A nonprofit is an organization formed to serve the public good, such as for a charitable, scientific, religious or educational purpose. The goal of a nonprofit is not to create profits for investors. The Wisconsin nonprofit laws provide guidelines for forming and operating a nonprofit in the state. Nonprofits generally follow the requirements of non-stock corporations, but have strict restrictions on profit distributions. All nonprofits should be careful to follow the legal requirements of their states, and may face fines or dissolution if not in compliance.
Board of Directors
Nonprofit organizations in Wisconsin are required to have a board of directors composed of, at minimum, three members. The board is responsible for managing the nonprofit. They must draft bylaws that determine how board members are added or removed, how often the board will meet, and other details concerning how the organization is to be run. If the bylaws do not otherwise specify, board members serve one-year terms. Generally, board members have limited liability for the nonprofit, meaning that they are not personally liable for the debts of the organization.
Read More: How to Sue a Nonprofit's Board of Directors
Articles of Incorporation
A nonprofit is officially formed upon filing a document called the articles of incorporation with the Wisconsin Department of Financial Institutions office. To file, you can use template Form 102, which is available on the Wisconsin Department of Financial Institutions website. You can fill out the form online, and then print it out and mail it to the address on the form. The articles of incorporation must include the name and address of the nonprofit, the name and address of the registered agent who will accept all legal documents on behalf of the organization, information about the incorporators, and the purpose of the nonprofit. You may also include additional information if you plan to eventually file for 501(c) (3) status with the IRS, such as information about how you will distribute assets if the nonprofit dissolves. There is a filing fee that you must include when you file.
Limitations on Distributions
With few exceptions, nonprofit organizations are not allowed to make distributions under Wisconsin law. Distribution refers to the payment of a dividend or any part of the assets or profit of a nonprofit to its members, directors or officers. Dividends do not include reasonable compensation, benefits, or reimbursement expenses. The nonprofit may make distributions upon its dissolution, or if the organization's bylaws allow for it to make distributions to another nonprofit organization and that distribution is made in accordance with the stated purpose of the corporation.
Wisconsin law requires that nonprofits maintain minutes of board meetings, accounting records, and membership records. Physical copies of these records, along with the articles of incorporation and adopted bylaws, must be kept at the principal office of the organization. All members of the nonprofit are allowed to inspect the records.
All nonprofit organizations are required to file an annual report with the Wisconsin Department of Financial Institutions. The report must include the name and address of the organization, contact information for the registered agent, name and address of each director and officer, a description of the nature of the business, and whether or not the organization has members.
Elizabeth Rayne earned her J.D. from Penn State University and has been practicing law since 2009, advising clients on issues ranging from employment law to nonprofit management. For two years, she served as a contributing editor for the "Vermont Environmental Monitor."