Articles of IncorporationBylawsFederal 501(c)(3) Status Legal Responsibilities

Articles of Incorporation

Articles of Incorporation and Bylaws are the museum’s two governing documents. By incorporating, an organization ensures that its assets are tied to the institution rather than individuals associated with it. To establish itself as a nonprofit organization, a museum needs to have both documents, Articles of Incorporation and Bylaws. This section explains the Articles of Incorporation. Succeeding sections explain how to write Bylaws and how to apply for tax-exempt status with the Internal Revenue Service.

The Articles of Incorporation establish the organization as an entity in the state in which it is located. The Articles usually declare the organization’s nonprofit status, its intent to follow federal rules for tax-exempt status, its rights to hold property and receive gifts, and provisions for disposal of its assets upon its dissolution. The Secretary of State’s office within each state can provide specific information on how to become incorporated in that state.

Museums can generally be divided into one of three categories: 1) a for-profit corporation, whose assets are held for the benefits of its stockholders, and whose Board is subject to oversight by the stockholders, 2) a private trust, whose assets are administered for the benefit of specific beneficiaries named in the trust, and 3) a public charitable corporation, a nonprofit corporation that holds its property for the benefit of the public and is governed by a Board held responsible by the state for ensuring that benefit. Most museums file Articles as nonprofit corporations so that they may pursue the tax exemptions that are explained in the section on federal 501(c)(3) tax-exempt status below.

Internal Revenue Service instructions include examples of Articles of Incorporation for a Nonprofit Corporation and for a Private Trust or Foundation. Bear in mind that requirements for these instruments may vary under applicable state law, so check to see your state’s specific requirements.

NonProfitAlly, a community website that advises nonprofits, includes an explanation of how to file the Articles as well as annotated sample Articles. This website is particularly helpful because it includes the specific required IRS language, explanations of that language, notes of what language is required by most states, and advice on how submitted language might be amended in the future. In addition, NonProfitAlly also has links to each state’s Incorporation Office, Taxation Office, and Attorney General’s Office.


The Bylaws are the internal rules under which an organization runs. The Internal Revenue Service requires that all incorporated organizations have a set of Bylaws but does not specify what the Bylaws must contain.

According to the widely used handbook Museum Administration 2.0, the Bylaws should, at a minimum, specify:

  • The name and purpose of the museum.
  • The number, selection, roles, responsibilities (including committees), terms, and process for removal of Board members.
  • Titles, duties, selection, and process for removal of Board officers.
  • Rules and procedures for Board meetings.
  • Responsibilities of professional staff, especially the Executive Director.
  • The institution’s fiscal year (with process for financial review noted among Board responsibilities)
  • Conflict of interest policies.
  • Provisions for amending the Bylaws and the Articles of Incorporation.
  • Provisions for the potential dissolution of the museum.

NonProfitAlly Bylaws has several examples of writing Bylaws for a nonprofit organization. The same link includes a video that guides the viewer through the steps of writing the Bylaws.

Federal 501(c)(3) Tax-Exempt Status

After incorporating as a nonprofit within its state and writing its Bylaws, an organization can apply for tax-exempt status with the Internal Revenue Service. Obtaining 501(c)(3) status requires that the funds used to operate the organization do not profit any private stockholders or other individuals, and that the organization will not attempt to influence legislation or participate in political campaign activity. In return, as an institution devoted to the public interest, the museum is eligible to receive tax-deductible contributions, which benefit both the museum receiving the contribution and the donor receiving the deduction.

When an entity qualifies as a tax-exempt organization, the IRS presumes it is a private trust or foundation unless it can show that it is a public charity. A public charity has a broad base of support while a private trust or foundation is rooted in a more concentrated number of donors. In The Wonderful World of Foundations the IRS has more information on the difference between public charities and private trusts or foundations.

The IRS provides lots of information on 501(c)(3) requirements. Both video and text versions are available, including:

Legal Responsibilities

Nothing on this website should be considered legal advice. This section presents legal issues of which museum Boards and professional staff should be aware. The museum’s Board of Directors has the ultimate responsibility for ensuring that the museum follows the law. The State Attorney General is the official who enforces the law.

Since the stockholders of a for-profit corporation already have effective methods of controlling its Board and officers, the law imposes a less demanding standard of conduct. There are more stringent standards for trusts and public charities. According to Marie Malaro in A Legal Primer on Managing Museum Collections, the law imposes three specific standards for Boards of trusts and public charitable corporations.

  • Under duty of care, the Board must institute policies that care for the organization’s assets and foster it long-term sustainability. Board members must also demonstrate good-faith efforts to monitor those policies.
  • The duty of loyalty requires that Board members put the interests of the museum over personal interests or the interests of other parties. Each Board member must disclose in advance to the Board any possible conflicts of interest, and the Board must remove that member from discussion or voting on those matters. The Board must also weigh the effects of the conflict in their decision-making process.
  • The duty of obedience obliges the Board to serve the specific mission of the museum. Since the duty of obedience often involves decisions regarding collections, check out those topics in the Archives and Collections section of this encyclopedia.

When a museum invites the public to enter its premises, there is an inferred promise that the museum has taken all reasonably prudent steps to protect the public from hazards. Safety considerations extend to premises, collections, exhibits, and all other aspects. All other considerations, including learning experiences, historical accuracy, and aesthetic appeal, must be secondary to public safety if the museum is to avoid substantiated charges of negligence. LegalMatch discusses Museum Liability Issues relating to negligence.

When a museum accepts federal financial assistance from a government agency, it must certify that it will comply with all federal laws and regulations concerning civil rights, drug avoidance, lobbying, debt status, and interactions with barred organizations and individuals. Federal financial assistance is defined broadly; it includes not only direct assistance from federal government agencies, but also federal funds dispensed by state agencies and municipal funds supported by federal revenue sharing. Information on compliance will be included in the grant application, and specific questions should be directed to the agency that dispenses the funds.

The Sarbanes-Oxley Act of 2002 requires that public-traded companies follow new standards regarding Board oversight of audits and financial transactions. The law also closes loopholes for all organizations, including nonprofits, regarding document destruction and whistleblower protection. BoardSource explains how Sarbanes-Oxley directly affects nonprofit organizations. The same document recommends that nonprofit Board leaders look carefully at Sarbanes-Oxley, as well as their state laws, and determine whether they should voluntarily adopt governance best practices, even those not explicitly mandated by law, in order to operate ethically.

Other Legal and Liability Issues