MKP USA Center Corporate Info 101
Background
In 2001-2003, MKP Centers were directed to incorporate as nonprofit organizations in their respective States. As Domestic Corporations in their home State, the Centers took on certain responsibilities as required under their State’s regulations. This document identifies the most common and the most important of these.
Since the corporate side of Centers play little or no role in the day-to-day life of the communities, it is very likely that few Warriors are even aware that their Center is a corporation and even fewer have any familiarity with the State and Federal requirements governing the care and feeding of tax-exempt nonprofits.
Getting started: Incorporation
Articles of Incorporation: In order to register with the State as a nonprofit organization, it is generally necessary to file Articles of Incorporation. In most States, this involves a standard form identifying the name, nature, and purpose of the corporation. It may include the founding Board Members and usually requires that a Resident Agent be identified.
Board Members: These are the people empowered under the Articles to conduct the corporation’s business. Minimally, there are a Chair/President, a Secretary, and a Treasurer. Usually, there are a (small) number of additional Officer and Director positions identified.
Resident Agent: This person is the liaison person between the State and the corporation. All official communications from the State are sent to this person who (usually) must reside in the State and the Agent may be the person who actually submits (but not necessarily prepares) the corporation’s filings with the State.
Bylaws: The Bylaws document defines the governance for the corporation and specifies how the organization conducts its business at the highest level. Usually, this document defines the types of corporation membership (e.g., voting and non-voting), the composition of the Board, and the Board Members’ duties. It sets out the procedures and timings for meetings and elections and may define the standing (i.e., permanent) Committees. Some States require that Bylaws be submitted either with the Articles of Incorporation or within a set number of days after incorporation.
Since Bylaw changes generally require a more formal approval process, only the most important and/or State required protocols are laid out in the Bylaws. Routine items are defined in policies and procedures developed by the Board, Committees, and other operating groups over time.
Maintaining Integrity with the State: Reporting and Filing
Good Standing: Although not every State uses the word “Good Standing,” they all have requirements that must be met for a nonprofit corporation to be in integrity. Failure to meet the requirements will cause an organization to be deemed not in good standing and, if not brought back into integrity in a timely manner, can cause the organization to lose its nonprofit status and ultimately to forfeit its incorporation and be unable to conduct business under the laws of the State.
Reports/Filings: All States require corporations to file a report, generally on an annual or biennial schedule, the month for the filing usually being the anniversary month of its incorporation. These reports are usually done via a standard State form available on the Secretary of State’s or the State Treasurer’s website and usually require payment of an annual filing fee. The number and nature of these required reports vary from State to State, but usually include naming the current Officers and Directors and documenting taxes paid or not due. The State usually notifies the Resident Agent of a report coming due and may notify the Resident Agent of a filing past due, but seldom pursues the issue. Rather, after a set number of days have passed, the corporation’s status is changed per State law.
Amendments: Changes to the Articles of Incorporation and, in some instances, to the Bylaws must also be filed with the State. The most notable such changes involve the corporation’s name, fiscal year, or tax exempt status. Such changes would also include mergers and acquisitions. Organizations are required to submit such changes to the State, usually within a set number of days of Board approval of the change and are not deemed to take effect until accepted by the State.
Certificate of Good Standing: This document, whether with this name or a State-specific equivalent, can be issued by the State either to the corporation in question or to a person or another corporation requesting legal proof that the organization is current in its compliance with State reporting requirements. It is analogous to a certificate of insurance in that it assures the recipients that they are, in fact, dealing with a legally recognized entity.
Documenting a Center’s Good Standing
Today, every State has a website where one can find information about corporations registered in that State, including the corporation’s current standing. Generally, if one does a search on “<state name> corporation standing”, a link to the appropriate website for that State will be returned. (Iin most cases, it is a page within the Secretary of State’s website.) On the page, there will usually be either a search box or a link titled “Search Businesses” or “Find a Company”. Search is frequently available by name, address, State ID number, and/or other identifying data elements.
Once the corporation is found, the information available online, while varying from State to State, will, for the most part, provide enough information to establish whether the organization is or is not in “good standing”. A printout of that page suffices for meeting the MKP USA requirement to document annually that a Center is in good standing. In a few States, however, the Center will have to purchase a Certificate for a small fee and then send the PDF file to MKP USA Operations. This Certificate can also be provided to anyone else who requires proof of the Center’s current nonprofit status with the State.
In addition to providing access to basic data about the corporation, most of these websites offer access to past filings and other documents, either directly (for free) or by order requests (for a fee).
Maintaining Integrity with the IRS: Form 990
Being a nonprofit, tax-exempt State corporation in Good Standing is only half the job. The Center must also maintain its Federal tax-exempt status in order to be able to receive and receipt for nontaxable donations. Having this status qualifies the Center as a 501(c)(3) educational organization.
Form 990 is the annual reporting return that certain federally tax-exempt organizations must file with the IRS. It provides information on the filing organization’s mission, programs, and finances. Again, this is a publicly available document that can be used, once validated by the IRS, as proof of the Center’s tax-exempt status, in this case at the Federal level.
Almost all MKP USA Centers currently operate under MKP USA’s 501(c)(3) designation. (There are a few Centers that file a complete Form 990 on their own.) To maintain this status, MKP USA must file a consolidated Form 990 annually. After each participating Center submit its Form 990 information to MKP USA Operations, MKP USA combines the Center submissions and its own Form 990 into a single IRS filing.
Being Out of Integrity May Have Consequences
Failure to maintain a Center corporation in Good Standing with its State could put all Centers and MKP USA at risk. Our insurance coverage and our 501(c)(3) exemption both depend on all affiliated corporations maintaining their qualifications.