Existing user? Sign in
Share your needs with us, get contacted by law firms.
Free. Takes 2 min.
Or refine your search by selecting a city:
Refine your search by selecting a city.
Nonprofit and charitable organizations play a vital role in Alabama’s communities by providing a wide range of public services, supporting causes, and offering educational, health, and welfare programs. In legal terms, these organizations operate without the intention of distributing profits to owners or shareholders. Instead, their income is reinvested to further their purpose or mission. The laws governing nonprofits in Alabama are designed to ensure organizations operate ethically, transparently, and in alignment with their stated mission, while also providing benefits such as tax-exemption if certain requirements are met.
Whether it's a charitable foundation, religious group, educational institution, or social club, each nonprofit must adhere to Alabama state laws, federal laws, and sometimes local regulations. Legal compliance is essential from the formation stage throughout the lifespan of the organization, including issues relating to corporate governance, fundraising activities, recordkeeping, tax filings, and dissolution.
Starting or running a nonprofit or charitable organization in Alabama can involve complex legal requirements. Legal counsel can help navigate the incorporation process, obtain and maintain tax-exempt status, develop bylaws, and handle employment matters. Common situations requiring a lawyer include:
Retaining a lawyer with experience in nonprofit law ensures that your organization’s decisions are legally sound and that you avoid common pitfalls that could threaten its mission or tax-exempt status.
Alabama has specific laws and regulations governing nonprofit and charitable organizations. These laws dictate how organizations are created, operated, and governed. The Alabama Nonprofit Corporation Law, found under Title 10A, Chapter 3 of the Code of Alabama, outlines the formation and administration of nonprofit corporations in the state. To be recognized as an official nonprofit, organizations must properly file their Articles of Incorporation with the Alabama Secretary of State and obtain a federal Employer Identification Number (EIN).
Organizations seeking tax-exempt status must also apply to the Internal Revenue Service for 501(c) status and may need to register for state sales or property tax exemptions. If soliciting donations in Alabama, most nonprofits are required to register with the Alabama Office of the Attorney General’s Consumer Protection Section. State law demands transparency in fundraising and how donated funds are used.
Compliance with annual reporting requirements is crucial. Alabama nonprofits often file an annual report with the Secretary of State, and must also submit proper filings to the IRS. Failure to comply can result in dissolution or loss of tax-exempt status.
In Alabama, various entities can be formed as nonprofits, including charitable, educational, religious, literary, and scientific organizations. Social clubs, mutual benefit societies, and civic leagues may also qualify.
To form a nonprofit, you must file Articles of Incorporation with the Alabama Secretary of State, create bylaws, hold an organizational meeting, and apply for an Employer Identification Number from the IRS. Further steps include applying for tax-exempt status.
No, tax-exempt status is not automatic. After forming your organization under Alabama law, you must apply separately to the IRS for federal tax exemption, such as 501(c)(3) status, and possibly to the state for state-level exemptions.
Most nonprofits that solicit donations in Alabama are required to register annually with the Consumer Protection Section of the Alabama Attorney General’s Office. Some exemptions may apply, such as for religious organizations.
Bylaws are the governing rules for your organization. They typically include information on membership, how directors and officers are chosen, meeting procedures, duties, and conflict-of-interest policies.
Generally, if board members act in good faith and in the organization’s best interests, they are protected from personal liability. However, exceptions exist in cases of fraud, gross negligence, or willful misconduct.
Most nonprofits must file an annual report with the Alabama Secretary of State and the IRS (usually Form 990, 990-EZ, or 990-N). Charitable organizations registering with the Attorney General must also renew annually.
Yes, nonprofits in Alabama can hire employees. They must comply with state and federal employment laws, including tax withholding, workers’ compensation, and unemployment insurance.
UBIT refers to income from regularly conducted business activities unrelated to your nonprofit’s primary mission. Such income may be subject to federal and state taxes, even for tax-exempt organizations.
Dissolving a nonprofit involves board approval, settling debts, distributing remaining assets per bylaws and state law, filing Articles of Dissolution with the state, and notifying the IRS and other agencies.
To better understand nonprofit and charitable organization requirements in Alabama, consider the following entities and resources:
If you need legal assistance for your nonprofit or charitable organization in Alabama, start by outlining your organization’s specific needs or concerns. Gather any existing documentation, such as your Articles of Incorporation, bylaws, IRS filings, and correspondence from state agencies. Then, consider the following steps:
A qualified attorney can guide you through regulatory requirements, help draft necessary documents, and advise you on maintaining compliance, protecting your organization, and achieving your charitable mission.
