It’s Alive!!!!!!

As of today, April 3rd, 2012, Project Create is an active corporation in the state of Louisiana. Project Create officially exists!!!

In a previous post, I discussed some of the legal steps to forming a nonprofit. The first of those steps is filing the Articles of Incorporation with the state. Since Project Create is in Louisiana, that is where I filed. The process is very straightforward, and I was able to complete it quickly online for $65 ($60 filing fee, $5 service fee).

I have included the questions used for online filing. The form can be found at the following link, and by clicking the Domestic Business Reg. Articles of Incorporation ($60 filing fee) radio button: http://www.sos.la.gov/tabid/1009/Default.aspx.

The name of this corporation is:

This corporation is formed for the purpose of: engaging in any lawful activity for which corporations may be formed under Chapter 2, Title 12, of the LA Revised Statutes (Non-Profit Corporation Law)

The duration of this corporation is (may be perpetual):

This corporation is a nonprofit corporation.

The location and municipal address (not a P.O.Box only) of this corporation’s registered office is:

The full name and municipal address (not a post office box only) of this corporation’s registered agent(s) is/are:

The full name and address of each incorporator of this corporation is:

The corporation’s initial board of directors, municipal addresses (not a P.O. Box only) and term of office are:

This corporation is to be organized on a non-stock basis.

Other Provisions:

As you can see, the information is fairly basic as long as you know some definitions. Here is an explanation of some of the necessary information taken from The Citizen Media Law Project (Note: this is not state specific information, so you should always check the applicability of these definitions in your state):

• Name of the Nonprofit Organization:

As discussed in Forming a Nonprofit Corporation, you must include the name of the nonprofit corporation, which typically must include “Corporation” or “Incorporated” or an abbreviation of one of these words, such as “Inc.” or “Corp.” Most states will not allow two companies to have the same name, nor will they allow your corporation to adopt a name that is deceptively similar to another company’s name. For state-level information on naming requirements, see State Law: Forming a Nonprofit Corporation.

• Name and Address of Registered Agent:

Most states require the name and address (not a P.O. Box) of the nonprofit corporation’s registered agent in the state of incorporation. The purpose of the registered agent is to provide a legal address for service of process in the event of a lawsuit. The registered agent is also where the state government sends official documents such as tax notices and annual reports. If your nonprofit corporation incorporates in the same state where you do business, an officer of the nonprofit corporation can usually serve as the registered agent. If your nonprofit corporation incorporates in a state other than where it does business, then you will have to hire a registered agent in the state of incorporation. You can find registered agent service companies online. Shop around and compare rates because there are many registered agent companies available.

• Legal Address of the Nonprofit Corporation:

Some states require that you include the address of the nonprofit corporation’s principal office (whether or not that address is inside or outside the state of incorporation). This is distinct from the address of the registered agent discussed above, although in some circumstances this address could be the same (e.g., when a corporate officer is serving as the registered agent).

• Duration of the Nonprofit Corporation:

Some states ask how long your nonprofit corporation will be in existence. You should answer “perpetual” unless you know that the nonprofit has a definitive termination date.

• Name of Incorporator(s):

An incorporator is the person preparing and filing the formation documents with the state. Most states require the name and signature of the incorporator or incorporators to be included in the articles of incorporation. Some states also require that you include the incorporator’s address.

• Name and Address of Director(s):

Some states require that you list the names and addresses of the initial directors of the nonprofit corporation in the articles. In other states, you are not required to identify them (although you may do so if you want). See State Law: Forming a Nonprofit Corporation for details on the number of directors required by the fifteen largest U.S. states and the District of Columbia. When the initial directors are not named in the articles, the incorporator or incorporators have the authority to manage the affairs of the corporation until directors are elected. In this capacity, they may do whatever is necessary to complete the organization of the nonprofit corporation, including calling an organizational meeting for adopting bylaws and electing directors.

There are a few other things I want to point out. First, this is organized on a nonstock basis because it is a nonprofit organization. If you remember from my previous post, nonprofits do not operate for a profit for shareholders, rather the profit flows back into the company. Therefore, there are no stock investors.

Second, you may be wondering what the “other provisions” section is for. Here is where you can (but do not have to) put information about what your nonprofit is meant to, and allowed to, accomplish, i.e. something saying that this is a nonprofit dedicated to art education, and that per state law, no lobbying activities will take place. This type of information should be pretty clear from any business plans and bylaws you have drawn up (I will post about that as well!).

Last, it is very important to note that right now Project Create exists as a nonprofit corporation, but it is NOT  federally recognized 501(c)(3) organization. This means that I still cannot solicit donations and make them tax deductible. I still need to apply for that status with the IRS, or achieve it through a fiscal sponsorship.

In a few days, I should be receiving a Certificate of Incorporation which, together with my Articles of Incorporation, are the legal “body” of Project Create. However, just like a baby is alive before it gets its birth certificate, Project Create officially exists as of today!

Next Steps: Within 30 days after filing the Articles of Incorporation, I have to file a copy of the Certificate of Incorporation and either a certified copy of the Articles of Incorporation or an original signed copy to the recorder of mortgages in the Orleans parish (where New Orleans is seated. I will also apply for an Employer Identification Number.

So how excited are you for Project Create’s birth!?!?! As usual, if you have any questions or concerns, please leave a comment.

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The “Hold Your Horses” Disclaimer: Nothing in this blog is intended to be legal advice. If you are thinking about starting your own business, these are very important steps that should not be taken lightly. The internet is an amazing place and there are plenty of resources available on filing these documents. Please do enough research to ensure you are comfortable with the relevant legal jargon, or seek the help of an attorney.

Project Create Is In A $500 Grant Challenge – Vote For Us!!!

Project Create has come quite a far way from being just an idea. We have accumulated over 300 followers, racked up over 3000 views, and held a contest for what can only be described as the Best Logo Ever. But Project Create needs to start doing something very, very, very important: RAISE MONEY!!!

Unfortunately, we are not yet accepting donations because we have not achieved our 501(c)(3) status, and donations would not yet be tax deductible (refer to my previous post on how to become a nonprofit). I will say that we have been in deep discussion with an amazing nonprofit that might take us on as a fiscal sponsor (I even flew down to New Orleans and met with their Board of Directors!), and hopefully achieving 501(c)(3) status will just be around the corner.

Until that time, we are doing everything we can to get our name out there and find other fundraising opportunities. One of those opportunities is the GOODMaker Art Everyday Grant. GOOD is offering a $500 grant to an individual or organization with an innovative plan for bringing the visual arts to their community.

I think we can all safely agree that Project Create falls into that category.  And so, Project Create is one of the many amazing ideas to be listed in the GOODMaker Challenge, but GOOD will only award the $500 (and all of the glory) to the one idea with the greatest amount of votes.

So now it is up to YOU to help us win the award!!! What can you do, you ask?

1. First, you can click here to go to our contest page and vote for us! Leave lots of comments too. People like to see comments.
2. Second, you can spread the word BIG TIME to all of your friends and family (Facebook, Twitter, Email, ANYTHING HELPS!). Share our link: http://arteveryday.maker.good.is/projects/projectcreatenola.
3. Make some art (true this won’t help us win the contest, but it will help you be AWESOME).

Voting is open from March 22 – 30. Please vote for us! This money, and the recognition, will go a long way in allowing us to opening our doors. Think of the children!

Does Nonprofit Mean No Profit?

I have had a lot of people asking me why I am starting a nonprofit organization rather than a for-profit. The most common questions have something to do with how nonprofits stay in business, and more importantly, how  I will pay my student loans, which are depressing to say the least. These are great questions, and ones I have definitely had to consider myself.

While everyone knows nonprofits exist, there are a lot of misconceptions about what they do and how they operate. The biggest misunderstanding is that “nonprofit” means “no profit”. To shed a little light on what a nonprofit actually is, here are a few differences between nonprofits and regular businesses from nonprofit.about.com:

• When you start a business, it is for the financial benefit of its owners and/or shareholders. Profit is the goal and the business pays taxes on that profit.
•  A nonprofit entity has a mission that benefits the “greater good” of the community, society, or the world. It does not pay taxes, but it also cannot use its funds for anything other than the mission for which it was formed.
• Nonprofit organizations can and do make a profit, but it must be used solely for the operation of the organization or, in the case of a foundation, granted to other nonprofit organizations.
•  When a for-profit organization goes out of business, its assets can be liquidated and the proceeds distributed to the owners or the shareholders. When a nonprofit goes out of business, its remaining assets must be given to another nonprofit.

There are many ways that nonprofits operate just like a regular corporation. For example, a nonprofit is also controlled by a board of directors. It is the board’s responsibility to ensure the nonprofit is fulfilling its mission, whether this is through direct action or supervision over an executive director.  

Another important similarity is that nonprofits can, and commonly do, have paid employees.  I won’t go into the politics of how much (or little) salaries should be, but they generally vary based on location, mission, and operating budget. For example, in an art nonprofit with an annual budget of $100,000, it would not be proper for a salary of $50,000/year. Also, while the major benefit of 501(c)(3) nonprofit status is that the company itself is not taxed on income, paid employees pay income taxes just like everybody else.

I know this is only a brief explanation, but I hope this helps clear up any confusions about how a nonprofit operates. My friends (and parents) can now rest assured that I am not signing up for a life of servitude without recourse. I don’t plan on becoming a millionaire through Project Create, but I certainly plan on being able to eat!