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 Nebraska 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 Nebraska? 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 Nebraska? 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 a Nebraska nonprofit organization.
Starting a Nebraska Nonprofit: Step by Step
Technically, the process for creating a Nebraska 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 Nebraska state law.
Nebraska has pretty simple laws for nonprofit names:
- Your name must include an entity type identifier, such as “Corporation” or “Inc.”
- Your name cannot imply that you conduct activities against state law or against the purpose stated in your Articles of Incorporation
- Your name cannot be “the same as, or deceptively similar to” the name of another entity; it must be unique
If you want more information on Nebraska nonprofit names, check out the Corporate Name Section of the Nebraska Revised Statutes.
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 Nebraska 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 a Corporation & Business Search. Typically, if you type in your desired name and no exact matches show up, your name is available. This seems 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 Application for Reservation of Corporate Name form. This optional filing costs $30 to submit, but once it’s approved, your name will be protected for 120 days (it cannot be renewed). That gives you plenty of time to prepare other business documents without losing your name to another business or nonprofit.
You can learn more through our guide on how to reserve a Montana business name.
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.
Nebraska doesn’t have a bunch of rules about who can serve on your board. The only explicit requirement is that your directors must be individuals. And unlike some states, Nebraska only requires a minimum of one director.
For everything else, your bylaws can dictate the terms; for example, your bylaws will dictate how each director is appointed, how long they’ll serve, how they’ll resign, how you’ll replace them, and more. It’s ultimately up to your bylaws.
3. Appoint a registered agent
Every Nebraska 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.
Nebraska has pretty lenient criteria for a nonprofit’s registered agent, as found in The Registered Office and Registered Agent section of the Nevada Revised Statutes:
- Every entity that files with the Secretary of State must appoint a registered agent
- The agent may be a member of the entity, an individual resident of the state, or a corporation with authority to transact business in the state
- An agent must be continuously maintained
So you might ask, “Can I serve as my nonprofit’s registered agent?” Technically, you can. 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 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 Nebraska nonprofits, that means filing the Articles of Incorporation.
This online document requires some foundational information about your nonprofit. Here’s the data you’ll need to have on hand:
- Name of your nonprofit corporation
- Whether or not your corporation will have members
- Your business address
- Activities of your nonprofit
- Email address for your nonprofit corporation
- Name and address of your registered agent
- Names and addresses of your incorporators
- Signatures of incorporators
All told, this document is pretty simple to complete; all you really have to do is fill in all the requested information. Since Nebraska currently only offers online filing for this document, so be sure to have a credit or debit card on hand to pay the $10 filing fee.
Processing speed: 2-4 business days
Congratulations! Your nonprofit is now a recognized entity in Nebraska!
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. Nebraska law does require that you have regular meetings, but as for the where, the when, the how…well, your bylaws can dictate all of those terms.
For example, your bylaws might require your president and CFO to report on the recent accomplishments and financial standing of the nonprofit at each meeting. But it all depends on what your bylaws require. For more information on your board meetings, check out the Nebraska Revised Statutes.
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 Nebraska 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 Nebraska 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. That automatically grants you an exemption from state income taxes and federal income taxes. However, if you want an exemption from the state’s sales and use taxes, you’ll have to complete a few additional steps. For starters, you’ll have to apply for an exemption certificate. And then whenever you make a purchase, you’ll need to provide your seller with a Nebraska Resale or Exempt Sale Certificate to verify your exempt status. Please remember that this exemption only applies for purchases made by the nonprofit, not personal purchases.
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. That said, Nebraska nonprofits with employees will need to account for unemployment insurance taxes and withholding taxes.
There are also miscellaneous industry-specific taxes in Nebraska, such as fees for occupations, local lodging, 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 Montana Department of Revenue just to be sure you’ve covered all your responsibilities.
That’s the basic gist of nonprofit taxes in Nebraska. 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 Nebraska’s requirements for each of those three areas.
1. Fundraising
A lot of states require you to register in order to solicit charitable contributions. However, Nebraska is one of the few states that does not require this registration. You’re free to begin fundraising as soon as you’ve established your business.
2. Lobbying
If your nonprofit will be lobbying for its cause in a formal capacity, then you’ll need to ensure that each person lobbying has the appropriate registration. This registration can be completed with the Clerk of the Legislature.
Registered lobbyists are also required to submit a Statement of Activity within 45 days of the end of a legislative session. Failing to file these reports can cost you your lobbying privileges. For more information on lobbyist requirements, check out the Nebraska Accountability and Disclosure Commission.
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.
Nebraska, unlike some states, doesn’t have a general business license that every state needs to obtain; some counties and cities require a license, but it’s not a statewide requirement. As a result, most license requirements come at the industry level instead. Nebraska upholds all federally regulated industry licenses, and the Nebraska Licensing Division is a great place to check out the state-level license requirements. It’s up to you to learn if there are any licenses for your industry, so be sure to complete this step!
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.
Nebraska 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 requirement with the Nebraska Workers’ Compensation Court.
Top Resources for Nebraska 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 Nebraska 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 Nonprofit Association of the Midlands. (This particular organization serves both Nebraska and Western Iowa). In their own words, NAM “serves nonprofits of all sizes and…works to strengthen the collective voice, leadership, and capacity of nonprofit organizations to enrich the quality of community life throughout Nebraska and SW Iowa.”
NAM does require membership, but joining grants you several advantages, including unique insurance options, networking opportunities, vendor discounts, and more, so joining will be worth your while.