Illinois Nonprofit Corporations
An Illinois nonprofit corporation distributes no part of its income to its members, directors or officers. Illinois Nonprofit corporations are similar to their for-profit counterparts (Illinois corporations) with two important basic differences. First, nonprofit corporations are formed for purposes other than for the generation of profit. For example, traditional nonprofit corporate purposes are religious, charitable, scientific, and educational. Nontraditional nonprofit corporate purposes also include trade associations, political action committees and various forms of membership organizations.
Secondly, unlike corporations, nonprofit corporations do not have persons who own equity interests in the corporation. In fact, nonprofit corporations are generally prohibited from distributing any assets to members.
Every Illinois nonprofit corporation has governance documents which define and outline the rules and regulations within which the nonprofit operates. The document which creates the corporation is the Articles of Incorporation. This document is filed with the Secretary of State. Upon filing, the corporation is in existence as an independent legal entity. The Articles must determine and provide the following:
If the corporation will be a public benefit, religious or mutual benefit corporation;
If the corporation will have members; and
A dissolution provision which identifies the distribution of assets upon the dissolution of the corporation.
Each corporation is also required to have Bylaws. The Bylaws outline the regulation and management of the corporation. The Bylaws generally set forth the basic governance structure of the corporation.
Additionally, any nonprofit corporation that intends to solicit funds from the public must register or qualify for an exemption under the Solicitation of Charitable Funds Act before any funds are solicited and comply with its reporting requirements.