The Texas Code of Business Organizations requires a non-profit corporation to have at least three directors, a president, and a secretary. A not-for-profit corporation is created by submitting a certificate of formation to the Secretary of State. This is done by filling out Form 202. A non-profit corporation can be created for any legal purpose, the purpose of which must be indicated in its certificate of incorporation. The designation “501 (c)” only refers to a specific federal tax provision.
If you need information about a federal tax provision or if a tax provision affects your training certificate, you should contact your own tax advisor, lawyer or the IRS. The Secretary of State's Form 202 meets the minimum requirements of state law, but does not include any additional returns that the IRS may require to obtain tax exemption. Many non-profit organizations use the term “member” as a synonym for “supporter” or “donor”. However, apart from this fundraising use, the Texas Code of Business Organizations establishes a non-profit corporation with a formal membership structure. According to section 1.002 (5) of the Texas Code of Business Organizations, a “member of a nonprofit corporation” is a person who has membership rights in the nonprofit corporation under its governing documents.
Members of a nonprofit corporation are similar to shareholders of a for-profit corporation in the sense that both members and shareholders can have significant rights with respect to internal corporate governance. However, unlike shareholders, members of a nonprofit corporation are generally not owners and do not issue shares. When creating a nonprofit corporation, you must determine if the corporation will have members and, if so, who will govern the corporation: the members, a board of directors, or both. A non-profit corporation is presumed to have members. If you are forming a not-for-profit corporation with no members, the certificate of formation must include a statement to that effect.
The same person cannot be president and secretary at the same time. Officers and directors must be natural persons, but may be known by other titles. Any corporation can pay reasonable compensation for services provided to the corporation. Keep in mind that the Secretary of State does not determine what is considered reasonable compensation.
A document presented in 1993 in the IRS Continuing Education Program for specialists in exempt organizations discusses reasonable compensation. This document is available on the IRS website. There are restrictions on political contributions by nonprofit corporations. For information on this topic, you can contact your private attorney, the Texas Ethics Commission (51) 463-5800, the Federal Election Commission, and the IRS. You may also want to review Title 15 of the Texas Election Code. The Texas Attorney General has the legal authority to investigate charities that operate as non-profit corporations and inspect the books and records of all corporations, including non-profit corporations.
The Secretary of State does not have that authority. In addition, the IRS can revoke a nonprofit corporation's tax exemption for violations of federal tax laws. Under certain circumstances, the books and records of a nonprofit corporation are also available to the public under the Texas Public Information Act (Chapter 552 of the Government Code).Section 552.003 (A) of the Public Information Act defines “government body” as “the part, section, or part of an organization, corporation, commission, committee, institution, or agency that spends or receives full or partial support from public funds”. For more information on the Public Information Act, contact the Attorney General; the Secretary of State cannot provide advice on the application of the Public Information Act to a particular nonprofit corporation. While organizations that file Form 990-PF must submit a copy to certain state attorneys general, nonprofit corporations are generally not required to file Form 990 with the Texas Attorney General or Secretary of State.
The IRS provides information on how to obtain copies of Forms 990, exemption requests, and related tax returns on its Form 990 resources and tools page. For more information on registrations and filings with the Texas Attorney General, visit the charitable trusts section of the attorney general's website. A nonprofit corporation that actively solicits funds in Texas may be “conducting business transactions” in Texas and must submit a registration request (see Form 302); however, if the corporation's contacts with Texas are solely through interstate commerce (for example, by mail or telephone) or independent contractors, the corporation is likely not “transacting” in Texas. The Secretary of State does not maintain the statutes or tax-exempt applications of any nonprofit organization. Some organizations that have obtained tax exemption from the Internal Revenue Service must make certain documents available to the public. Bylaws may be available if included as part of the organization's exemption request.
For more information, visit the IRS website.The Secretary of State's office cannot help you obtain these documents. While a nonprofit corporation is not required to notify the Secretary of State of changes in information from officers or directors at the time of change, it can file a periodic report even if it has not been requested by the Secretary of State.However submitting a voluntary report does not affect your duty to submit one on time when requested by them. The Texas Business Organizations Code (the “Code”) states that a nonprofit corporation created under special law is subject to Title 1 and Chapter 22 of said code; however this is only applicable if it is not inconsistent with special law. The organizers or directors who call for meetings must send notices regarding time and place no later than three days before said meeting.
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