I am considering starting a 501(c)(4) social welfare nonprofit with your "sole member" structure. I have 4 questions: 1. Can I incorporate in any state, or just the state I live in? 2. Does foreign incorporation avoid requirements that the home state might have, like the number of board members, etc.? 3. Do you recommend any particular state to incorporate in? 4. Is it important to allow the board to vote for the president/CEO? As the founder, I would want to fill that position.
Answers: 1. You may incorporate in any state, but you may have to register separately to do business in your home state if you incorporate elsewhere and do business in your home state. 2. The internal structure and operation of your corporation will normally be controlled by the law of its state of incorporation and not of the state(s) of operation. 3. I do not recommend New York because it requires at least three individuals as members of a nonprofit membership corporation. Otherwise, check other state laws and regulatory systems to see where you can do what you want to do without facing excessive requirements. 4. We recommend letting the board vote on officers (See Ready Reference Page: “Sole Member Bylaws Can Protect Founder of Nonprofit”) because it invests them with more responsibility and involvement in the success of the organization. If the other directors are willing to serve on the board, it is because they respect you and support the mission of the organization. If you let them know you want to be the president/CEO, they are likely to elect you to the position and help assure that your vision will be followed. If that is a problem that can’t be worked out, you probably have some wrong people on the board.