WHAT IS A NONPROFIT PUBLIC BENEFIT CORPORATION?
A Nonprofit Public Benefit Corporation must be formed for public or charitable purposes and cannot be formed for private gain of any individual. Public benefit purposes include organizations such as childcare centers, shelters for homeless people, community health care clinics, museums, hospitals, schools, performing arts groups, conservation groups, and affordable housing groups.
The Public Benefit Corporation is legally restricted in that all its assets must be irrevocably dedicated to charitable, scientific, or educational purposes. In this sense, the nonprofit corporation is owned by the public. No private individual can claim ownership of the corporation. The board of directors and the officers cannot own the corporation’s assets.
For this reason, the Public Benefit Corporation cannot distribute dividends to any individual. If the organizers of the Public Benefit Corporation later decide to terminate the corporation, the assets of the Public Benefit Corporation must be transferred to another charity that has the same or similar purpose. The assets remaining after the debts and liabilities are paid must be transferred to another public benefit organization and cannot be transferred to any members of the former corporation or any private individual or any for-profit corporation. The property must be permanently used for charitable purposes. Moreover, a valuable asset to the nonprofit is its intellectual property. It is important that the nonprofit corporation also make the appropriate filings to protect its intellectual property, such as trademarks, service marks, copyrights, and patents.
In addition, because the Public Benefit Corporation is formed for charitable purposes, it must register and submit reports with the Attorney General’s Registry of Charitable Trusts. Moreover, Federal tax law requires that charitable organizations make available at their principal place of business the organization’s financial information, including applications for tax exemption, IRS Form 990, IRS Form 990EZ or IRS Form 990PF returns for the past three (3) years, and its IRS determination letter. These copies must also be provided upon written request from any person.
LOS ANGELES BUSINESS LAWYER
If you need to form a nonprofit public benefit corporation, contact a business attorney at The Sterling Firm. We have an attorney experienced in forming nonprofits. We can help! Call now to speak with an attorney!