Governance Building Blocks for the Nonprofit– February 14, 2017

Posted by Guest Blogger Alex Campbell, Associate, Buckingham Doolittle & Burroughs, LLC

There is an array of issues when it comes to starting and maintaining an Ohio nonprofit, but one of the most important is good governance. A well-structured, compliant organization is the best vehicle to advance the organization’s cause. Below are some of the primary governance issues to consider, including the basic steps to form a nonprofit under Ohio law and to obtain recognition of tax-exempt status under federal law, a list of ongoing state and federal filing obligations, and how to dissolve the organization under state and federal law. This article is necessarily brief and far from comprehensive, but it should provide a helpful starting place.

Forming a Nonprofit under Ohio Law

The first step to formally create an Ohio nonprofit is to file Articles of Incorporation with the secretary of state. The Articles must include the name of the organization, its location and its purpose. The Articles also may include an initial list of directors. Section 1702 of the Ohio Revised Code contains a more detailed description of the basic rules; the secretary of state’s and IRS’ websites are also useful resources. An organization intending to seek tax-exempt status should be careful to ensure its stated purpose is a tax-exempt purpose — such as charitable, religious, or scientific — and also that its dissolution provision complies with federal law for exempt organizations.
Along with the Articles of Incorporation, the newly formed nonprofit also must file an Appointment of Statutory Agent with the secretary of state. The statutory agent is the person or entity designated to receive official notices, such as filing reminders and service of process.
Once formed, the single most important document for the organization is its Code of Regulations (a.k.a. its bylaws). The Code of Regulations is not filed with the secretary of state, but it is provided to the IRS during the application for recognition of tax exemption, to potential grantmakers and funders, and others. The Code of Regulations is essentially the organization’s operations manual and dictates how it is to operate on a day-to-day basis. This document defines the roles of officers, directors, member and committees. It also describes procedures for meetings and financial and administrative issues. The Code of Regulations should be reviewed and amended, if needed, on an annual basis. It’s also a good idea to establish a bylaw or governance committee that is tasked with this regular review.
Most Ohio nonprofits are charitable organizations, meaning that they need to register with the attorney general under Ohio’s Charitable Trust Act, Ohio’s Charitable Organizations Act, or both. If an organization intends to hold funds in Ohio, it must register under the Charitable Trust Act. If an organization intends to solicit charitable contributions in Ohio, it must register under Charitable Organizations Act. There are exceptions to both registration requirements, and a review of the relevant statutes will reveal whether a particular organization falls into these exceptions. Most organizations will likely need to register under both Acts, which can be accomplished using a single form.
It is important to note that Ohio nonprofit status does not automatically equal federal tax-exempt status. It also does not mean that the organization is exempt from all state taxes or does not have to comply with relevant employment laws.

Seeking Recognition of Tax Exempt Status Under Federal Law

Once incorporated under state law, and after obtaining an Employer Identification Number (a.k.a. a federal tax ID number) from the IRS, a nonprofit seeking recognition of tax-exempt status will file an appropriate form with the IRS. Which form is to be filed depends on the nature of the organization. The two most common are Form 1023, which is used by public charities and private foundations, and Form 1024, which is used for social welfare organizations, business leagues, and social clubs.

Ongoing State Filing Obligations

Every five years, an Ohio nonprofit must file a Statement of Continued Existence with the secretary of state, essentially informing the state that the organization still exists. Failure to file results in the cancellation of the organization’s charter/registration, and a reinstatement form must be filed.

In addition, most nonprofits must file an annual financial report with the attorney general. Most organizations will simply provide their IRS Form 990, but for those organizations that are not required to file Form 990 and are not otherwise exempt from the attorney general reporting obligation, they must file a Financial Report of Charitable Organizations. Failure to timely file results in late fees.

Ongoing Federal Filing Obligations

For most tax exempt nonprofits, IRS Form 990 must be filed annually. Which specific form — Form 990, Form 990-EZ, or Form 990-N — depends on the nonprofit’s financial position. All private foundations file Form 990-PF. In any case, if required, the form is due on the 15th day of the fifth month after the end of the nonprofit’s fiscal year; typically, May 15th, although extensions can be requested. It should be noted that the Form 990 is required to be filed even if the determination letter is still pending.
Failure to file can result in significant late fees and penalties, and failure to file three years in a row results in the automatic revocation of the nonprofit’s tax exemption.
Certain organizations are exempt from the 990 requirement, such as churches and government entities.


Dissolution of a nonprofit can be either voluntary or involuntary. Voluntary dissolution means the directors and/or members decide to terminate the nonprofit’s corporate existence. State law requires, among other things, that the organization file a certificate of dissolution with the secretary of state. Carefully following the prescribed dissolution process provides finality and a measure of protection for the organization’s board of directors from future liability.

After filing the certificate of dissolution, the now-dissolved nonprofit must file a final Form 990, 990-EZ or 990-N. Private foundations must file a final Form 990-PF and be aware of special rules that apply to the termination of private foundation status.


Whether you are thinking about starting a nonprofit or already working with one, you should work closely with your legal and accounting teams to ensure the organization is well-organized and adheres to the good governance principles set forth in this article. Doing so will allow you, and your organization, to focus on the organization’s primary objectives.

Contact Alex Campbell at for further discussion.

Neither Alex Campbell, the law firm of Buckingham, Doolittle & Burroughs, LLC, nor the firm of Cohen & Company, are rendering legal, accounting or other professional advice. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts and circumstances.