A Montana Nonprofit Corporation is sometimes called a Montana Not-For-Profit Corporation.

A Montana Nonprofit Corporation is an organization that is legally registered with the Montana Secretary of State.  While the federal government must approve the tax-exempt status of a Montana Nonprofit Corporation, a Montana Nonprofit Corporation is not initially registered with any US government agency.

A Montana Nonprofit Corporation is an organization that works to serve some kind of public interest rather than to provide financial benefit to any particular individuals or entities.

Many Montana Nonprofit Corporations have much in common with Montana For-profit Corporations.  This includes the liability protection that comes with a legally registered Montana Nonprofit Corporation.  A lot of Montana Nonprofit Corporations hire managers and employees just like a Montana For-profit Corporation does.  The application process for a Montana Nonprofit Corporation is very similar to that of a Montana For-Profit Corporation.

Contrary to popular belief, Montana Nonprofit Corporations can and do make money.  In a Montana Nonprofit Corporation, any profits must legally go directly back into the Montana Nonprofit Corporation.

The short answer is no. The state of Montana does not legally require a lawyer to form a Montana Nonprofit Corporation.  However, if there is anything about forming a Montana Nonprofit Corporation that you're not sure about you should seek the advice of a competent Montana lawyer, a Montana accountant, or both BEFORE you Incorporate.

Once you have made the decision to Form a Montana Nonprofit Corporation, a lawyer can file your documents and act as a middle man for a few hundred dollars an hour; or you can use an online service provider like All Business Documents to perform these services and save money that you can use in your new Montana Nonprofit Corporation.

A Montana Nonprofit Corporation is formed to provide some kind of public or community benefit.  Unlike the other types of Montana Corporations and LLCs, a Montana Nonprofit Corporation may be eligible for certain benefits, including tax exemptions on both the state and federal levels.  Depending on the nature of the organization, some Montana Nonprofit Corporations may not be eligible for tax exempt status.  A Montana Nonprofit Corporation may also be eligible for public and private grants.  A Montana Nonprofit Corporation is formed in a similar way as that of forming a Montana For-profit Corporation.  Montana Nonprofits must file Articles of Incorporation in the same way that Montana For-profit Corporations do.

A Montana Nonprofit Corporation comes with the same liability protection as the other types of Montana Corporations.  The main difference between a Montana Nonprofit Corporation and a Montana For-profit Corporation is how the profits of the Montana Corporation are distributed,  In a Montana For-profit Corporation profits can be distributed to shareholders.  Montana Nonprofits are legally required to use the income to further a goal that benefits the community or some part of the public.

While most federal tax exempt organizations are Nonprofit Corporations, registering a Montana Nonprofit Corporation does not automatically qualify the Montana Nonprofit for tax exempt status at the federal level.  The IRS recognizes various types of tax exempt Nonprofit Corporations.  To receive federal tax exempt status a Montana Nonprofit Corporation must file forms with the Internal Revenue Service.  The forms can get very complex depending on the nature of the Nonprofit.

Also, a Montana Nonprofit Corporation cannot legally use its resources for propaganda or to further a political cause or to support a candidate for public office.

One of the major responsibilities of a Montana For-profit Corporation is to increase shareholder value.  For most Montana Corporations the pursuit of shareholder value is done without regard for specific benefits to the public.  The only benefits that matter are those that benefit the shareholders, who are the owners of the Montana Corporation.  Montana For-profit Corporations often face pressure to abandon social goals in order to increase their bottom line.

Montana Nonprofit Corporations are formed to provide some kind of public benefit but may be restricted in their ability to raise capital when they need to grow.

The state of Montana has created a new kind of For-profit Corporation which has a legal responsibility to include some kind of public benefit in their Corporate operating requirements.  A Montana Corporation of this kind is called a Montana Benefit Corporation or a Montana B Corporation.

Benefit Corporations are a hybrid between a For-profit and nonprofit Corporation.  Operating capital is easier to raise for a Montana Benefit Corporation and the Montana Benefit Corporation is required to provide some kind of public benefit.

Benefit Corporations do not have any special tax breaks or benefits.  Benefit Corporations are taxed just like any other Montana Corporation is taxed.

To qualify as a Montana Benefit Corporation, a Corporation must have an explicit social or environmental mission, and a legally binding fiduciary responsibility to take into account the interests of workers, the community and the environment as well as its shareholders.  A Montana Benefit Corporation must also publish independently verified reports on its social and environmental impact alongside its financial results. 

Some examples of the specific public benefit that a Montana Benefit Corporation must provide, among others, include:

• Providing low-income or under served individuals or communities with beneficial products or services
• Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business
• Preserving the environment
• Improving human health
• Promoting the arts, sciences or advancement of knowledge

No one person or group of people can own a Montana Nonprofit Corporation.  Once it is incorporated, the Montana Nonprofit Corporation is a separate legal entity from its founders, directors, officers, and employees.  The Montana Nonprofit Corporation itself owns assets of the business and is entitled to receive all revenues from its operation.  Any equity in a Montana Nonprofit Corporation belongs to the organization itself, not to the founders, board of directors or staff.

In addition, a Montana Nonprofit Corporation cannot be sold to another individual, corporation or organization.

Contrary to popular belief a Montana Nonprofit Corporation may actually make a profit.  Many Montana Nonprofit Corporations derive much of their funding from tax-exempt donations.  Sometimes a Montana Nonprofit Corporation can receive more in donations that the costs to actually run the organization.

A Montana For-Profit Corporation may distribute any excess assets to its owners or shareholders.  There is no distribution of assets in a Montana Nonprofit Corporation.

In a Montana Nonprofit Corporation all of the money earned by or donated to the Montana Nonprofit organization is used in pursuing the organization's objectives as stated in its Articles of Incorporation.  Any excess capital after the close of the Montana Nonprofit Corporation's fiscal year must be kept in the Montana Nonprofit's accounts.

The state of Montana does not have a Corporate income tax so there is no need for a Nonprofit Exemption from Montana Corporation income taxes.

501(c) refers to a section of IRS code which deals with tax exempt organizations including, but not limited to, Nonprofit Corporations.

The most common type of tax-exempt organization falls under section 501(c)(3) of the IRS code.  This section of the IRS code allows a Montana Nonprofit organization to be exempt from federal income tax if its activities include any of the following purposes:

• Charitable
• Religious
• Educational
• Scientific
• Literary
• Testing for public safety
• Fostering amateur sports competition
• Preventing cruelty to children or animals

There are other types of 501(c) tax exempt organizations defined in the IRS code - 29 of them - but 501(c)(3) tax exempt organizations are by far the most common in the state of Montana and the US.

One advantage to qualifying to be a 501(c)(3) tax exempt organization is that most foundations will only make grants to 501(c)(3) Nonprofits. 

Tax exemption does not excuse a Montana Nonprofit organization from maintaining proper records and filing any required annual or special-purpose tax returns if they are required.  Failure to file required returns such as Form 990 (Return of Organization Exempt From Income Tax) may result in fines.

One prohibition for 501(c)(3) organizations is that they are prohibited from conducting political campaign activities to intervene in elections to public office.  There are, however, provisions which may allow some 501(c)(3) organizations to legally lobby to influence legislation.

BEFORE you apply with the IRS for 501(c)(3) Tax Exempt status it will need the following:

• Articles of Incorporation approved by the Montana Secretary of State
• Bylaws
• Federal Employer Identification Number (EIN)
• Statement of purpose that meets IRS requirements
• Statement that your Nonprofit Corporation will not engage in prohibited political or legislative activities
• A Plan of Dissolution describing the distribution of assets upon dissolution

There is also very specific language which needs to be included in your Articles of Incorporation which are filed with the Montana Secretary of State if you want to get 501(c)(3) Tax Exempt Status.

When a Nonprofit Corporation dissolves all remaining assets must be distributed to other active Nonprofits.  None of the remaining assets can be distributed to any directors, members or staff.