The mission of a charitable organization is to provide services that improve the quality of life for people and communities in need. Examples of this type of organization include: Charity:water brings clean drinking water to people in developing countries, Make a Wish America grants wishes to children with critical illnesses and Habitat for Humanity helps people build homes and communities.

To become a charitable organization, a group must be legally recognized as such by the state in which it is located. This typically involves filing a document with the secretary of state that outlines the purpose, board members and other details. The document may also contain the name of the group and the tax-exempt status it seeks. Many states require this document be published so the public knows that a new nonprofit has been formed. This notice typically appears in a local newspaper.

Amending the articles of incorporation is a common task for nonprofits as their address, mission, board and other information changes over time. This typically involves submitting a form and paying a fee. Some states even require a board meeting to approve the amendments before filing them.

Filing for 501(c)(3) tax exempt status with the IRS is another important step in becoming a charitable organization. This process is more complicated than the articles of incorporation filing and requires additional forms, documents and fees. If the articles include the necessary language, however, a group can avoid income tax on donations, giving it access to more funds to fulfill its mission.

A charitable organization’s governing document must clearly limit its activities to one or more of the purposes set forth in Internal Revenue Code Section 501(c). The document must not allow the group to engage in any activities that are not substantially related to its exempt purpose unless it meets a “insubstantial” test.

When a nonprofit decides to close, it must prepare detailed termination plans for all its contracts. It must also identify and evaluate its existing liabilities, including future contractual obligations, and determine if these can be paid off with existing assets or if they require a sale of some or all the group’s assets. If the group employs people, it must notify them of its intention to shut down so they can find new employment or receive unemployment compensation. The group must also prepare a final financial statement that includes all its existing assets and liabilities. It must then file its Articles of Dissolution with the appropriate state office. In addition, it must notify all relevant state agencies, such as the Attorney General or other agency that regulates charitable solicitation registration, the state department of labor and any departments that accredit or license the group’s activity. The final statement must also reflect the amount of money that remains in the bank after all expenses have been paid. The group must then distribute these final statements to all parties.