How to Start a Nonprofit in Delaware


Steve Goldstein
Steve Goldstein
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Start a Nonprofit in Delaware

Are you looking to start a nonprofit in Delaware? You’ve come to the right place. Known for its vibrant community and rich culture, Delaware (often referred to as The First State) is an ideal location for establishing a nonprofit organization. Unlike for-profit businesses, nonprofits focus on addressing pressing social issues and require a strong foundation, thorough research, and a clear mission targeting a specific community problem.

Embarking on the journey of creating a nonprofit entails various crucial steps, such as obtaining 501(c)(3) status. A 501(c)(3) organization is designed for charitable, religious, educational purposes, and more, qualifying it for federal and state tax exemptions.

In the spirit of Delaware’s motto, “Liberty and independence,” thousands of nonprofits are founded within the state each year. This article will provide a comprehensive guide to starting your own nonprofit corporation in Delaware. Keep in mind that the steps discussed here are general guidelines, and modifications may be necessary depending on your specific circumstances. To gain a deep understanding of how to start a nonprofit in Delaware, we encourage you to read this article in its entirety.

What is a Nonprofit in Delaware?

Nonprofit organizations are legal entities that operate to serve public benefits and address community issues. Unlike for-profit organizations, nonprofits do not aim to generate any profit. The Internal Revenue Service (IRS) generally exempts nonprofit organizations from tax. However, based on the business entity structure, you will receive tax exemptions as a nonprofit.

In Delaware, ensure you have a community issue to address before you start forming your nonprofit. It can generally be education, religion, charity, social service, or other social issues. Nonprofits do not pay taxes on the money they receive through fundraising programs, donations, or any charitable funding.

Types of Nonprofits in Delaware

The first thing one has to decide is what type of nonprofit structure one wants. There are several types of nonprofits one can start. Here is a list of nonprofit types one can choose from-

  1. Nonprofit LLC
  2. Nonprofit Corporation
  3. Unincorporated Nonprofit

Forming an LLC in Delaware for your nonprofit can be a smooth option. However, having a corporation is less complex than having a nonprofit LLC. Hence, it is wise to start a nonprofit corporation instead of an unincorporated nonprofit or nonprofit LLC.

LLCBuddy Editorial Team.

Technically, starting a corporation for your nonprofit protects your personal assets but also is eligible for Federal and State tax exemptions. When you form an LLC for your nonprofit, it only protects your personal assets but does not give you any tax exemptions. On the other hand, a nonprofit Corporation has both corporation and limited liability company benefits. You can also have an unincorporated structure where you don’t have to register it. Unincorporated nonprofits in Delaware might be eligible for tax exemptions (check with Delaware Division of Revenue), but this type of organization does not get to enjoy limited liability and personal asset protection.

How to Start a Nonprofit Corporation in Delaware

Setting up a nonprofit corporation requires a few things to consider. Name of the nonprofit, initial directors, drafting bylaws, get a Registered Agent, obtain tax IDs, insurance, and a bank account – these are important steps you must follow. The steps mentioned here are general business formation steps. State-wise, some steps can be different. Getting an expert consultation before you start your nonprofit corporation formation is recommended. Here are the steps explained below-

Step 1: Get a Suitable Name for Your Delaware Nonprofit Corp

The first step is to name your nonprofit corporation. You must be sure that the name is available and that no other organization is using this name. You can check the Delaware LLC name search to find the best suitable name for your organization. You must follow those rules to avoid any legal issues later. You can reserve the name for 120 days for any domestic entity (such as a nonprofit LLC) if you’re not forming the nonprofit immediately.

Step 2: Appoint the Initial Board of Directors

The next step is to get your nonprofit’s initial board of directors. It is very important when you are setting up a nonprofit corporation. You need at least One unrelated directors to start the organization. If you don’t choose a minimum of One directors, it will automatically become a member-managed corporation.

Step 3: Appoint Your Delaware Registered Agent

The third step is to get a Delaware Registered Agent for your nonprofit corporation. The Registered Agent is a person who receives all the legal documents on your behalf. It is necessary to get a registered agent. He/she must be above 18 years old and have a physical address in Delaware.

Step 4: Write Delaware Nonprofit Bylaws

The next important step is to write the company bylaws. The directors and board members must decide how the meetings, elections, voting, and other corporate activities will be held. These bylaws must comply with the Delaware state law. It is similar to an LLC operating agreement in Delaware for the LLC owners.

Step 5: File the Delaware Certificate of Incorporation

This is the most important step. File your Certificate of Incorporation with the Delaware Secretary of State. You can do it through three ways, online, by mail and fax. All the formation forms, such as the Delaware LLC Certificate of Formation form, the Delaware Certificate of Incorporation form for corporations, forms for LLPs, and all others can be found on the Delaware SOS official website. Submit the details of your nonprofit corporation, like the name of the nonprofit, address, name and address of the registered agent, operation dates, directors’ details, and more information related to your company. You can send the form (for offline filing) and the filing fee of $89 for filing online, fax and by mail to the Delaware Division of Corporations, 401 Federal Street, Suite 4 Dover, DE 19901 or upload it online (if available).

Step 6: Obtain Tax ID for Your Delaware Nonprofit Corporation

The subsequent step involves obtaining a Tax ID for your nonprofit corporation. You will need to acquire an Employer Identification Number (EIN) from the official IRS website. To obtain the EIN, submit your application to the IRS office either by mail or through their online platform. There is no associated cost for this process.

Step 7: Get Business Licenses in Delaware

The next step is to get the business licenses you need to run your nonprofit organization in Delaware. Check with the local government office if any special licenses you need to run your nonprofit. You can file your nonprofit as a charity if you want.

Step 8: Federal Tax Exemption

You must submit Form 1023 to the IRS to file for federal tax exemption. This form, titled “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code,” is required for all nonprofit corporations. Smaller nonprofits have the option to file Form 1023-EZ instead. You will be prompted to provide details about your organization upon obtaining the relevant form. Complete the form with the necessary information and submit it. The filing fees are $600 for Form 1023 and $275 for Form 1023-EZ.

Step 9: State Tax Exemption

Once you get the Federal Tax Exempt, it is time for State Tax Exempt. In Delaware, you must apply for the tax exemption to Delaware Division of Revenue. Get the form, fill it up with the correct details, and send it to the office. You may need to pay a fee along with the form and supportive documents to apply for the State Tax Exemption. You need no form to apply for the state tax exemption. Read Delaware classification of taxes to learn more about the Delaware tax structure.

Step 10: Get Insurance for Your Delaware Nonprofit

Once you start your nonprofit, you must get insurance to protect your organization. You must get workers’ compensation and unemployment insurance if you have employees. Based on your nonprofit structure, you might need general liability insurance, property, vehicle, auto insurance, etc. You can contact the insurance providers to learn more about which are required for your organization. Also, you can contact Delaware Insurance Department for more information.

After Forming Your Delaware Nonprofit Corporation

Once your nonprofit is formed, there are additional steps to complete:

  • Get a Business Bank Account: You must get a business account for all types of business-related transactions in Delaware. You may need different documents based on the bank and place of business. Check with the bank for it.
  • File Nonprofit as Charity: This is optional. Your nonprofit is either for charity purposes or any purpose that meets your community’s needs. If your organization is for charity purposes, then you can file your nonprofit as a charity to enjoy tax exemptions.
  • Other Business Compliances: You may need additional compliances based on your nonprofit type. Check with your attorney or local authority for more information.

Names of Nonprofit Corporations in Delaware

Following are some of the Nonprofit Organizations in Delaware. The contact information of these organizations can be found on Delaware SOS official websites.

  • Leukemia & Lymphoma Society
  • Food Bank Of Delaware
  • Big Brothers Big Sisters of Delaware Inc.
  • Pathways To Success
  • Inc.
  • AARP
  • The Salvation Army.
  • Bike Delaware.
  • Ronald McDonald House of Delaware.

FAQs

What are the requirements for starting a nonprofit in Delaware?
To start a nonprofit organization in Delaware, you need to submit Articles of Incorporation, a registered agent and a Certificate of Incorporation with the Delaware Secretary of State. The organization must also have a Board of Directors and must comply with state and federal laws.
Are there any fees associated with starting a nonprofit in Delaware?
Yes, there are fees associated with starting a nonprofit in Delaware. The filing fee for the Articles of Incorporation is $90, the registered agent fee is $50, and the Certificate of Incorporation fee is $50.
What are the benefits of starting a nonprofit in Delaware?
There are several benefits to starting a nonprofit in Delaware. Delaware has some of the most favorable laws for nonprofits in the US, including a streamlined filing process, no minimum capital requirement, and no corporate income tax. Additionally, Delaware has a reputation for providing a high level of privacy and confidentiality to its nonprofits.
Who regulates nonprofits in Delaware?
In Delaware, the Secretary of State’s Division of Corporations regulates nonprofits. This division is responsible for reviewing filings and ensuring compliance with state and federal laws.
What types of organizations qualify as nonprofits in Delaware?
In Delaware, organizations must qualify as a 501(c)(3) organization to be considered a nonprofit. This means that the organization must be organized and operated exclusively for charitable, religious, educational, scientific, literary, or other purposes outlined in the Internal Revenue Code.
What documents do I need to submit to start a nonprofit in Delaware?
To start a nonprofit organization in Delaware, you need to submit Articles of Incorporation, a registered agent and a Certificate of Incorporation with the Delaware Secretary of State.
Does Delaware require nonprofits to have a Board of Directors?
Yes, Delaware requires all nonprofits to have a Board of Directors. The Board of Directors is responsible for overseeing the organization’s activities and ensuring compliance with state and federal laws.
Does Delaware have any requirements for corporate governance of nonprofits?
Yes, Delaware has several requirements for corporate governance of nonprofits. These include requirements for meetings, voting, and filing of annual reports.
What is the process for filing taxes for a nonprofit in Delaware?
Nonprofits in Delaware must file an annual report with the Delaware Secretary of State and must also file an annual information return with the Internal Revenue Service. The information return must include financial information and details about the organization’s activities.
Does Delaware offer any exemptions from taxes for nonprofits?
Yes, Delaware law provides exemptions from certain taxes for nonprofits. These include exemptions from Delaware income tax, franchise tax, and gross receipts tax.
Does Delaware require nonprofits to hold annual meetings?
Yes, Delaware requires nonprofits to hold annual meetings of the Board of Directors and members. The Board of Directors must also approve the organization’s annual budget and any major changes to the organization.
Does Delaware require nonprofits to keep detailed financial records?
Yes, Delaware requires nonprofits to maintain detailed financial records. These records should include income, expenses, and other financial information related to the organization’s activities.
Does Delaware have any laws or regulations related to fundraising?
Yes, Delaware has several laws and regulations related to fundraising. These include requirements for registering with the state, filing reports, and other rules for conducting fundraising activities.
Does Delaware require nonprofits to have audited financial statements?
No, Delaware does not require nonprofits to have audited financial statements. However, it is recommended that nonprofits have their financial statements periodically reviewed by an independent accountant.
What are the public disclosure requirements for nonprofits in Delaware?
Delaware requires nonprofits to make certain documents and information publicly available, including the Articles of Incorporation, annual reports, and financial statements.
Does Delaware require nonprofits to register with the state?
Yes, nonprofits in Delaware must register with the Secretary of State’s Division of Corporations. This registration is required in order to receive tax-exempt status from the state.
Does Delaware have any laws or regulations related to charitable giving?
Yes, Delaware has specific laws and regulations related to charitable giving. These include requirements for registering with the state, filing reports, and other rules for conducting charitable activities.
Can a nonprofit in Delaware receive grants from the state?
Yes, a nonprofit in Delaware can receive grants from the state. In order to receive a grant, the organization must submit an application to the appropriate state agency or department.
Does Delaware require nonprofits to have bylaws?
Yes, Delaware requires nonprofits to have bylaws. The bylaws should outline the organization’s mission, structure, and governance procedures.
Does Delaware require nonprofits to have conflict of interest policies?
Yes, Delaware requires nonprofits to have a conflict of interest policy. This policy should outline the procedures for handling potential conflicts of interest among the organization’s officers, directors, and members.
Does Delaware allow nonprofits to engage in political activities?
Yes, Delaware allows nonprofits to engage in political activities. However, these organizations must comply with state and federal laws, including laws related to lobbying and campaign finance.
Does Delaware require nonprofits to publish annual reports?
Yes, Delaware requires nonprofits to publish annual reports. These reports must be filed with the Secretary of State and should include information about the organization’s activities.
Does Delaware require nonprofits to carry insurance?
While Delaware does not require nonprofits to carry insurance, it is recommended that organizations carry general liability, property, and other types of insurance to protect against potential risks.
Does Delaware require nonprofits to file annual reports with the IRS?
Yes, Delaware requires nonprofits to file an annual information return with the Internal Revenue Service. This return must include financial information and details about the organization’s activities.
Does Delaware have any laws or regulations related to data privacy and security?
Yes, Delaware has specific laws and regulations related to data privacy and security. These include requirements for collecting, storing, and using personal information, as well as the use of encryption and other security measures.
What is the process for dissolving a nonprofit in Delaware?
The process for dissolving a nonprofit in Delaware involves filing a Certificate of Dissolution with the Delaware Secretary of State. The organization must also provide notification to its creditors and members, as well as take other steps to ensure the dissolution is properly handled.
Does Delaware require nonprofits to have an annual budget?
Yes, Delaware requires nonprofits to have an annual budget. The Board of Directors must approve the budget, and the organization must adhere to the budget in its operations.
Does Delaware require nonprofits to register charitable solicitations?
Yes, Delaware requires nonprofits to register charitable solicitations with the Secretary of State’s Division of Corporations. This registration is necessary to receive tax-exempt status from the state.
Does Delaware require nonprofits to have a mission statement?
Yes, Delaware requires nonprofits to have a mission statement. This statement should clearly define the organization’s purpose and should be consistent with its activities.
Does Delaware require nonprofits to have a whistleblower policy?
Yes, Delaware requires nonprofits to have a whistleblower policy. This policy should outline procedures for reporting potential violations of the law or organizational policies.

Also Read

Why Delaware Nonprofit Corporation is So Important

One of the key reasons why Delaware nonprofit corporations are so important is their ability to fill in gaps where government resources fall short. These organizations often target specific needs within their communities and work tirelessly to bridge the divide in areas such as healthcare, education, and poverty alleviation. By addressing these pressing social issues, nonprofit organizations in Delaware contribute to the overall well-being of society, ensuring that the most vulnerable populations are not left behind.

Moreover, Delaware nonprofit corporations play a crucial role in fostering a culture of philanthropy and volunteerism within communities. These organizations rely heavily on the dedication and support of volunteers who are passionate about making a difference. Through various outreach programs and community events, nonprofit organizations in Delaware are able to engage individuals and inspire them to give back to their communities. This spirit of collaboration and generosity helps to strengthen social ties and create a sense of unity among community members.

In addition, Delaware nonprofit corporations are instrumental in advocating for social change and raising awareness about important issues. These organizations serve as powerful voices for the marginalized, the disadvantaged, and the underserved, bringing attention to societal problems that are often overlooked. By leveraging their resources and networks, nonprofit organizations in Delaware can influence policy decisions, mobilize public support, and ultimately drive meaningful change within our communities.

Furthermore, Delaware nonprofit corporations serve as a vital source of innovation and creativity in addressing complex social challenges. These organizations are often at the forefront of developing new approaches and solutions to pressing issues, providing insights and expertise that can inform policymaking and inspire positive change. By fostering a culture of innovation and experimentation, nonprofit organizations in Delaware contribute to creating a more dynamic and resilient society that is better equipped to tackle future challenges.

Overall, Delaware nonprofit corporations play an indispensable role in promoting social justice, community well-being, and collective prosperity. These organizations have the unique ability to bring people together, inspire action, and drive transformative change in our society. As such, it is essential that we continue to support and empower Delaware nonprofit corporations to fulfill their mission of building a more inclusive, compassionate, and just society for all.

Conclusion

Starting a nonprofit corporation in Delaware is an incredible way to give back to your community and positively impact the causes that matter most to you. By forming a nonprofit, you can provide essential services, promote awareness, and make a lasting difference in the lives of those who need it most. In Delaware, a lot of nonprofit organizations are there to cater to people in need. Starting a nonprofit corporation is better than an LLC, as it provides limited liability and tax benefits. It helps you save taxes. If you want to start a nonprofit in Delaware, you must follow the steps mentioned above in the article.

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