Q&A #149 – Can a nonprofit use a DBA or trade name?
Question: I was reviewing my nonprofit organization’s latest Form 990 and noticed the option to enter a “doing business as” name for the organization in Column C at the top of page 1 of the Form 990. Are nonprofits permitted to do business under names that are different from the formal corporate name, and is this an appropriate way to try out new names and brandings for the organization and its programs?
Answer: Like any other business or entity, nonprofit organizations are permitted to conduct their activities under a “trade name” (often referred to as a fictitious name, “doing business as,” or “DBA”) so long as the name is properly registered in the relevant states and reported on the Form 990, charitable solicitation registrations, and other required filings, and the name is available to use without infringing on the trademark rights of others.
State laws typically require that any person or entity that engages in “business” in the state under a name other than the person’s or entity’s formal legal name must register this “DBA” or “trade name” with the state. For these purposes, doing “business” in a state generally includes any activity that involves providing or offering goods or services to the public, including operating nonprofit programs, although state laws vary as to the specific definitions. Trade name registrations are usually valid for a specific length of time and must be renewed periodically if the organization wishes to continue using the name.
Nonprofit organizations are free to operate under one or more trade names provided these state law registration requirements are satisfied and the trade name(s) are properly disclosed in other required filings (such as annual corporation reports, charitable solicitation registrations, and (as discussed in Q&A #140) the applicable version of the Form 990.
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Additionally, nonprofits must make sure that other persons or entities do not already have rights to the name that would prohibit the nonprofit from using it, including but not limited to trademarks that are federally registered with the United States Patent and Trademark Office. It is important to be aware that a “trade name” is not the same thing as a “trademark,” and trademark registrations have legal consequences that are distinct from registering a trade name with the state.
Note that nonprofit organizations are not necessarily required to register a trade name for each of their individually branded programs or businesses. As a rule of thumb, trade name registration should be considered if program or business has its own identity and the public cannot easily tell that it is owned and operated by the nonprofit under its formal legal name.
Planning Tip – When considering any formal or informal name change, broad-based internet research is just as important as researching official databases such as the federal trademark search website, state corporation databases, and the IRS Exempt Organizations Business Master File. Doing broad searches using search engines and social media can uncover potential problems that would be hard to find using only official databases. For example, you may find other persons or entities that could be confused with your organization because they use a similar acronym or variation of the name, or possible misinterpretations or modifications of the name that could be embarrassing or offensive.
While operating under a trade name rather than formally changing the organization’s corporate name is not necessarily an ideal long-term option for the reasons discussed in Q&A #139, using a DBA can be a good strategy for trying out new names and brandings for the organization and its programs. This is because undoing a formal corporate name change is somewhat more difficult and leaves a more confusing public record, while it is relatively simple to cancel a trade name registration or let it expire if it is not working as anticipated after a trial period.
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