charitable organizations are an important aspect of life in New Mexico providing education, social services, arts, help to the disadvantaged, and other services to support our communities. Such organizations also employ thousands in New Mexico adding to the overall health and growth of the State.While forming a charitable organization is not typically a complicated process, it can be time consuming.
The information listed here is not intended to be all inclusive, but is meant to provide general information only and cannot replace the help of an attorney or accountant.1. What is the definition of a Charitable Organization?
As outlined in the Charitable Solicitation’s Act, a "charitable organization" means any entity that has been granted exemption from the federal income tax by the United States commissioner of internal revenue as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, OR identifies itself to the public as having a charitable purpose.
2. What's the difference (if any) between Non-profit Organization and Charitable Organization?
Most charities are non-profits, but not all non-profits are charities.
Under the Internal Revenue Code (IRC), there are approximately 25 categories of nonprofit organizations.
Only one of these categories, 501(c)(3), is designated for charitable organizations. Donations made to 501(c)(3) organizations are tax-deductible on the donor's income tax return.
In New Mexico, to qualify as a charitable organization, it must be designated a 501(c)(3) status, or hold itself out as having a charitable purpose.
In New Mexico, to qualify as a non profit corporation, no part of the income or profit may be distributable to its members, directors or officers. The corporation is formed by filing articles of incorporation with the New Mexico Public Regulation Commission-Corporations Bureau.
3. I'd like to start a Charitable Organization, what are the first few steps of the process?
Before you begin, make sure there is a need and you have a viable plan of action.
See: wikiHOW: How to Start a 501c3 Nonprofit Organization
Get an Employer Identification Number (EIN) from the IRS. This is typically needed to open bank accounts, file employee taxes, and other filings where a unique identifier is needed. Using a social security number could cause future tax problems, so an EIN is important and the IRS provides them at no charge.
IRS tax exemption is needed for most organizations.
Incorporate with the New Mexico Public Regulations Commission.
If you plan on paying employees, you will need to check with the Department of Labor as well as the IRS for information on employee taxes, social security, etc.
Register with the NM Attorney General’s Office.
For additional assistance, we recommend that an organization consult an attorney that specializes in nonprofit law.
4. Where can I find relevant laws or regulations?
IRS Tax Information for Charities & Other Non-Profits
Charitable Solicitations Act
Nonprofit Corporation Act
Public Regulation Commission
5. Do I have to file with the Attorney General’s Office?
If your organization is a 501(c)(3) and/or identifies itself to the public as having a charitable purpose and is not exempt from registration by statute (schools, churches) , it probably has to register regardless of its 501 status. Charitable purpose means a benevolent, social welfare, scientific, educational, environmental, philanthropic, humane, patriotic, public health, civic or other eleemosynary objective or an activity conducted in support of or in the name of law enforcement officers, firefighters or other persons who protect public safety.
If in doubt, send an email to Char...(click to show)...@nmag.gov and we will work with your organization to determine its registration requirements.
6. I think I’m exempt from registering with the Attorney General’s office, how do I check?
We ask all organizations that believe they are exempt from registration to send in an exemption request, the articles of incorporation, the organization’s by-laws and the IRS determination letter. If approved, we will then send an exemption letter for your file. This will allow our office to maintain accurate information on the organization. Exemptions include:
Religious organizations are exempt so long as the primary purpose of the entity is religious in nature. Religious organization means a church, organization or group organized for the purpose of divine worship or religious teaching or other specific religious activity or any other organization that is formed in association with or to primarily encourage, support or promote the work, worship, fellowship or teaching of the church, organization or group.
Educational institutions are exempt from registration. Educational institution means (1) an entity organized and operated primarily as a school, college or other instructional institution with a defined curriculum, student body and faculty, conducting classes on a regular basis; and (2) auxiliary entities, including parent-teacher organizations, booster and support clubs that support, encourage or promote a school, college or other instructional institution and its defined curriculum, student body, faculty, facilities or activities. All auxiliary entities must be under the supervision of the educational institution to receive exemption.
Persons soliciting for an individual or group that has suffered a medical or other catastrophe is also exempt so long as (a) the individual or group is identified by name at the time of the solicitation; (b) the purpose for the solicited contribution is clearly stated; and (c) the gross contributions collected, without any deductions for or by the solicitor or any other person, are deposited directly to an account in the name of the individual or group in a local federally insured financial institution established for that sole purpose and solely used for the direct benefit of the named individual or group as beneficiary.
7. Additional Resources
Establishing a Nonprofit Corporation by the Foundation Center.
Starting a Non-Profit Organization: A Resource List
National Association of State Charity Officials aka NASCO.
The New Mexico Attorney General’s Office - Charity Unit 505-222-9046
The Public Regulations Commission 1-888-4ASK-PRC (1-888-427-5772)
New Mexico Taxation and Revenue (505) 827-0700