12 Step Program...

Step Nine

File Articles of Incorporation & Meet Legal Obligations

The Articles of Incorporation establish the name and purpose of the nonprofit organization. Incorporating the organization serves three primary functions:

Establishes legitimacy for your organization. Nonprofit incorporation says to the world that you are serious.
Prepares for anticipated future developments. You will have "done your homework" and be ready to proceed with a major fundraising effort. Incorporation is a necessary condition for being granted tax-exempt status.
Helps you meet the requirements of another organization with whom you wish to collaborate. Funders or contractors may require that your program be incorporated.
Potential Advantages to Incorporation:
The process of incorporation can be strengthening for an organization. It requires careful planning about your purpose and how you are going to do your work.
It establishes minimum accountability for your management of a public trust-a nonprofit organization.
It readies an organization for application for federal tax-exempt status.
It helps to formalize decision making and ownership among the principals involved.
It reinforces the legitimacy of the organization.
Potential Disadvantages to Incorporation:
It takes time and money to accomplish.
It entails complying by state and federal government rules. You must be knowledgeable about the laws related to charitable organizations.
There may be some risk in over-structuring the organization. Avoid an organizational structure that may hinder the ability to carry out organizational aims.
There is some risk of people involved thinking incorporation will accomplish something magical. It will not!
Articles of Incorporation must be filed with the Secretary of State's office in the state the organization will reside.
Public charities constitute the major part of 501(c)(3)/tax exempt organizations and private foundations are another category. To be recognized as a public charity, your nonprofit must be organized and operated for purposes that are beneficial to the public interest.

These purposes include:

Relief of the poor, distressed, or underprivileged
Advancement of religion
Advancement of education and science
Erection or maintenance of public buildings or monuments
Lessening the burden of government
Elimination of prejudice and discrimination
Defense of human and civil rights
Combating community deterioration and juvenile delinquency.
The organization must not operate for the benefit of a private person. Upon dissolution its assets must be distributed to another 501(c)(3) charity. It is not allowed to engage in any political activity. Lobbying is accepted but cannot be a substantial part of its activities. Public charities are the only tax-exempt organizations that can receive tax-deductible donations.
Suggestions for Further Reading

Hopkins, Bruce. A Legal Guide to Starting and Managing a Nonprofit Organization, 2nd. Edition. John Wiley & Sons, 1993.

Hopkins, Bruce. The Law of Tax Exempt Organizations. John Wiley & Sons, 1991.