About 1.5 million NGOs are operating in the United States. These non-governmental organizations focus on a variety of issues such as healthcare, women’s rights, economic development, and more. To conduct certain activities, an NGO must be registered. There are benefits to registration beyond avoiding legal troubles, such as signing contracts in the NGO’s name and qualifying for certain financial assistance. How does the registration process work in the United States?
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First steps
If you’re part of a group that wants legal benefits like exemption from federal and state taxes, you’ll need to formally incorporate and register as an NGO. Not a United States citizen? On the State Department’s page for NGOs, it states that individuals do not need to be citizens to create a new NGO. When you’re beginning the process, structure is important. That includes choosing a name for your NGO. Because you want to incorporate your organization, you’ll need a unique name that hasn’t been claimed already. This is also the time to appoint a board of directors. With their help, draft the operating rules (the bylaws) of your NGO and decide what kind of legal structure the group should take – a trust, association, or corporation.
Paperwork and tax exemption
The next step is to file incorporation paperwork and apply for tax-exempt status. Registration requirements vary state by state, but it’s usually not complicated. You’ll need to write a short description of the organization, including its name, mission, and address of an agent in the state you’re registering in. There’s also a fee. Depending on what state you’re in, some NGOs with religious, educational, or other charitable goals may need to also register with a state charity official. In most states, the process does not involve any kind of “approval” by a government authority. This is so authorities don’t abuse their power and hinder NGOs with goals they don’t like.
Most NGOs in the US qualify for federal and state tax exemption. Depending on the type of NGO and its activities, the kinds of benefits it can receive vary. Usually, NGOs that exclusively focus on religious, charitable, educational, literary, and nonpartisan goals can apply. To pursue this, you’ll need to apply to the IRS. The IRS has instructions and guidelines on this process. This is also the time to get any necessary permits and licenses you need to operate.
Foreign NGOs in the US
The United States allows foreign NGOs to register in the country with a non-profit entity form. These NGOs are funded by foreign governments but work within the US for varied purposes. Some are nonpartisan, while others serve as a liaison on foreign policy to US organizations. It’s common for foreign NGOs to fund and work alongside American NGOs. As long as these foreign NGOs register and file tax returns as required by law, they don’t have to provide reports to other US federal government agencies. If the NGO wants to apply for tax exemption, the process is generally the same as for US NGOs. Foreign NGOs also need to apply for a license in whatever state they want to operate in.
What to do if your tax exemption is revoked
NGOs can lose their tax exemption. If they fail to file the required Form 990 series returns or notices for three years in a row, their status is automatically revoked. Luckily, you can apply for reinstatement. One option is to try and get the tax-exempt status retroactively reinstated. An NGO is only eligible if they’ve not had their status automatically revoked before and if they submit a series of forms no later than 15 months after their Revocation Letter. This is known as “Streamlined Retroactive Reinstatement.” There are three other options if an NGO doesn’t meet the streamlined requirements. To avoid losing its tax exemption, an NGO needs to submit required returns to the IRS.
After registration
After an NGO registers, the US government doesn’t involve itself in the NGO’s mission. NGOs can recruit participants and don’t need to notify any government agency about activities, membership, or outreach. NGOs are also free to work with foreign governments and NGOs. Some rules apply, such as not working with governments or individuals sanctioned by the US or any groups designated as a terrorist organization. NGOs are free to recruit foreign donors and work internationally.
Under US law, NGOs have freedom of expression and association. That means NGOs can engage in nonpartisan political activities. If they take a partisan stance, an NGO may not qualify for tax exemption. Nonpartisan NGOs are still free to advocate for specific political issues and criticize the government. There are laws on issues like immigration, visas, campaign finance, and more, but NGOs are not held to a different standard than other organizations.
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