Massachusetts Nonprofit Corporations

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Nonprofit corporations in Massachusetts are generally formed under Chapter 180 of the Massachusetts General Laws, which incorporates by reference numerous provisions of the Commonwealth’s Business Corporation Act and governs the formation, operation and dissolution of nonprofit corporations in Massachusetts. Note that Chapter 156B is no longer applicable to for-profit corporations in Massachusetts, which now operate under the newer statute, Chapter 156D.  The older statute is nevertheless maintained for the purpose of supporting references to Chapter 156B that appear throughout Chapter 180. 

In addition to being subject to these statutes, a charitable nonprofit corporation is subject to oversight by the Attorney General of the Commonwealth through the Nonprofit Organizations/Public Charities Division. A nonprofit corporation in Massachusetts is managed by its board of directors and operated by its officers and employees.  A nonprofit corporation organized under Chapter 180 cannot have capital stock, but may have members, who enjoy voting rights that are somewhat similar to those of for-profit shareholders.  No part of the income or surplus of a Massachusetts nonprofit corporation may be distributed to its members, directors or officers; however, reasonable compensation may be paid for services rendered to the nonprofit corporation.

This section addresses Massachusetts state law corporate matters.  It does not address federal law, including the distinctions between private foundations and publicly supported nonprofits; these distinctions can have an impact on operational matters.  For example, there are special federal rules that apply to compensation paid by private foundations to insiders.  Please refer to the section on Nonprofit Taxation for information about applicable federal rules.

A nonprofit corporation has an existence of its own, independent of the terms of office or employment of members, directors or officers. It can sue or be sued in its own name and can own real estate in its own name.

Advantages of Incorporation: pros and cons of nonprofit vs. for-profit
The principal advantage of incorporation is that it protects the shareholders or members from personal liability for the obligations and liabilities of the corporation, including unlawful actions of officers, directors and staff acting on its behalf.  In addition, incorporation establishes continuity; corporations (both nonprofit and for-profit) are subject to a body of statutes that provide very specific guidance as to their formation and operation; and incorporation brings stature to the organization and implies stability.

Where profit is not a goal and the enterprise can be funded without the need for access to capital markets, the nonprofit corporation is the preferred vehicle for pursuing social objectives. Although nonprofit corporations are not prohibited from engaging in commercial activities (up to a certain point) or from engaging in activities that generate income, the directors of a nonprofit are duty-bound to devote primary attention to the promotion of the social mission of the corporation rather than the production of net income.

On the other hand, if access to capital markets is needed, a for-profit corporation (or limited liability company, discussed below) is likely to be the preferred option because nonprofit corporations cannot issue capital stock.  The directors of a for-profit corporation, however, owe strict duties to the shareholders to maximize profits and value.  Therefore, unless the directors and managers can tie the social mission of their for-profit corporation directly to its business purpose, they can be sued for breach of their duties to shareholders and for misuse of corporate assets if they focus too much on the social mission and forego profits.  This problem can be avoided where all shareholders agree to pursue a social mission or devote a percentage of revenues to charitable causes but such agreements may be temporary because a change in control—or a drop in earnings—can lead to amendment or abrogation of shareholder agreements.

A nonprofit corporation attains its separate legal status through the filing and approval by the Secretary of the Commonwealth of Massachusetts of its articles of organization. This document is in essence a contract between the state and the nonprofit corporation in which Massachusetts grants individual legal status to the corporation in exchange for the corporation’s commitment to follow its rules.  Under Chapter 180, one or more persons over the age of 17 must act as the corporation’s incorporators and adopt articles of organization, approve by-laws, and elect initial directors, a president, treasurer, and clerk of the corporation.  Once adopted, the articles of organization must be signed by the incorporators and filed, along with a $35 filing fee, with the Secretary of the Commonwealth, Corporations Division, located at One Ashburton Place, 17th floor, Boston, MA 02108-1512.  

The articles of organization must include the following information:
  1. The name and mailing address for each incorporator.  The incorporator does not need to be a resident of Massachusetts.
  2. The name of the corporation, which must be sufficiently distinguishable from any other entity authorized to conduct business in the Commonwealth, include a term indicating that it is incorporated, and not be misleading as to its corporate purpose.
  3. The purpose of the corporation.  For Chapter 180 to apply, the corporation’s purpose must fall within at least one of the categories described in Section 4 of the statute, which include charitable and educational purposes.
  4. The initial fiscal year of the corporation.
  5. The initial principal office of the corporation in Massachusetts.
  6. The name, residence, and mailing address of each of the initial directors (of which there only needs to be one), president, treasurer, and clerk.  None of these persons need to be residents of Massachusetts and one person may hold more than one (or all) of these positions.  
  7. The name and business address of resident agent, if any.  A resident agent is only required if the clerk is not a resident of Massachusetts.

It is also recommended that the articles include provisions (1) granting the corporation power to act as a partner, and (2) allowing the corporation to hold meetings of the members (if any) outside of Massachusetts, but in the United States.

Additional information and electronic versions of applicable forms are available on the Secretary of the Commonwealth’s website at  An electronic version of the template for articles of organization can be accessed at  Note that incorporation as a nonprofit corporation under Chapter 180 does not in itself result in tax exemption for the corporation.  In order to obtain such exemption, the entity must follow appropriate procedures at the federal and state level.  State requirements are described in further detail in paragraph (g) below.  Please refer to the section on Nonprofit Taxation for information about applicable federal rules.

Although a nonprofit organization files for incorporation with the Secretary of the Commonwealth, and has reporting obligations to the Secretary, the nonprofit organization, if it is a “charity” organized or operating in Massachusetts, is also subject to the jurisdiction of the Attorney General.  Under Massachusetts law, there is no statutory definition of a charity, but the Attorney General notes that as a general matter, a nonprofit organization having a primarily charitable purpose, that benefits an indefinite class or number of people, and that is exempt under section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), is considered a charity by the Attorney General, and therefore subject to its oversight. See General FAQs about Charities, (follow “Nonprofits & Charities” hyperlink; then follow “AG’s Oversight & Enforcement Role” hyperlink).  

Relying on Attorney General v. Weymouth Agricultural and Industrial Society, the Attorney General has on occasion asserted its jurisdiction over organizations that do not squarely fit these criteria.  Note that “charity” and “charitable purpose” includes educational and other activities.  Massachusetts law grants the Attorney General the authority to enforce the “due application” of funds held and administered by charities within the Commonwealth. 

Management and Control
A nonprofit corporation is governed by its board of directors, and if applicable, its statutory members.  Massachusetts nonprofit corporations may be organized to have one or more classes of statutory members.  Statutory members should be distinguished from ordinary members who may pay an annual fee in exchange for certain benefits from the nonprofit corporation.  In many ways, statutory members act as shareholders of a for-profit corporation.  In a nonprofit corporation with statutory members, the statutory members elect the directors and vote on major corporate decisions, such as amendments to the articles of organization and in some cases the by-laws of the corporation, and thus have significant control over the nonprofit corporation. In a nonprofit corporation without statutory members, the directors act in place of the statutory members.

Once the nonprofit corporation has been established, the initial board of directors should act (at a meeting in person or by unanimous written consent) to ratify the actions taken by the incorporators in connection with the initial formation of the corporation and to adopt bylaws which set forth the rules and procedures governing the decision-making process of the members (if any) and the board of directors as well as the general operation and management of the corporation consistent with the applicable statutes of Massachusetts and the articles of organization.

Typically, the bylaws of a nonprofit corporation contain provisions governing member, director and officer qualifications, powers, and duties; voting; filling of vacancies; meetings; property holding and transfer; indemnification of directors and officers; committees; bank accounts; fiscal year audits and financial reports; conflicts of interest; and amendment and dissolution procedures.

Liability of Members, Directors and Officers
In Massachusetts, directors, officers, and members (if any) of nonprofit corporations are, generally, not personally liable for contracts entered into by the corporation.  Chapter 180 also allows a nonprofit corporation to indemnify any person affiliated with the corporation, as long as that person acts in good faith with the reasonable belief that her actions are in the best interests of the organization. Directors and officers owe a duty of care and a duty of loyalty to the corporation and are required by statute to act in good faith, to exercise the level of care expected of a reasonable, similarly-situated person, and to act in a manner reasonably believed to be in the best interests of the corporation.  In discharging their duties, directors and officers are entitled to rely on information and opinions from retained professional advisors, officers or employees of the corporation who are reasonably believed to be reliable and competent, and may delegate certain decisions to committees of the board.

Massachusetts law also provides certain limitations on liability for charities and their leadership.  The cap on liability for charitable corporations is $20,000, excluding costs and interest, as long as the organization was engaging in activities that contribute directly to its charitable purposes and are non-commercial in nature. Officers and directors serving charitable corporations as uncompensated volunteers are protected by statute from any personal liability for negligent acts or omissions taken in connection with the individual’s corporate duties unless those acts or omissions were intentional or grossly negligent.

Volunteers for charitable organizations are not given special protection under Massachusetts law, but the federal Volunteer Protection Act of 1997 (the “VPA”) fills this gap by providing immunity to volunteers.  It shields them from any claim arising from acts performed within the scope of the volunteer’s responsibilities in the organization, provided the conduct was not of a particularly egregious variety.  The VPA includes no specific limitation to claims in tort.  However, to date, the VPA has been invoked in only one recorded case (not in Massachusetts), and it is only rarely cited in published commentaries.

Mergers, Acquisitions and Dissolution
Under Massachusetts law, any two or more corporations can merge by entering into a merger agreement; however, if one of the corporations is a Massachusetts charitable corporation, the surviving corporation must be a Massachusetts charitable corporation.  Note that this means that if a Massachusetts nonprofit corporation merges with an out-of-state corporation, the Massachusetts nonprofit corporation must be the surviving entity.  The merger agreement must set forth the names of the merging entities and the name of the surviving corporation, the purposes of the surviving corporation, and the terms of the merger.  If one of the corporations had capital stock, the merger agreement must detail the method of cancelling such stock.  The merger agreement must then be adopted by two-thirds of the members qualified to vote for each corporation.  Upon corporate approval, articles of merger must then be filed with the Secretary of the Commonwealth, Corporations Division, along with the filing fee of $35, for the merger to be effective. 

A Massachusetts charitable corporation must provide at least 30 days advance notice to the Attorney General’s office of any sale, lease, exchange, or other disposition of substantially all of its assets if the transaction will result in a material change in the nature of the organization’s activities. There are no established definitions of “substantially all” of a charitable corporation’s assets and “material change” in this context; as a result, a corporation will need to consider whether the transaction requires notice to the Attorney General’s office.  Charitable corporations can expect the Attorney General’s office to pay particular attention to the value received by the charity in exchange for the assets, whether any of the charity’s assets are being used for non-exempt purposes or are leaving the state, and whether the assets carry donor restrictions or other limitations on the use of the assets.  The Attorney General may impose conditions on the transaction. 

The process for dissolution of a Massachusetts nonprofit corporation depends on whether the corporation is charitable for purposes of Massachusetts law (see discussion under section 1(c) above).  For those that are not charitable entities, a majority vote of members qualified to vote can authorize a petition for dissolution.  Once it has been authorized, the petition must be filed with either the Supreme Judicial Court or a Superior Court detailing the grounds for the application.  After a hearing, the court may decree dissolution.  Charitable nonprofit corporations must obtain a majority vote of the board of directors, the petition must be approved by the Attorney General’s office, and the petition must be filed with the Supreme Judicial Court of Massachusetts.  Charitable corporations are well advised to consult with the Attorney General’s office before submitting a petition to the Court.  Further information from the Attorney General and sample packets for dissolving a charitable corporation in Massachusetts can be found at and and

Recordkeeping, State Reports and State Taxes
All Massachusetts nonprofit corporations must file an annual report with the Secretary of the Commonwealth, accompanied by a filing fee of $15 and must also notify the Secretary of the Commonwealth in writing of the occurrence of certain events (such as relocation of its principal office or changes in its registered agent, directors, or statutory officers).  Failure to file the annual report for two successive years can result in the revocation of the nonprofit corporation’s charter by the Secretary of the Commonwealth, although this penalty has not been enforced in recent years.  Charitable corporations are also required to register with the Attorney General’s office before commencing operations or raising funds in Massachusetts and must file thereafter an annual report with the Attorney General’s Nonprofit Organizations/Public Charities Division, located at One Ashburton Place Boston, MA 02l08  on the “Form PC,” accompanied by a filing fee that is determined based on the corporation’s gross support and revenue for the most recent fiscal year (for more information see

Nonprofit corporations must also observe the formalities of the corporate form, such as holding regular meetings (or taking action by written consent) of its directors (and members, if any), maintaining corporate minutes, properly accounting for the property of the corporation, and avoiding the commingling of funds of the corporation with those of its directors, officers, or members.   

Massachusetts nonprofit corporations that are recognized by the Internal Revenue Service (“IRS”) as tax-exempt organizations under section 501(c)(3) of the Code may apply for exemption from Massachusetts corporate excise (income) tax.  To apply, the corporation must register with the Massachusetts Department of Revenue (“DOR”), either online at or by completing and submitting Form TA-1, and submit a copy of the following supplemental documents: (1) the IRS determination letter granting the corporation 501(c)(3) status, (2) the Articles of Organization filed with the Massachusetts Secretary of State, and (3) the IRS Employer Federal Identification Number, if it is not stated on the determination letter.  The application should be forwarded to the Bureau of Desk Audit, Nonprofit Corporations Unit, 200 Arlington St., Room 4300, Chelsea, MA 02150 or faxed to (617) 887-5059.  If, however, a nonprofit corporation regularly engages in a business activity unrelated to the exempt purposes of the organization, any income stemming from such activity is considered “unrelated” and generally subject to taxation both at the federal and state levels.

Massachusetts nonprofit corporations that are recognized by the IRS as tax-exempt organizations may also apply for exemption from Massachusetts sales and use tax.  The organization may apply online for the exemption at  It may take up to three to four weeks to receive the Certificate of Exemption, Form ST-2.  Once the certificate is received, the organization must save the original and make several copies of it.  When the organization purchases goods that will be used in service of its stated charitable purposes, it may present a copy of the Certificate of Exemption and avoid payment of sales tax on the goods.  The vendor may ask for both a copy of the Certificate of Exemption and a Form ST-5, Sales Tax Exempt Purchaser Certificate.  Form ST-5 can be downloaded from the following website and filled out in advance:

Nonprofit corporations may also be exempt from the requirement to collect sales tax on sales of tangible personal property sold by the organization for fundraising purposes.  Such sales are exempt as “casual and isolated sales” if: (1) the organization does not make sales of the same type of property in the regular course of business and (2) amounts derived from such sales are used to further the organization’s exempt purpose.  If these tests are met, the number of such sales made in a calendar year is immaterial.  The Commissioner of Revenue generally presumes that amounts derived from the sale of tangible personal property purchased for fundraising activities are used to further the organization’s exempt purpose.

Generally, all property – real and personal – is subject to taxation by cities and towns in Massachusetts; however, an exception to this tax is made in the case of certain charitable organizations, also referred to as “qualifying nonprofits.”  Qualifying nonprofits are charitable corporations that are established for “literary, benevolent, charitable, scientific or temperance purposes.”  A significant body of Massachusetts case law has established criteria for the determination of what qualifies as charitable in the context of the property tax exemption.  Each such organization that claims relief from Massachusetts property tax must affirmatively prove that it was organized and in fact operates as an organization that meets the statutory definition of “charitable” as clarified by such case law.   In addition, only charitable trusts or charitable corporations are eligible for the property tax exemption.  Non-corporate entities such as LLCs that operate as charitable organizations are ineligible since LLCs do not qualify as corporations under Massachusetts law.  

Nearly every type of activity by a nonprofit corporation can become the target of some kind of a claim by a firm or an individual that alleges damage or injury by the corporation or individuals responsible for it (i.e., directors, officers or employees). Even if the claim is without merit, the costs of defending against the claim can be very substantial.

To encourage qualified individuals to accept positions as directors and officers, many nonprofit corporations purchase insurance to cover director and officer (D&O) liability.  In addition, most responsible nonprofit corporations purchase a basic comprehensive general liability policy that covers liability for accidents in the corporation’s offices, at sponsored meetings and the like. 

Massachusetts law does provide for limitations on liability for uncompensated charitable directors and officers, as well as for charitable corporations, as described in Section 1(e) above.  However, liability insurance for nonprofit corporations is often a very complicated matter.  Consultation with an experienced and knowledgeable agent or consultant is essential in order to obtain the right coverage at the lowest premium.

  • Oleck and Stewart, Non-Profit Corporations, Organizations & Associations (Prentice-Hall, 1994, Cum. Supp. 2002).
  • Jacobs, Jerald A., Association Law Handbook (ASAE & The Center for Association Leadership 4th ed., 2007).
  • Nonprofit Governance and Management (American Bar Association and American Society of Corporate Secretaries, 2002).
  • Guide to Nonprofit Corporate Governance in the Wake of Sarbanes-Oxley (American Bar Association Section of Business Law, 2005).
  • Guidebook for Directors of Nonprofit Corporations (American Bar Association Section of Business Law 2d ed., 2002).
  • Nonprofits and Charities, Office of the Attorney General, cagotopic&L=2&L0=Home&L1=Non-Profits+%26+Charities&sid=Cago.
  • Nonprofit Corporation Information, Secretary of the Commonwealth,

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