The Importance of the Nonprofit Board of Directors
A corporation organized primarily or exclusively for charitable purposes and which plans to obtain state tax exempt status under state Revenue and Taxation Code section 23701d and/or federal tax exempt status under Internal Revenue Code section 501(c)(3) is a nonprofit Public Benefit corporation. To form a Nonprofit Public Benefit Corporation, you must file Articles of Incorporation with the Secretary of State. This form is for use by corporations seeking tax-exempt status within the meaning of Internal Revenue Code section 501(c)(3).
The nonprofit board of directors holds to ultimate responsibility for ensuring that the organization serves its mission, and for the overall welfare of the organization itself. There are several different types of boards which include:
- Elected boards are common to member-serving and advocacy organizations.
- Self-Perpetuating Boards are used by most charitable nonprofit organizations.
- Appointed and Hybrid Boards are selected through appointment. These boards are typical model for public organizations.
- Advisory Councils are created by nonprofit organizations because they can provide substantive advice on the organization’s programs (Worth, 2019, pgs. 82-85).
A Statement of Information must be filed with the state within along with filing the Articles of Incorporation and every two years thereafter during the applicable filing period. The applicable filing period is the calendar month in which the Articles of Incorporation were filed and the immediately preceding five calendar months. (IRS Section 6210.) The personal information including the name and address of the process server who is listed on the filing documents will become public knowledge and will remain as a part of the incorporation process, even when the process server is changed, the initial information will remain. Make sure that your nonprofit board of directors and process server are aware of this information becoming public knowledge.
Importance of an Agent for Service of Process
The corporation must have an Agent for Service of Process. There are two types of Agents that can be named: an individual (e.g. officer, director, or any other individual) who resides in the state with a state physical street address; OR a registered corporate agent qualified with the Secretary of State an Agent for Service of Process is responsible for accepting legal documents (e.g. service of process, lawsuits, other types of legal notices, etc.) on behalf of the corporation. You must provide information for either an individual OR a registered corporate agent , not both. If using a registered corporate agent, the corporation must have a current agent registration certificate on file with the Secretary of State as required by( IRS Section 1505).
Important to Note:
1. Process Server is a non-voting Member of the Board.
2. They do not have to attend board meetings.
3. The purpose is to receive mail and updated information for the nonprofit organization and relay that information to the nonprofit board of directors or chair.
Nonprofit Board Development & Training Certificate
This course is designed to provide the necessary nonprofit certificate that signifies your understanding of how to properly recruit, train, and retain highly qualified nonprofit board members. Ensure your policy-making body is as efficient as possible with this course!