What to Include in Your Nonprofit Articles of Incorporation

If you’re reading this article, you’re probably a nonprofit founder getting ready to incorporate a new nonprofit corporation. Congrats, that’s exciting! As a lawyer for nonprofits, I’m going to let you in on the information I wish all founders knew before they filed their articles.

This step is part of the broader formation process outlined in The Legal Steps to Forming a Nonprofit

Quick Summary

Your Articles of Incorporation create the nonprofit entity, but that's not the end of the story! The IRS cares about what's included in that document, and missing important information can delay your tax-exemption application.

• The Articles free form from your state usually doesn't have the language you need
• Your purpose clause must be specific, but not too limiting
• Tax exempt organizations must include clauses about dissolution, inurement, lobbying, and political activity

Why You Shouldn’t Use Free Forms or Samples

You probably already know that articles of incorporation create the nonprofit entity in your state. But there’s a big thing some folks don’t realize: your articles are also what the IRS looks at to see if you qualify for tax-exempt status.

Mistakes in this document are a common cause of IRS problems. See Common Mistakes When Applying for Nonprofit Tax-Exempt Status with the IRS.

Your state will have a bunch of requirements for your articles, and those laws vary from state to state. Some require a registered agent while others don’t. Sometimes you’ll need to include “Incorporated” at the end of your name, sometimes not. You’ll need to make sure your draft complies with your state’s nonprofit statutes.

Many states provide a “free form” for the Articles of Incorporation. These bare-bones forms cover all the minimum requirements for that state. But if you’re going to apply for 501(c) status, you can’t rely on the bare minimum. Those free forms usually don’t include the clauses the IRS requires – which can cause you trouble down the line. You need to draft Articles of Incorporation specific to your organization.

Required Clauses for Tax Exemption

These are the sections you must include in your Articles of Incorporation to comply with IRS rules for nonprofits and receive tax-exempt status.

Exempt Purpose Statement

You’ll need a purpose clause that limit activities to one or more exempt purposes under Section 501(c)(3)—charitable, educational, religious, scientific, literary, testing for public safety, fostering amateur sports competition, or preventing cruelty to children or animals.

You’ll also want to include a statement specific to what you will be doing. Don’t get super specific (like “providing free meals to Minneapolis residents on Tuesdays”) because that can limit your future growth. But don’t keep it really vague like “any lawful purpose under the state law.” The IRS wants to know why the nonprofit exists.

Dissolution Clause

Your articles also need to detail what will happen if the nonprofit goes out of business. For tax-exempt nonprofits, the IRS requires that you donate the leftover money and assets to another nonprofit with a similar mission.

Nonprofit Limitations

The IRS requires that you include some of the big nonprofit no-nos in your articles, stating the nonprofit will not participate in these activities. These include:

• No private inurement
• No substantial lobbying
• No participation in political campaigns

The Bottom Line

Your Articles of Incorporation are an important foundational document for a new nonprofit – not just a box to check in your startup journey. While filing Articles is quick and easy online in many states, it’s important you get the right information in your document.

Using a document-filing company like LegalZoom often gives you the free form with just one extra line – not enough to pass IRS muster. Even attorney-drafted articles can miss the mark if the lawyer isn’t familiar with nonprofits. I don’t recommend borrowing language from another nonprofit’s articles, either. Their purpose might not match yours, and it’s no guarantee that the document is up to date with changing rules and regulations.

Slowing down now will help later when it’s time to file your IRS application. Do your research – or even better, work with a professional who can help get the nonprofit incorporated the right way!

Frequently Asked Questions

Can I just use another nonprofit’s articles as a template?

I wouldn't recommend it. Their purpose clause probably isn't going to fit with your mission, and there’s no guarantee their document is current with IRS rules and regulations.

What happens if my articles are missing a required clause?

The IRS may delay or deny your application for tax-exempt status. Getting the articles right from the start is much easier than trying to fix them after you’ve already filed.