit corporations. According to Oregon law, a nonprofit organization's name cannot include the words "cooperative" or "limited partnership." The name also can't be misleading. Finally, a nonprofit's name can't cause someone to think that it conducts business that it does not.
Step Two: Choose a Registered Agent
A registered agent is a person or company located in Oregon that is designated to receive legal documents such as the service of a summons for a lawsuit. State law requires that every nonprofit have a registered agent named in its articles of incorporation. A registered agent may be an individual or a company that operates a registered agent service.
Step Three: Pick Your Board of Directors and Officers
Your board of directors and officers will be the persons who will run your nonprofit. Under Oregon law, every nonprofit must have at least three directors, a president, and a secretary. Members of the board of directors should be like-minded and want to further the nonprofit's purpose.
Oregon law has placed specific duties on members of the board of directors. The board of directors must ensure that the nonprofit's actions are legal. The board of directors also has the duty of care and loyalty.
- Duty of Care: The board of directors exercises its duty of care when it uses reasonable care when making decisions for and on behalf of the nonprofit. All decisions made by the board of directors must be to further the nonprofit's purpose.
- Duty of Loyalty: The duty of loyalty means that the board of directors must act in a way that is in the nonprofit's best interest, not in their own best interests. The duty of loyalty also requires that the board of directors ensure the nonprofit remains financially solvent.
Step Four: Write Bylaws and a Conflict of Interest Policy
Bylaws are the set of rules that govern the operation of a nonprofit corporation. A conflict-of-interest policy lays out rules that limit the self-serving actions of the board of directors and officers. A conflict-of-interest policy ensures that every decision made by leadership is in the nonprofit's best interest.
Your nonprofit must have bylaws and a conflict-of-interest policy. Without them, you will be ineligible for 501(c)(3) tax-exempt status.
Step Five: File Articles of Incorporation
You must file the articles of incorporation for your nonprofit with the Oregon Secretary of State. The filing fee is $50.00. You can file the articles of incorporation by mail or online at the Oregon Secretary of State's website.
In the articles of incorporation, you must state your nonprofit's purpose. For tax-exempt status, your nonprofit's purpose must be approved by the Internal Revenue Service (IRS).
You also must address the dissolution of your nonprofit in your articles of incorporation. Dissolution refers to a business shutting down. Also, as a part of the dissolution, your articles of incorporation must explicitly state how the nonprofit's assets will be divided upon dissolution.
Step Six: Hold an Organizational Meeting
Your initial organizational meeting of the board of directors will take place after you have filed the articles of incorporation with the secretary of state. Directors and officers will be named during the meeting, and your organization will formally adopt bylaws and a conflict of interest policy.
Step Seven: Get an EIN
An employer identification number (EIN) is a unique number given to every business or nonprofit by the IRS. To get an EIN from the IRS, you must complete an application on the IRS website, by mail, or by fax. Please note that the IRS does not charge an application fee for an EIN. If you come across any website that charges a fee, you are not applying on the IRS.gov website.
Step Eight: Apply for 501 (c)(3) Status
501(c)(3) status is a federal tax status available only for nonprofits that pursue specific goals. Generally, 501(c)(3) status can only be obtained if your nonprofit was formed for one of the following purposes:
- Fostering national/ international amateur sports competition
- Preventing cruelty to animals or children
- Testing for public safety
If your nonprofit's purpose falls within one of the above categories, you can apply for an exemption by completing a Form 1023 or a Form 1023-EZ. If your federal tax-exempt status is approved for your Oregon nonprofit, you will receive a determination letter from the IRS stating you are exempt from paying federal income taxes.
Step Nine: Apply for State Tax Exemptions
There is no additional application for Oregon state tax exemptions. If you are approved for federal tax exemptions and are operating in the state, you are automatically exempt from state taxes. There is no sales tax in Oregon to worry about.
Step Ten: Register as a Charitable Organization
If your nonprofit is a charitable organization, then it must register with the philanthropic activities section of the Oregon Department of Justice (DOJ). You can submit the Form RF-C online with the department. You must register with the DOJ before you begin accepting donations. There is no fee for the initial registration. However, you will be required to pay an annual fee on a sliding scale based on the nonprofit's income each year.
Step Eleven: File an Annual Business Renewal
Most states require that a nonprofit file an annual report of some kind. In Oregon, an annual report is called a yearly business renewal. An annual report is essentially a yearly performance review that gives up-to-date information about the nonprofit. The business renewal must be filed with the secretary of state each year on the anniversary of your nonprofit's incorporation.
Need Help Forming an Oregon Nonprofit?
Forming a tax-exempt nonprofit corporation can be a complex process. However, it is made simpler through the use of online business formation services. By answering some simple questions, you can ensure that your organization is set up correctly.
A skilled local business attorney will also have a solid understanding of the state and federal rules you will need to comply with to ensure that your organization is tax-exempt and that donors can claim deductions for their donations.
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