Legal and Financial Considerations for Starting an Sigma Chapter in the United States

Starting Out as an Unincorporated Association

An unincorporated association is a group of individuals who enter into an agreement as volunteers to form an organization to accomplish a purpose. 

Groups with intent to start an Sigma chapter are required to form a nursing honor society (an unincorporated association) and operate according to Sigma honor society bylaws for at least one year. There are no legal requirements to start an unincorporated association.

Federal Not-for-Profit & Tax-Exempt Status

Sigma is recognized by the federal government as a 501(c)3 organization. Sigma is the parent organization for all chapters. This means:

  • Sigma is a non-profit organization that is exempt from paying federal income tax because its purpose is charitable, educational and scientific 
  • Sigma may receive grants from foundations 
  • Donations to Sigma are tax-deductible for the donors. 
  • As a 501(c)3 organization requirement, Sigma has stated explicitly in the bylaws that the organization will not participate in any candidate's political campaign, lobbying activities or make expenditures for political purposes. (This means that chapters and developing honor societies must comply with this bylaw requirement.)

With the assistance of Sigma staff, approved Sigma chapters will apply for an Employee Identification Number (EIN) and become subordinate non-profit organizations exempt under Sigma's group exemption number.

Most developing honor societies apply for chapter status within 1-2 years of forming the honor society.  Thus, it is not recommended that developing honor societies pursue 501(c)3 status on their own prior to becoming an official chapter. This is not recommended for many reasons:

  • Unincorporated associations are not required to apply for 501(c)3 status.
  • Applying for 501(c)3 status involves a lot of paperwork, a lot of time, and some expense.
  • Once approved for chapter status, chapters will apply for an EIN number and will fall under the "umbrella" of Sigma's 501(c)3 status and group exemption number. 
  • The process of converting an honor society's 501(c)3 status once approved to become a chapter would be arduous and time-consuming.

Federal Tax Requirements

US chapters are required to file IRS Form 990 by 15 November each year. Please see the presentation and link below for more information.

  • IRS 990 Filing Requirements for Chapters (presentation outline) 
  • US developing honor societies should consult the IRS website to obtain information about their filing status. 

    State Requirements

    Some states may require registration for unincorporated associations. A developing honor society should inquire about their state's requirements and laws for taxation, charities, necessity of incorporation, fundraising and raffles, online voting and state tax-exempt status at their state's office of the Secretary of State or Attorney General. 

    Most developing honor societies find that it is not necessary to become incorporated; however, it is always best to check with state authorities to be sure.

    Liability & Insurance

    Board members are volunteers who often make difficult decisions. Insurance can protect them from claims including wrongful terminations, failure to properly promote, financial wrong-doing or fraud, harassment and discrimination. Not having such insurance can make it difficult to attract and retain good board members, who simply cannot afford to serve if they run such risk to their personal assets.  Insurance cost depends on location. Some states have absolute volunteer immunity which makes premiums lower. 

    During the development stage, honor societies should research their state's requirements and decide if insurance is warranted for their honor society given their timeline to become a chapter and their budget. Most developing honor societies wait until their application is approved to purchase insurance. Sigma provides Liability Insurance for all approved chapters within the United States and Canada. Chapters may also purchase Directors & Officers Insurance and Fidelity Bonding for officers. For questions, please contact Sigma staff.

    Bank Accounts

    Some universities, banks and states have specific requirements to open an honor society or chapter bank account. Check with your banking institution, your university and your state to inquire about their requirements.

    Frequently asked questions about starting a non-profit organization (


    This information is for chapters within the United States only. It is not intended to be legal advice but rather information collected based on the experiences of past developing honor societies.


    Connect & Engage