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Nonprofit and charitable organizations play a vital role in Montana. These entities operate to fulfill a public or social benefit instead of distributing profits to shareholders or owners. Nonprofits in Montana include a range of groups focused on education, health, religious activities, animal welfare, arts, environmental conservation, and social services. Charitable organizations, a subset of nonprofits, typically focus their work on benevolent purposes, including relief to the poor or advancing education and religion.
To lawfully operate in Montana, nonprofits must comply with state and federal laws governing the formation, governance, reporting requirements, fundraising, and tax-exempt status. Nonprofit law protects organizations, their leaders, donors, and the communities they serve, ensuring transparency, accountability, and trust.
There are several situations when working with an attorney knowledgeable about Montana nonprofit law is essential:
Legal guidance can help prevent costly mistakes and protect the organization’s mission and reputation.
Montana law recognizes and regulates nonprofit corporations under the Montana Nonprofit Corporation Act, found mainly in Montana Code Annotated Title 35, Chapter 2. The Secretary of State oversees initial registration and ongoing corporate reporting. Key aspects include:
Additional federal laws and IRS regulations also apply to Montana nonprofits, particularly for organizations seeking or maintaining 501(c)(3) status.
Montana allows the formation of various nonprofit types, including educational, religious, charitable, social, recreational, and mutual benefit organizations.
You must file Articles of Incorporation with the Secretary of State, create bylaws, appoint a board of directors, and apply for an Employer Identification Number. You may also need to register with state tax authorities and apply for federal and state tax-exempt status.
No, but 501(c)(3) tax-exempt status is necessary if you want donors to receive tax deductions for their contributions and to be exempt from federal income tax.
You must file annual reports with the Secretary of State, maintain proper governance records, report to the IRS if required, and comply with any state charitable solicitation laws.
Yes, most fundraising nonprofits need to register with the Montana Department of Justice before soliciting donations from the public.
Board members must act in good faith, with the care an ordinarily prudent person would exercise, and in the best interests of the organization. They must avoid conflicts of interest and comply with state and federal laws.
Directors can receive reasonable compensation for their services, but excessive payments can jeopardize tax-exempt status and lead to penalties.
Montana does not require routine audits by all nonprofits, but certain organizations, especially those that solicit the public or receive large grants, may be required by funding sources, the IRS, or state agencies to provide audited financial statements.
Violations can result in penalties, loss of tax-exempt status, dissolution by the state, and personal liability for board members in some cases.
Dissolution requires a formal process, including board and member approval, filing with the Secretary of State, notifying the IRS, and distributing remaining assets to another charitable organization.
Information and assistance regarding nonprofit operation, compliance, and legal matters can be found at:
If you are considering starting a nonprofit or facing a legal issue with an existing organization, consult with an attorney who specializes in nonprofit and charitable organization law in Montana. Gather your organization's governing documents, financial records, and any correspondence with state or federal agencies. Prepare a list of questions and concerns specific to your situation. Reaching out to the Montana Nonprofit Association or your local bar association can also help you locate a qualified legal professional. Proactive legal guidance will ensure your organization thrives while meeting all applicable laws and regulations.
