Will your association benefit from becoming a non-profit corporation?
Here are some circumstances that might make it worth your while to incorporate and get tax-exempt status:
- You want to solicit tax-deductible contributions. Contributions to nonprofits are generally tax deductible for those who make them. If you want to solicit money to fund your venture, you'll make it more attractive to potential donors if their contributions are tax-deductible.
- Your association makes a taxable profit from its activities. If your association will generate any kind of income from its activities, it's wise to incorporate so that you and your associates don't have to pay income tax on this money.
- You want to apply for public or private grant money. Without federal tax-exempt status, your group is unlikely to qualify for grants.
- Your members want some protection from legal liability. By incorporating your association, you can generally insulate your officers, directors, and members from liability for the activities they engage in on behalf of the corporation
- Your advocacy efforts might provoke legal quarrels. If, for instance, your association is taking aim at a powerful industry (such as tobacco companies), it might be worth incorporating so that your association's officers and directors will have some protection from the spurious lawsuits that are sure to come-and will also receive compensation for their legal fees.
Forming a nonprofit corporation brings other benefits as well, such as lower non-profit mailing rates and local real estate and personal property tax exemptions.
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