Nonprofits corporations are required to have a registered agent in their state of domicile and in each state where they are registered to do business. The purpose of a registered agent is to ensure that there is a place with a street address (as opposed to a P.O. Box) where an organization can be contacted or served with notice of a lawsuit or other legal action.
The nonprofit itself may not serve as its own registered agent. Instead, many nonprofits choose to have a director or officer serve as the registered agent at their home address. The disadvantage of naming an individual connected with the nonprofit is that when they move, resign or become incapacitated, important communications can be missed. Further, individuals often prefer not to publish their personal addresses for privacy reasons.
Other nonprofits opt to name an executive to serve as their agent and use their own business address instead. This is fine; however, it can result in sensitive information being broadcast to the organization’s receptionist or other bystanders if the organization is served with a lawsuit.
Most nonprofits prefer to have their attorney serve as their agent in their home state. Doing so ensures that communications will be promptly brought to the organization’s attention and confidences maintained. There are also a number of professional registered agent services that can be hired to serve in other states where the organization does business.
Once established, the registered agent information should be kept current as the agent must be maintained at all times to be in compliance with the law. Failure to appoint or maintain an agent will typically result in the involuntary administrative dissolution of the organization in its home state and/or result in having its registration to do business as a foreign corporation in other states revoked. The dissolution of a tax-exempt nonprofit can be devastating as it typically results in the organization having to reincorporate and reapply to the IRS for tax-exempt status.
Nonprofits have a number of options when searching for a registered agent. The important thing is to choose an agent that is responsive, discreet and will be around for the long term.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. Ellis advises nonprofit and socially responsible businesses on corporate, tax, and fundraising regulations. Ellis is licensed to practice in Washington and Arizona and advises nonprofits on federal tax and fundraising regulations nationwide. Ellis also advises donors with regard to major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.