Nonprofit corporations are required to draw up proper documents and follow a particular way of conducting business. The American Bar Association identified the need to create a singular source of information about nonprofit corporation requirements and documentation. Using the ABA's Non-Profit Corporation Act is a first step for creating statutes that guide the creation of nonprofit organizations.
Regulating Nonprofit Organizations
Nonprofit organizations in the United States are organized through state legislation. The Revised Model Non-Profit Corporation Act of 1987 was originally drafted by The American Bar Association. The act was designed as a guide for states to use when drafting their own legislation pertaining to nonprofits. The Non-Profit Corporation Act can be adopted by a state in full, in part or not at all.
About RMNCA
The Revised Model Non-Profit Corporation Act is based on the for-profit Model Business Corporation Act designed by the American Bar Association. The act creates a uniform statute for a for-profit corporation. The RMNCA breaks down nonprofit organizations into three categories and also outlines the enforcement power of the attorney general. The three categories of organizations outlined in the RMNCA are mutual benefit, public benefit and religious corporations.
What The Act Covers
As a comprehensive guide, the RMNCA covers all type of nonprofit corporations. It regulates internal and external activities for not-for-profits. The act includes requirements that a state can use for registration of nonprofits and what also needs to be included in articles of incorporation and the bylaws in order for the IRS to accept the nonprofit as tax-exempt. Nonprofit-operating structure, the voting process, mergers and the sale of assets are also covered.
What Is Not Covered
There are at least three types of possible nonprofit entities: unincorporated associations, charitable groups and corporations. RMNCA does not address details of the unincorporated associations or charitable organizations. Acts such as the Uniform Unincorporated Non-Profit Association Act of 1996, drafted by the National Conference of Commissioners On Uniform State Laws, and the Model Charitable Solicitations Act of 1986, developed by the National Association of Attorneys General, help states fill in specifics that the Non-Profit Corporation Act does not include.
Nonprofits and Federal Laws
Not-for-profit organizations interact with the federal government through the Internal Revenue Code, Section 501(c)(3). Section 501(c)(3) outlines the provisions that must be provided in a nonprofit organization's organizing documents. Actual organizing documents are obtained through the state the organization resides in.
