Obtaining a legal status allows the chapter to operate independently and have greater control over their own finances, governance, and strategy.
Chapters can obtain legal status through various means such as federal tax exemptions (501(c)(3), 501(c)(6)), fiscal sponsorship, registering as an LLC, or incorporating within your state.
YNPN strongly recommends that every chapter acquire their own legal status as part of affiliating with YNPN National.
If chapters do not have already have certification of their federal tax status, National can offer technical support and resource guides to chapters looking to obtain their various legal statuses.
What does it mean to be incorporated?
Incorporating means having your organization formally recognized by your state of incorporation.
To incorporate the organization must be structured according to specific state laws. These laws include having a "creating document" commonly known as the articles of incorporation, and rules of operation, which are commonly known as bylaws. Usually, there is a board of directors and officers, and state laws (usually) limit the liability of members in varying degrees.
Unincorporated organizations is still a formal structure with an official structure. However, a constitution or other policies may take the place of the articles of incorporation, and there is no protection against personal liability.
Individual states, and not the federal government, grant official nonprofit status. They may do so in slightly different ways, and give slightly different advantages for obtaining it. However, the federal government can recognize your nonprofit status. If you want to apply for tax-exemption, for example, you must be recognized as nonprofit by the federal government.
Federal Tax Exemptions
A first important distinction to make is that granting nonprofit status is done by the state whereas tax-exempt designation (such as 501(c)(3), the charitable tax-exemption) is granted by the federal government in the form of the IRS.
Whether or not you incorporate, you can apply for Federal Tax Exemptions.
Learn more about different kinds of legal statuses and processes of getting a legal status here.