Ohio
Updates
What You’ll Learn
If you’re a nonprofit in Ohio, or you’re a nonprofit considering fundraising or other activities in Ohio, you must understand the requirements that Ohio has established for nonprofits operating in the state.
How can you become familiar with these laws? Where should you start?
Start here. This state profile includes the basic requirements nonprofits must consider. Reading the profile and implementing appropriate compliance measures will help you prepare your organization for success in Ohio.
Getting to Know the State Nonprofit Corporation Law
Background
*Important primarily for nonprofits incorporated in Ohio
Emma Woodhouse, handsome, clever, and rich, with a comfortable home and happy disposition, seemed to unite some of the best blessings of existence; and had lived nearly twenty-one years in the world with very little to distress or vex her. She was the youngest of the two daughters of a most affectionate, indulgent father; and had, in consequence of her sister’s marriage, been mistress of his house from a very early period. Her mother had died too long ago for her to have more than an indistinct remembrance of her caresses; and her place had been supplied by an excellent woman as governess, who had fallen little short of a mother in affection.
- Emma, Jane Austen
When reading a novel, we get to know a fictional character by the author’s description. The author tells us about the character’s appearance, purpose, actions, mannerisms, and values.
Nonprofit corporations are something like fictional characters.
We learn how a nonprofit will look and act and make decisions not by reading a novel, but by reading the state law (called the nonprofit corporation act) and the rules the nonprofit makes for itself (called the bylaws and articles of incorporation). The law and the organization’s own rules tell us the organization’s name, purpose, way of acting, and method of making decisions.
To get to know your own nonprofit, be sure to review the sections below.
State Nonprofit Corporation Law
Corporate Governance
Conflict Transactions: Ohio Rev. Code § 1702.301; Need to review the basic best practices for conflicted transactions? See Bylaws Module 14: Conflicts of Interest.
Director Standards of Conduct: Ohio Rev. Code § 1702.30(B); Need a refresher on the role of directors? See Bylaws Module 6: Directors.
Members: Eligibility and Statutory Powers Ohio Rev. Code § 1702.13; Not sure what a “member” is? Need to review the basics? See Bylaws Module 5: Members.
Indemnification: Ohio Rev. Code. 1702.12 § (E)(1); Not sure what “indemnification” is? Need to review the basics? See Bylaws Module 8: Indemnification.
For Religious Nonprofits
Nonprofit Religious Corporation Act: Ohio’s nonprofit corporation law lacks: (a) specific provisions permitting the formation of nonprofit religious corporations; (b) specific protections for religious exercise at faith-based organizations, and (c) express acknowledgement of an option for nonprofits to incorporate for religious purposes. Ohio Rev. Code §§ 1712 and 1715.; Confused about what it means to be a religious nonprofit corporation? See our whitepaper “Why a Religious Corporation?”
Reliance on Religious Guidance in Governance: Ohio law permits a director, in the fulfillment of the director’s fiduciary duties, to rely on the opinion of individuals who can reasonably be assumed to have expertise on a certain matter, but does not expressly allow a director to rely on guidance from religious figures within his or her faith tradition. Ohio Rev. Code § 1702.30
Understanding Religious Liberty in this State
Case Study
*Important for all nonprofits doing business in Ohio, whether incorporated in Ohio or elsewhere
The religious education and formation of students is the very reason for the existence of most private religious schools, and therefore the selection and supervision of the teachers upon whom the schools rely to do this work lie at the core of their mission. Judicial review of the way in which religious schools discharge those responsibilities would undermine the independence of religious institutions in a way that the First Amendment does not tolerate.
- Our Lady of Guadalupe School v. Morrisey-Berru, 140 S. Ct. 2049 (2020).
Sometimes, the state or local government (like the city or county) makes laws that could conflict with your organization’s free exercise of religion or its sincerely-held religious beliefs.
For example, a law might require employers not to make faith-based distinctions between job candidates. If your organization’s mission is to pass on the teachings of your faith, you will need to make faith-based distinctions in evaluating candidates because their faith commitments will impact their abilities to partner in your mission and witness the faith to your program participants.
So what do you need to do? Be aware of the laws listed below. If any of the laws impact your organization—for example, if you are an employer or a facility open to the public—learn more about how you can protect yourself by reviewing Napa Legal’s religious liberty resources. Talk to an attorney if you have specific concerns.
Religious Liberty Protections
State Religious Freedom Restoration Act: Ohio has not enacted a RFRA and has enacted nondiscrimination laws that conflict with the beliefs of many religious organizations. Not sure what a “religious freedom restoration act” is? Click here to learn the fundamentals.
State Constitutional Protection of Free Exercise: The Ohio Constitution has been interpreted by the Ohio Supreme Court to provide stronger protections for religious free exercise or worship than the federal First Amendment. Oh. Const. art, I, § 7, see also Humphrey v. Lane, 89 Ohio St. 3d 62
State Blaine Amendment: The Ohio Constitution contains a Blaine Amendment that could prevent the participation of faith-based schools in generally available public benefit programs on the same terms as similarly situated secular schools. This is not as broad as a general Blaine Amendment, which prohibits all aid to faith-based institutions, but is still detrimental to the work of faith-based institutions. Current U.S. Supreme Court precedent has rendered this language ineffective, but it could become effective in the future if Court precedent changes. Oh. Const. art. VI, §§ 1 and 2 see also Zelman v. Simmons-Harris, 536 U.S. 639, 122 S. Ct. 2460 (2002) allowing Ohio’s Education Voucher system. Not sure what a Blaine Amendment is? Review the basics here.
Other Relevant State Laws and Regulations
Ohio currently has a statewide public accommodation law that does not include protections for faith-based organizations. Be sure you understand this and any local regulations that may apply to your organization.
Religious Freedom and Public Accommodation Laws: Ohio’s nondiscrimination laws generally restrict religious freedom for religious organizations that offer public programming and facilities but provide accommodations or exemptions for the vast majority of religious organizations. Ohio Rev. Code § 4112.02(G); Not sure what a public accommodation law is or what it means for your organization’s religious liberty? Learn the basics in this article which discusses the issue in the context of the case Fulton v. City of Philadelphia.
Protections for Religious Exercise in State of Emergency: Ohio law has no explicit constitutional or statutory protections for religious exercise during a time of emergency.
Key Employment Laws and Regulations
In addition to tracking with the protected classes in the federal anti-discrimination employment law (race, color, religion, sex, and national origin), Title VII of the Civil Rights Act of 1964, Ohio prohibits employers from discriminating on the basis of military status, disability, age, and ancestry. An employer is any person who has four or more employees in the state. No religious exemptions apply to this requirement. Local governments may also have employment-related regulations. An attorney can help you understand what requirements apply to your organization.
Religious Freedom for Faith-Based Employers: Ohio Rev. Code § 4112.02(O); Need to review the basics on religious freedom and employment matters? Walk through a self-audit of best practices here.
Religious Freedom for Employees: Not Present
Conducting Activities or Programs in this State
Understanding the Business Registration Requirement
*Important primarily for nonprofits doing business in Ohio but incorporated elsewhere
If you are fundraising or conducting activities in this state, you must consider whether you need to register as a foreign nonprofit corporation. The state law requires entities that are transacting business in the state to register. An attorney can help you decide whether you need to register based on the type and volume of activities you have in this state.
Business Registration Statute
Fundraising and Charitable Registration in This State
How to Know (And What to D0) If You're Fundraising In This State
*Important for both Ohio and Foreign Nonprofits
Not sure what “charitable registration” is? Need to review the basics? Read this article for a refresher.
In this state, organizations are generally required to register prior to soliciting for donations. However, the registration requirement has a religious exemption. Religious organizations must apply for this exemption; the religious organization exemption is not automatic.
This state has both a Charitable Trust Act (Ohio Rev. Code §§ 109.23 – 109.33), which applies to organizations holding charitable assets in the state, and a Charitable Organizations Act (Ohio Rev. Code Ch. 1716), which applies to organizations soliciting contributions from residents in the state. In this state, organizations can file to request exemption from registration if the organization (1) receives fewer than $25,000 dollars annually (“excluding grants or awards from the government or an organization that is exempt from federal income taxation under section 501(a) and described in section 501(c)(3) of the Internal Revenue Code”), and (2) does not use a professional solicitor. The statute does not specify whether the $25,000 maximum is based on total revenue in Ohio or total revenue regardless of source.
If You're Fundraising In Multiple States, Make Sure You Understand the URS
Organizations that are required to register do not have the option of registering through the Unified Registration Statement, which is a standardized charitable registration accepted in many states (“URS”). Rather, organizations in Ohio must use Ohio’s online charitable registration system.
Evaluate Whether You'll Need a Registered Agent
Some states require organizations to appoint a "registered agent" in the state as part of the organization's charitable registration. Although appointing a “registration agent” is not required with respect to charitable registration, any entity registered with the Ohio Secretary of State is required to continuously maintain a “statutory agent” whose address is located in Ohio. Ohio Rev. Code §§ 1701.07; 1702.06; 1703.24
Follow the Rules About Communicating with the Public
Under Ohio Rev. Code § 1716.10, this state requires organizations to include specific statements whenever the organizations is requesting donations (also called "charitable solicitation"). Below is sample language to use with charitable solicitations in this state:
This request is made on behalf of *ORG*, located in *PRINCIPLE PLACE OF BUSINESS*. *ORG* is exempt from federal income tax under Internal Revenue Code Section 501(c)(3).
Charitable Registration Statute
Charitable Registration Exemption Statute
Annual Report Requirement
Audit Requirements: Ohio does not require the submission of reviewed or audited financials as a condition of maintaining authorization to fundraise in the state. See Ohio Rev. Code § 1716.04ll
Get Acquainted with State and Local Taxes and Exemptions
State and Local Taxes
*Important for all nonprofits doing business in Ohio, whether incorporated in Ohio or elsewhere
In this state, organizations which have received federal income tax exemption under IRC § 501(c)(3) are automatically exempt from state income tax. Some organizations may choose to send a copy of their IRS determination letter to the state department of revenue to indicate the organization’s position that it qualifies for the exemption.
It is important to consider whether applying for sales and use tax and property tax exemption would be appropriate for your organization. Generally, nonprofit corporations are not subject to the Ohio Commercial Activity Tax. However, a nonprofit corporation may have to pay Ohio sales and use taxes on sales and purchases, except in certain circumstances, and a nonprofit corporation that makes sales may have to obtain a vendor’s license in Ohio. An accountant or attorney can provide specific answers to these questions.
Corporate Income Tax Statute
Ohio imposes a corporate income tax but automatically exempts organizations with federal 501(c)(3) exempt status. Ohio Rev. Code § 5751.01(e)(8)
Corporate Franchise Tax Statute
Not Present
Corporate Gross Receipts Tax: Not Present
What You Need to Know About Sales Tax
Sales and Use Tax: Ohio imposes a sales and use tax on religious organizations’ sales and only provides limited exemptions. Ohio imposes a sales and use tax on religious organizations’ purchases but generally provides a broad and comprehensive, entity-based tax exemption for 501(c)(3) religious organizations’ purchases upon application. Ohio Rev. Code § 5739.02
State Tax Treatment of Unrelated Business Income: Not Present
Property Tax: Ohio imposes property tax but, upon application, generally provides an exemption to religious organizations for property used for religious and/or charitable purposes. Ohio Rev. Code § 5713.07
State-Specific Special Requirements
Miscellaneous
Useful Links
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Legal Disclaimer
This resource contains general educational information related to legal concepts, but this information does not constitute legal advice. Anyone seeking legal advice is strongly encouraged to consult with a licensed attorney regarding any of the matters discussed herein. Although licensed attorneys work with Napa Legal, Napa Legal is not a law firm and does not undertake legal representation on behalf of any clients. Further, no licensed attorney working with or on behalf of Napa Legal agrees to undertake legal representation on behalf of any client unless the terms of such representation are set forth in a separate, written representation agreement.
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**Please note that the following state profiles are forthcoming and will be published soon:Hawaii and Washington