Since 1968, Louisiana law has recognized nonprofit corporations as a distinct business entity, providing organizations with a structured legal framework to pursue charitable, religious, educational, and other nonprofit purposes while benefiting from important legal and financial advantages. In 2015, Louisiana enacted the current Louisiana Nonprofit Corporation Act (the “Louisiana Nonprofit Act”),[1] which modernized governance, clarified member and director rights and obligations, and aligned with aspects of the Louisiana Business Corporation Act. By incorporating as a nonprofit corporation, organizations can gain limited liability protection for its founders, members and directors, ensuring that personal assets are not at risk for the organization’s debts or legal obligations. Nonprofit corporations may also qualify for federal and state tax-exempt status, allowing the organization to receive tax-deductible donations and grants that can significantly enhance funding opportunities; however, to take full advantage of these benefits, it is crucial to understand and comply with both state and federal laws and regulations.

1. Forming a Nonprofit Corporation in Louisiana

The two primary organizational documents of any nonprofit corporation are its articles of incorporation and bylaws.

(a) Nonprofit Articles of Incorporation

The articles of incorporation serve as the legal foundation of a nonprofit corporation in Louisiana, officially establishing it as a legal entity once filed with the Louisiana Secretary of State. Properly drafting this document is crucial for compliance with state law and for securing federal tax-exempt status.

Under the Louisiana Nonprofit Act,[2] the articles of incorporation must contain certain mandatory provisions in order for a nonprofit corporation to be validly formed and registered in Louisiana, including:

  • the name of the corporation;
  • the purpose for which the corporation is formed;
  • the duration of the corporation (perpetual or limited);
  • that is a nonprofit corporation;
  • the location and address of its registered office;
  • the name and address of its registered agent;
  • the names, addresses, and terms of office of the initial directors; and
  • whether the corporation is to be formed on a stock basis or a non-stock basis, or both;[3] and
  • the taxpayer identification number of the nonprofit corporation.

In addition to these mandatory provisions, the Louisiana Nonprofit Act permits nonprofit corporations to include a range of optional provisions that allow the incorporators to shape the organization’s governance and structure, including:

  • whether the nonprofit will have members and, if so, what rights or classes of membership exist;
  • how assets will be distributed upon dissolution, which is especially important for nonprofits seeking federal tax-exempt status; and
  • whether directors and officers will be shielded from certain liabilities to the fullest extent permitted by law.

The articles of incorporation may also provide governance rules for the organization such as director qualifications, quorum or voting requirements, and amendment procedures, which enhance organizational stability, reduces the likelihood of disputes, and demonstrates to regulators, donors, and funding organizations that the nonprofit has adopted a strong and deliberate governance framework from the outset.

(b) Nonprofit Bylaws

While the articles of incorporation establish a nonprofit corporation as a legal entity, the bylaws serve as the organization’s internal operating manual. Although not mandatory under the Louisiana Nonprofit Act, like the articles of incorporation, a clear and comprehensive set of bylaws is critical to a nonprofit corporation’s success, as they provide organizational clarity, reduce the potential for conflict among the organization’s stakeholders, and ensure the organization operates consistently with applicable federal and state law and its stated mission.

Unlike the articles of incorporation, the Louisiana Nonprofit Act does not impose a fixed set of mandatory bylaw provisions. Rather, bylaws are intentionally flexible, and can be tailored to the unique needs, size, and mission of each organization. That said, certain provisions are universally recommended and should be included in every set of bylaws, including:

  • the structure of the board of directors, including the number of directors, their qualifications, terms of office, and the process for their election or appointment;
  • the roles and duties of officers, such as the president, secretary, and treasurer, to ensure clarity in day-to-day operations;
  • meeting procedures for both the board and members, such as notice requirements, quorum rules, and voting procedures, to establish consistent decision-making practices;
  • if the nonprofit corporation has members, membership rights and eligibility, classes of membership, and termination procedures; and
  • a process for amending the bylaws, providing a clear method for adapting the governance framework as the organization evolves.

In addition to these core provisions, a nonprofit corporation may benefit from including additional guidelines tailored to its distinct operations and risk profile, such as director qualifications (e.g., residency or professional expertise), conflict-of-interest policies to promote ethical decision-making, the establishment of committees to handle specific functions, and indemnification provisions to protect directors and officers from personal liability to the fullest extent permitted by law. Bylaws may also address financial oversight responsibilities, including budgeting, audits, and fiscal controls. Including these provisions not only promotes transparency and accountability, but also demonstrates to donors, funding organizations, and regulators that the nonprofit corporation has adopted a strong governance framework. Ultimately, strategically written bylaws help build trust with stakeholders, safeguard the organization against internal disputes, and ensure the nonprofit corporation is equipped to carry out its mission effectively over the long term.

(c) Key Structural Considerations for Louisiana Nonprofits

When forming a nonprofit corporation in Louisiana, organizers must make important structural decisions that shape how the organization will be governed and how it interacts with its stakeholders. Two of the most significant considerations are whether the nonprofit will have members and whether it will be formed on a stock or non-stock basis.

(i) Nonprofit Membership

A Louisiana nonprofit corporation may be formed either with or without members. Members of a nonprofit corporation function similarly to shareholders in a for-profit corporation, though without any ownership rights in the organization. Members may be granted voting power to elect directors, approve amendments to the articles of incorporation or bylaws, and authorize other significant corporate actions. Member-based nonprofit corporations are common for trade associations, professional and advocacy groups, and organizations where active participation and accountability to a defined constituency are central to the mission of the organization.

By contrast, many Louisiana nonprofit corporations choose to operate without members, with governance and operational authority residing solely with the board of directors. This structure simplifies decision-making, reduces administrative costs, and insulates the organization from membership disputes. For most public charities, especially those seeking federal tax-exempt status, this structure is often preferable because it allows the directors to focus on the organization’s mission without navigating internal politics.

(ii) Stock vs. Non-Stock Basis

Louisiana law also requires the articles of incorporation to provide whether the nonprofit corporation will be organized on a “stock” or “non-stock” basis, or both. In practice, most Louisiana nonprofit corporations are formed on a non-stock basis, meaning the organization does not issue shares of stock and ownership is not divided into transferable equity interests, reinforcing the nonprofit corporation’s mission-driven character and ensuring that organizational assets remain dedicated to nonprofit purposes. By contrast, a stock-based nonprofit corporation, while rare, is permitted, and may be useful in certain circumstances, such as cooperative-style organizations where issuing stock to members facilitates participation or financing. Regardless of the approach, the nonprofit must operate without distributing profits to private individuals, consistent with the Louisiana Nonprofit Act and federal tax-exemption requirements.

2. Federal Tax-Exempt Status of a Nonprofit Corporation

Creating a nonprofit corporation under Louisiana law establishes the organization at the state level, but securing federal tax-exempt status is essential to unlock the financial and fundraising benefits on which most nonprofit organizations depend. To obtain exemption from federal income tax and the ability to receive tax-deductible donations, an organization must apply for recognition as a tax-exempt entity with the Internal Revenue Service (“IRS”). For most charitable organizations, this means seeking recognition under Section 501(c)(3) of the Internal Revenue Code.[4]

The application requires detailed disclosures regarding the nonprofit corporation’s structure, governance, programs, and finances, to confirm that the organization is both organized and operated exclusively for exempt purposes and that none of its earnings improperly benefit private individuals. Because the tax exemption application process can be technical and time-intensive, many nonprofit corporations seek assistance from legal or accounting professionals to draft compliant organizational documents, prepare accurate financial disclosures, and ensure adherence to IRS requirements. A well-prepared application improves the chances of prompt approval and provides the organization with a strong foundation for long-term success.

Conclusion

Establishing and operating a nonprofit corporation in Louisiana is a complex process that requires both careful planning and strict adherence to statutory requirements. The articles of incorporation and bylaws form the foundation of the organization, while structural decisions regarding membership and governance dictate how the nonprofit corporation will function over time. A properly structured Louisiana nonprofit corporation provides a durable framework for carrying out charitable, educational, religious, or civic purposes, allowing the organization to make a meaningful impact on its community and the purposes it serves.

Forming and operating a nonprofit corporation in Louisiana involves important legal and structural considerations. Experienced legal counsel can guide you through the formation process, ensure compliance with state and federal requirements, and help you establish a strong foundation so that your organization can focus on achieving its mission.

Tim Robinson is a member of the Business & Corporate group and practices in the firm’s Baton Rouge office. Tim advises clients on the legal aspects of commercial agreements, corporate governance, and business transactions. Committed to serving as outside counsel, Tim helps businesses navigate complex legal issues while maximizing operation efficiency and protecting their long-term investments.

[1] La. R.S. 12:201-12:269.

[2] La. R.S. 12:203.

[3] La. R.S. 12:203B(10)-(11) provides certain additional mandatory provisions depending on whether the nonprofit corporation is organized on a stock or non-stock basis.

[4] Section 501(c)(3) tax-exempt status is the most common for charitable, religious, and educational organizations; however, the Internal Revenue Code provides additional exemptions for other types of nonprofits, including social welfare organizations under §501(c)(4), labor and agricultural organizations under §501(c)(5), business leagues and trade associations under §501(c)(6), and social clubs under §501(c)(7). Each classification carries its own eligibility requirements and limitations on activities.