Becoming incorporated at the state level as a non-profit corporation and being granted status as a 501(c)(3) at the federal level are two different events.
The primary benefit of being incorporated is that it changes your group into a legal entity instead of a collection of individuals which affords your board membes some protection in lawsuits.
The other benefit is that the organization exists in perpetuity - it continues to exist unless it is dissolved.
1) Yes, you need to obtain the 501(c)(3) to have donations tax deductible.
2) The perpetuity part doesn't change. What the IRS wants is a clause detailing where the organizations assets go if you
choose to dissolve it. They have very specific language that needs to be used in your organizing instrument and you can pick it up from the instructions. Most PTOs have it that the assets would go to the school/school district and
if they cease to exist, then another 501(c)(3) org.
When we filed we failed to include that second part, so ours wasn't accepted. The reviewer contacted me and we had to write a letter outlining the change to our constitution (we're not incorporated) and have at least two officers sign saying it would be adopted at the next general meeting. So they may accept a certfication that the change is in process rather than waiting for you to file the change.
Lastly, there is an exception for certain states:
Line 2c. Operation of state law. If you are a corporation formed in the following states, then you do not need a specific provision in your articles of incorporation providing for the distribution of assets upon dissolution.
- Arkansas
- California
- Louisiana
- Ohio
- Oklahoma
- Minnesota
- Missouri
- Massachusetts
Otherwise, you need to include the dissolution clause. And be sure to use the IRS boilerplate version.
