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Nonprofit and charitable organizations play a vital role in Texas by offering a wide range of services meant to benefit the public good. These organizations are distinct from traditional businesses because they operate without the purpose of making a profit for private individuals or stakeholders. Instead, they typically use their resources to achieve charitable, educational, religious, or other socially beneficial goals. In Texas, nonprofits are governed by a combination of state and federal laws that set out how they can be formed, operate, and maintain their tax-exempt status.
Seeking legal advice is crucial for anyone involved with nonprofit or charitable organizations in Texas. Here are common situations where a lawyer’s help is valuable:
Even well-meaning mistakes can have serious legal or financial consequences for a nonprofit, so timely and knowledgeable legal guidance is highly recommended.
Texas law governs how nonprofits are formed, operated, and regulated within the state. The core state statute is the Texas Business Organizations Code, which covers the creation and management of nonprofit corporations and other forms such as unincorporated nonprofit associations and charitable trusts. Here are a few key aspects of Texas nonprofit law:
Remaining in good standing, both legally and financially, requires careful compliance with ongoing reporting and operational requirements.
You must file a Certificate of Formation with the Texas Secretary of State, prepare bylaws, appoint a registered agent, and designate directors. Most organizations also apply for federal 501(c)(3) status for tax exemption.
No. Nonprofits must apply separately for federal tax exemption with the IRS and for a state-level exemption from Texas taxes such as franchise and sales tax.
The most common types are nonprofit corporations, unincorporated nonprofit associations, and charitable trusts.
Yes. Texas has regulations covering charitable solicitation, raffles, bingo games, and public fundraising events. Some activities require registration or permits with state and local agencies.
Nonprofits can pay reasonable compensation for services, but excessive payments could jeopardize their nonprofit status. Volunteers can serve without pay.
Key documents include formation papers, bylaws, minutes of board meetings, financial records, annual reports, and compliance documents related to fundraising and tax filings.
Common reasons include failing to file annual IRS returns, engaging in prohibited activities like political campaigning, or providing private benefits to individuals.
You must follow the dissolution procedures in the bylaws, file a Certificate of Termination with the Secretary of State, settle debts, and distribute remaining assets as required by law.
Many nonprofits must make records such as their IRS Form 990 and determination letter available to the public upon request.
A lawyer can draft and review formation documents, ensure compliance with all laws, assist with IRS filings, advise on governance, resolve disputes, and represent the organization in any legal matters.
If you need more information or assistance, consider these resources:
If you think you need legal assistance with a nonprofit or charitable organization in Texas, you might start by gathering all relevant documentation about your organization, including incorporation papers, bylaws, and financial records. Consider scheduling a consultation with an attorney who has experience in nonprofit law. Prepare a list of questions or concerns to discuss, such as compliance issues, tax matters, or plans for growth. Acting early and seeking specialized legal guidance can help protect your organization and further your charitable mission.
