Forming a nonprofit corporation is a noble goal. But if you’re just starting out, the process can feel incredibly confusing. Compared to other entity types like LLCs or even standard corporations, a nonprofit has detailed start-up requirements and complicated maintenance procedures.
In this guide, we’ll walk you through the ins and outs of forming a nonprofit in Alaska so you can get back to what truly matters: your cause.
What Is a Nonprofit Corporation?
A nonprofit and for-profit corporation both have similar “nuts and bolts,” so to speak. Both businesses have a board of directors, CEOs, bylaws, annual board meetings, and the like. But what makes a nonprofit stand out is its purpose. A business corporation typically organizes for financial gain; a nonprofit exists not to make money but to further a cause or reach a goal. Additionally, a business corporation gains investors by offering stock, which has the incentive of dividends and financial gain. Nonprofit corporations solicit contributions that don’t generate any income for those investors.
Well-known nonprofits include groups like Doctors Without Borders, Alcoholics Anonymous, and even your local YMCA.
It’s important not to confuse “nonprofit” with “no income.” Most nonprofits generate income from donations or day-to-day services. The distinction is that nonprofits use 100% of their income to pay expenses and reinvest in their cause. For example, the YMCA uses member dues and community donations for exercise programs, youth sport development, and maintaining their equipment and facilities. They also pay their employees.
Because of this, nonprofit corporations may apply for and receive a tax-exempt status (typically a 501(c)(3) designation), eliminating the corporation’s responsibility for income taxes at the federal and state levels.
Should you form one?
Before you dive into the rest of this guide, you should do a little soul-searching: should you even form a nonprofit in Alaska? The goal is a noble one, but it certainly isn’t for everyone. And some concepts simply aren’t right for the nonprofit sector.
Here are some questions to ask:
- Will I be able to convince others to buy into this cause? How hard will it be to attract donors?
- Are there other existing nonprofits with the same goal?
- If so, do they operate in Alaska? Nationwide? Should I form a local chapter of their nonprofit instead?
- Can I further this cause better or differently than they are?
- Can I hire employees for this cause, or will I rely on volunteers? How will I successfully recruit their help?
If you find yourself stumped by any of those questions, you may want to step back and get some help…or simply do some more thinking before diving in. But if you have answers to most of those questions, then you’re well on your way to starting an Alaska nonprofit organization.
Starting an Alaska Nonprofit: Step by Step
Technically, the process for creating an Alaska nonprofit entity is pretty simple. It’s really just a matter of picking a few people and filing some paperwork (it’s the requirements immediately after forming the nonprofit that get complicated).
1. Pick & Claim a Name
Choosing a name is one of the most crucial decisions for starting your business. You want to pick a name that’s memorable, likable, and most importantly, compliant with Alaska state law.
Alaska has pretty simple laws for nonprofit names:
- Your name cannot include language that implies that your nonprofit conducts activities that are prohibited by law or by the purposes stated in your Articles of Incorporation
- Your name must be “distinguishable on the records,” or distinct from the names of all other state entities
If you want more information on Alaska nonprofit names, check out the Corporate Name Section Alaska’s Nonprofit Corporation Act.
As a result, you have a lot of leeway to pick a name that will resonate with your target audience, potential donors, and of course, with you. The ideal Alaska nonprofit name describes what the organization does, sounds good when said out loud, and just “sticks” in the minds of people who see it.
Whenever you pick a potential name, you should check whether it’s available with an Entity Name Search. Typically, if no exact matches show up for a name you search, the name is available. This may seem like a very basic step, but it’s crucial to streamlining your filings.
Once you nail down an available name that you like, you can reserve it using the Name Reservation Application. This optional form costs $25 to submit, but once it’s approved, your name will be protected for 120 days. That gives you plenty of time to prepare other business affairs without losing your name to another business or nonprofit. You can even renew this reservation twice for a total of 360 days of reservation, if you need to.
You can find a full explanation of how to reserve an Alaska business name here.
2. Assemble your initial board
A nonprofit corporation is only as impactful as the people leading it. That’s why your initial board of directors is extremely important; you’ll want to pick a team of people that are just as passionate about your cause as you are.
More importantly, it’s helpful to choose a group with complementary strengths. For example, a medical outreach group might have a board of directors with three doctors, a nurse, a financial expert, a creative visionary, and a lawyer. The right board of directors will help your nonprofit thrive.
Alaska doesn’t have a bunch of rules about who can serve on the board. The primary requirement is that your board must have at least three directors. As long as you have the minimum three directors, your nonprofit can set out how many directors you’ll have (and their qualifications) in your company bylaws. You can also dictate how each new director is appointed, how long they’ll serve, how they’ll resign, and how you’ll replace them.
3. Appoint a registered agent
Every Alaska entity—nonprofits, corporations, and LLCs alike—must appoint a registered agent. This individual accepts “service of process” from the state on your behalf. Basically, if the state ever needs to notify you regarding a lawsuit or an upcoming annual report due date, they’ll contact your registered agent. The agent forwards that notice to you.
Alaska has pretty straightforward criteria for a nonprofit’s registered agent, as found in The Alaska Corporations Statutes and Regulations Code:
- Every entity that registers with the Alaska Department of Commerce must appoint a registered agent
- The registered agent must be an individual resident of Alaska whose business address matches the address of the registered office OR a business entity with authority to operate in Alaska
- An agent must be continuously maintained
So you might ask, “Can I serve as my nonprofit’s registered agent?” Technically, you could. But we don’t recommend it. That puts your personal details (and often private details like your address and primary email) on the public record. You’ll also be busy running your nonprofit and pursuing your goals; you won’t want to tie yourself down to a registered address (especially for a tedious thing like service of process). We recommend appointing an individual you trust.
Or, if you prefer, you can hire a registered agent service instead. For a pretty small annual fee, these services will act as your agent. That frees you up to focus on running your nonprofit.
4. File your Articles of Incorporation
Up until now, your nonprofit has just been an idea; it’s not recognized by the state government. Technically, businesses don’t “exist” until they file the appropriate paperwork. For Alaska nonprofits, that means filing the Articles of Incorporation.
This three-page document (plus a credit card authorization page, if needed) requires some foundational information about your nonprofit. Here’s the data you’ll need to have on hand:
- Your nonprofit’s name
- Your 6-digit NAICS code (find it here)
- Name and address of the registered agent
- Number of directors who will serve on the initial board
- Name and mailing address of each initial director
- Printed name and signature of each incorporator (must be at least 19 years of age)
- Contact information for any questions regarding the filing
All told, the document itself is pretty simple, and you can file it online instead. Either way, you’ll have to pay a $50 filing fee.
Shortly after you file these Articles, you will also need to submit an Initial Report, which gives the state a little more information about your business. There is no fee for this initial report. In the future, you’ll file biennial reports every other year for $25 to stay in compliance.
Processing speed: real-time for online documents; 10-15 business days (March-September) or 15+ days (October-February) for mail-order documents
Expedited processing: $50 to have your file placed at the top of the queue
Congratulations! Your nonprofit is now a recognized entity in Alaska!
Prepare for & Hold Your First Board Meeting
After your Articles of Incorporation form is complete, it’s time to truly get your nonprofit’s activities underway. And that means it’s time for the first board meeting.
No two board meetings will look exactly the same; after all, every nonprofit has different tasks to accomplish. Alaska law does state that your board should meet at least once a year (but failing to do so does not force dissolution of your nonprofit). For most boards, a typical meeting includes a presidential report on the nonprofit’s most recent accomplishments and a review of the business’s financial standing. Ultimately, your bylaws will dictate how your board meetings play out.
Your very first board meeting, however, will look a bit different. Here’s what you’ll need to accomplish:
- Draft and approve the nonprofit’s bylaws: The bylaws dictate exactly how your nonprofit will be run. This includes a detailed rundown of your corporate purpose, how your board will be selected and replaced, how you’ll raise funds, how you’ll hire employees or solicit volunteers, and much more (including a provision for how to amend the bylaws). To save time, you may choose to write a draft before the meeting and revise it when your full board is present. The important thing is that the board approves the final bylaws, making them the governing document for your nonprofit.
- Draft and approve a conflict of interest policy: Occasionally, one of your nonprofit’s contributors will have personal affairs that intersect with the activities of your nonprofit. A conflict of interest policy dictates exactly what happens in those situations, protecting both the nonprofit and the individual contributor.
- Appoint someone to take minutes at each meeting: Every Alaska nonprofit corporation must establish and maintain a corporate record. That’s why every board should appoint someone to take minutes, or a summary of every board meeting, documenting what was said and what decisions were made.
- Finalize responsibilities for each board member: If one board member will be responsible for fundraising while another raises awareness for the cause, you should assign those roles at the initial board meeting.
- Appoint officers for the nonprofit (if needed): Some corporations choose to have their officers, such as the CEO or CFO, be members of the board. Others appoint non-board members to fill these roles, creating a division between the governance and day-to-day operations. Either choice is fine, but these vital roles should be filled.
This initial meeting will be a very full, technical day (or even series of days!), but nailing down these aspects will help you establish a nonprofit that’s compliant with Alaska state law and efficiently run.
Take Care of Taxes
Taxes as a nonprofit are a tricky beast; frankly, we recommend getting advice from a tax lawyer, accountant, or similar consultant to make sure you cover all your bases! But let’s take a quick look at the basics for nonprofit taxes.
First, apply for tax-exempt status on the federal level
If you don’t file for tax-exempt status, you’ll technically be liable for corporate income taxes. And that’s the last thing a non-profit wants. That’s why you’ll need to start out by filing Form 1023 or Form 1024, which are the applications for charitable, religious, or educational groups and other nonprofits respectively. After that application is completed, you’ll play the waiting game. The IRS can take up to 180 days to approve or reject your application, so we highly recommend completing the application correctly the first time.
Once your application is approved, you’ll receive a letter of tax-exempt status from the IRS. Simply having this letter exempts you from the state’s income taxes (although you’ll still make reports). In some states, you would have to apply for a certificate of exemption from sales taxes to avoid paying those, but Alaska doesn’t charge one (a few municipalities do, though; be aware of that). So as long as you get your IRS letter, you’re mostly set to go.
Obtain an EIN
An EIN, or an Employer Identification Number, is an important identifier to get; it acts a bit like a Social Security Number, but for a business entity. Unfortunately, you aren’t assigned one automatically.
Thankfully, it’s free to apply for an EIN online with the IRS. Even if you don’t plan to have employees right away, it’s a good idea to have this number from the get-go. Miscellaneous forms, such as license applications or even bank accounts, may request this number.
Account for employment & miscellaneous taxes
No two businesses are alike, so each nonprofit will have slightly different taxes. Since Alaska does not have a state personal income tax, you will only need to account for withholding taxes on the federal level. Meanwhile, you’ll be responsible for unemployment insurance taxes at both the federal and state levels. Alaska also has a few miscellaneous taxes, such as fees for fisheries, mining, and more. In most cases, these taxes won’t apply to your nonprofit, but it’s still a good idea to double-check with the Department of Labor and Workforce Development just to be sure you’ve covered all of your responsibilities.
That’s the basic gist of nonprofit taxes in Alaska. We still recommend consulting with a tax professional, as they’ll be able to give you specialized advice for your unique situation.
Register for Licenses and Permits
Licenses and permits are especially important for nonprofits. And there are three major categories of potential permits and licenses: fundraising, lobbying, and licensing. Let’s walk through Alaska’s requirements for each of those three areas.
A lot of states require you to register in order to compliantly solicit charitable contributions; Alaska is one of them. Every year by September 1st, you should register with the Attorney General if you intend to ask for donations. The filing fee is $40.
Alaska doesn’t charge a late fee if you don’t file this on time; however, as long as your registration is not complete or hasn’t been renewed, you cannot collect contributions. A few organizations, such as churches and people running for political office, are exempt from the registration requirements.
If you will be personally lobbying for your cause or your nonprofit’s employees will lobby for the cause, then you will need to ensure that each lobbyist has the appropriate registration. This registration is handled through the Public Offices Commission.
To lobby compliantly, every registered lobbyist is required to attend training sessions and make regular reports to the POC. You can find the report due date calendar here, but basically, reports are due every month for the first six months of the year and then every quarter for the rest of it. Be sure not to miss this requirement!
3. General licensing
Nonprofits are tax-exempt, but they aren’t exempt from licensure requirements, whether that’s for an industry-specific license or a state general business license. So you’ll need to get the licenses that apply to your unique organization.
Alaska requires every business entity to apply for and maintain a general business license. There are no exceptions to this requirement, and you’ll need to renew the license every year. Usually, there is a $50 application and renewal fee, but Alaska has temporarily waived it.
Beyond that, there’s a fair chance that your nonprofit (or members of the nonprofit) will need to obtain industry-specific permits for the people you serve or the services you offer. For example, Alaska requires licenses for dental examiners, midwives, social work examiners, and more. You should consult Alaska’s Professional Licensing page to learn which licenses apply to your business.
Whenever you apply for a license or permit, we recommend inquiring about the requirements for renewing your licenses. That way you’ll know exactly how often you’ll need to renew your licenses (if applicable).
Meet Insurance Requirements
We highly recommend that every business entity maintain at least some sort of general liability policy — even nonprofit entities. There’s always a chance that something can go wrong (no matter how careful you are). A natural disaster can happen, a break-in might cost you some important equipment, or an accident during day-to-day operations might cause a broken bone and damaged property. A general liability policy will protect your business if something like that happens.
Alaska state law also requires you to get a workers’ compensation insurance policy if you have one or more employees working for your nonprofit. You can learn more about this policy requirement at the Department of Labor and Workforce Development.
Top Resources for Alaska Nonprofits
Nonprofit work isn’t always easy, but you never have to go it alone! There are dozens, if not hundreds of nonprofit resources available to Alaska organizations.
On the national level, there’s the National Council of Nonprofits. They exist to advocate for and strengthen nonprofits throughout the country by providing nearly comprehensive resources, teaming up with each state’s nonprofit network, and keeping you aware of the trends in policy and public opinion. It’s also a great place to peruse the latest reports and data about charitable giving and advocacy in the U.S.
On the state level, you can always turn to The Foraker Group. In their own words, the Foraker Group is “dedicated to increasing the leadership and management skills of professionals and volunteers through an innovative approach” that is holistic and sustainable. The Foraker Group offers a wide variety of learning tools and nonprofit advocacy programs that make it worthwhile to join. If nothing else, networking with other nonprofit initiatives is a great way to learn new ideas and make connections.