The chart below outlines the two structures available for non-profit organizations in Rhode Island. It is best to consult with an attorney about which structure is best suited for your organization.
|Non-Profit Corporation||Charitable Trust|
|Who are the owners?||No owners, governed by Board of Directors (minimum of 3 directors).||No owners, governed by the Trustees.|
|What are the governing documents?||Bylaws.||A will, indenture, and/or other Trust Instrument.|
|What is the source of initial business funding?||Grants, individual contributions/donations, fees for services.||A will, indenture, and/or other Trust Instrument.|
|Who is liable?||The corporation is liable for debts. Directors/Employees are not personally liable for debts of the corporation||The trust is liable for debts. Trustees/Employees are not personally libale for debts of the trust.|
|Who receives profits?||Profits cannot be distributed among members or officers. Profits can only be used to pursue its stated purpose.||Profits cannot be distributed among trustees or employees. Profits can only be used to pursue its stated purpose.|
|What income taxes must be paid?||There is no Rhode Island income tax*. The organization may owe federal income tax unless it was granted tax exempt status by the IRS.||There is no Rhode Island income tax*. The trust may owe federal income tax unless it was granted tax exempt status by the IRS.|
|What are the initial and annual filing obligations in RI?||File Articles of Incorporation with the RI Department of State ($35). Submit an annual report to the RI Department of State between June 1 and 30 each year, excluding the year of incorporation ($20).||File a Charitable Trust Registration Statement with the RI Attorney General ($50). Submit an annual report to the RI Attorney General by July 1 of each year ($50).|
A Charitable Trust can also be registered as a non-profit corporation. For more information on Charitable Trusts see the Attorney General’s Website.
*Non-profit corporations can generate unrelated business income by regularly performing a trade or business activity that is not substantially related to its exempt purpose. Unrelated business income over $1,000 must be reported to the IRS and the RI Division of Taxation. Learn more.
Back: Tax Exempt Status Next: Cost and Fees