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Religious Corporation

A religious corporation is a type of religious non-profit organization, which has been incorporated under the law defined by the concerned authorities.

It is usually the government, who holds records of non-profit religious organizations, is responsible for regulating these religious not-for-profit corporations, say for instance Secretary of State. These not-for-profit religious corporations are recognized under the law on sub national level and usually Secretary of State of that particular state will be monitoring the activities of such religious corporations.

If we compare Religious corporations with other tax-exempt organizations then these religious non profit corporations are subject to less state and federal filing and reporting requirements. Depending on the state in which they are incorporated, they may also be exempt from some of the inspections or regulations governing non-religious groups performing the same services.

Corporation sole

Non profit religious corporations need to designate a person to act in the capacity of Corporation Sole. He is a person who acts as the bona fide holder of title on property and so on for these religious societies or corporations.

How can a religious not for profit corporation be formed?

Any church, congregation or society formed for the purposes of religious worship, may become incorporated in the manner following:

By electing or appointing two or more of its members as trustees, at any meeting held for that purpose, and may adopt a corporate name; and upon the filing of the affidavit, as hereinafter provided, it shall be and remain a body politic and corporate, by the name so adopted.

Filing certificates of incorporation of religious corporations

 

The certificate of incorporation of a religious corporation shall be acknowledged or proved before an officer authorized to take the acknowledgment or proof of deeds or conveyances of real estate, to be recorded in the county in which the principal office or place of worship of said corporation is or is intended to be situated, and shall be filed and recorded in the office of the clerk of said county.

It may also be filed and recorded in the office of the secretary of state. Where a religious not-for-profit corporation removes to another county within the state a duplicate copy of its certificate of incorporation together with a statement of such removal duly signed and acknowledged by the directors and officers of said religious corporation may be filed in the office of the clerk of said county to which it has removed.

And every act, deed, matter and thing done or performed by every such religious society or corporation since the recording of its certificate in the office of said county clerk is hereby ratified, confirmed and declared to be as valid in all respects as if the said certificate has been properly and appropriately recorded in the office of the register of the county in which said religious society or corporation was organized; but this section shall not affect any suit or proceeding already commenced arising out of such original mistake.

Rights and duties of trustees of religious corporations

The trustees of every religious corporation shall have the custody and control of all the temporalities and property, real and personal, belonging to the corporation and of the revenues there from, and shall administer the same in accordance with the discipline, rules and usages of the corporation and of the ecclesiastical governing body, if any, to which the corporation is subject, and with the provisions of law relating thereto, for the support and maintenance of the corporation, or, providing the members of the corporation at a meeting thereof shall so authorize, of some religious, charitable, benevolent or educational object conducted by said corporation or in connection with it, or with the denomination, if any, with which it is connected;

They shall not use such property or revenues for any other purpose or divert the same from such uses.

They may transfer all or any part of the real or personal estate of such religious non-profit corporation to such bank or trust company organized or existing under the laws of the State where it was incorporated, or to a national banking association whose principal office is located in the State of New York as may be designated by them or to a holding company, organized under the laws of the State of New York, of the same religious denomination, such property to be held in trust or in safekeeping or custody, to collect the income thereof and pay over the same to the trustees of such religious corporation at such times and in such manner as shall be agreed upon

They may also delegate and grant to the trustee or custodian designated by them all or any portion of the powers, responsibilities and discretionary authority possessed by them with respect to the retention and the investment and reinvestment of such property or any part thereof, and may from time to time modify such powers delegated by them or designate successor or different trustees or custodians within the limits and subject to the regulations and restrictions contained in this section.

What is Non-For Profit Corporation?

A non-profit organization is an organization that does not distribute its surplus funds to owners or shareholders, but instead uses them to help pursue its goals. Examples of nonprofit organizations include charities (i.e. charitable organizations), trade unions, and public arts organizations. Most governments and government agencies meet this definition, but in most countries they are considered a separate type of organization and not counted as nonprofit organizations.

What are the Legal aspects?

There is a wide diversity of structures and purposes in the nonprofit organization landscape. For legal classification and eventual scrutiny, there are, nevertheless, some structural elements of prime legal importance:

  • Economic activity
  • Supervision and management provisions
  • Representation
  • Accountability and Auditing provisions
  • Provisions for the amendment of the statutes or articles of incorporation
  • Provisions for the dissolution of the entity
  • Tax status of corporate and private donors
  • Tax status of the foundation

Benefits of Nonprofit Corporation

Nonprofit corporations enjoy an exemption from corporate income taxes on profits from activities that are related to their organizational purpose. Also, a nonprofit is permitted to raise funds by receiving public and private grant money and donations from individuals and companies. (And the tax laws encourage people and businesses to donate money and property by allowing donors to deduct their contributions on their own tax returns.) Finally, structuring an organization as a nonprofit corporation protects its directors, officers, and members from personal liability for the corporation's debts and liabilities.

Formation of a nonprofit corporation

There are several steps you must take to create a not for profit corporation. The first is filing a short document, usually called "articles of incorporation," with the corporations division of your state government. The name of your corporation .

  • The corporation's address
  • The name and address of a "registered agent" (a person who agrees to receive legal papers on behalf of the corporation), and sometimes
  • The names of the corporation's directors.

Tax exemption

In many countries, nonprofits may apply for tax exempt status, so that the organization itself may be exempt from income tax and other taxes. In the United States, to be exempt from federal income taxes the organization must meet the requirements set forth by the Internal Revenue Service.

After a recognized type of legal entity has been formed at the state level, it is customary for the nonprofit organization to seek tax exempt status with respect to its income tax obligations. That is typically done by applying to the Internal Revenue Service (IRS), although statutory exemptions exist for limited types of not for profit organizations. The IRS, after reviewing the application to ensure the organization meets the conditions to be recognized as a tax exempt organization (such as the purpose, limitations on spending, and internal safeguards for a charity), may issue an authorization letter to the nonprofit granting it tax exempt status for income tax payment, filing, and deductibility purposes. The exemption does not apply to other Federal taxes such as employment taxes. Additionally, a tax-exempt organization must pay federal tax on income that is unrelated to their exempt purpose. Failure to maintain operations in conformity to the laws may result in an organization losing its tax exempt status.

Individual states and localities offer nonprofits exemptions from other taxes such as sales tax or property tax. Federal tax-exempt status does not guarantee exemption from state and local taxes, and vice versa. These exemptions generally have separate application processes and their requirements may differ from the IRS requirements. Furthermore, even a tax exempt organization may be required to file annual financial reports (IRS Form 990) at the state and federal level.

Issues faced by nonprofit corporations

Capacity building is an ongoing problem faced by nonprofit corporations for a number of reasons. Most rely on external funding (government funds, grants from charitable foundations, direct donations) to maintain their operations and changes in these sources of revenue may influence the reliability or predictability with which the organization can hire and retain staff, sustain facilities, or create programs. In addition, unreliable funding, long hours and low pay can lead to employee burnout and high rates of turnover.

Founder's syndrome is an issue organizations face as they grow. Dynamic founders with a strong vision of how to operate the project try to retain control over the organization, even as new employees or volunteers want to expand the project's scope and try new things.

Can a Non-US-Resident create a non-profit corporation or organization in USA?

In most states A Non-US-resident can create a non profit organization.

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