Jump to content
The Official RONR Q & A Forums

Recommended Posts

My wife is a long-time member of a non-profit  recreational organization. The current by-laws state on dissolution the assets, after debt is paid up, are to be distributed to non-profits engaged in similar activities. A  change is being proposed where on dissolution the assets will be distributed in the following way--5% to a similar non-profit and the balance (95%) to the membership who have been members for more than 10 years.  I've looked at about 5 or 6 different on-line sites about this topic (federal and state) and it doesn't appear that this can be done. Appreciate any thoughts and comments. Thank you, bobby1011

Share this post


Link to post
Share on other sites

If your claim is that it can't be done because of some law or statute, that's beyond the scope of this forum.  It's also something that calls for consultation with an attorney, not a google search.  If it's a parliamentary question, I don't see any reason the bylaws cannot be changed in this manner.

Share this post


Link to post
Share on other sites

Jonathan: Thanks for getting back so quickly. I understand and agree with your point about the by-laws and the ability of the membership to change them. My question, and I'm neither a lawyer or a tax  authority, deals with the effect of this action, if it passes, on the status of the organization. When I became aware that this approach was being considered, I suggested that both a lawyer and a tax accountant be consulted; I don't know whether this has happened. I was hopeful that some member of this forum might have had exposure to this issue and had some comments/advice on how to proceed. bobby1011

Share this post


Link to post
Share on other sites

If you are incorporated as a non profit corporation or if you have tax exempt status with the IRS, you need to consult with an attorney and/or a tax accountant. Most, if not all, state non profit corporation statutes have strict provisions dealing with the distribution of assets upon dissolution. So does the IRS. That is s legal question, not a parliamentary one. 

From a parliamentary standpoint, you can provide for almost anything you want to in your bylaws, but it might not be legal and might carry adverse  legal consequences.

Edited by Richard Brown
Added last paragraph

Share this post


Link to post
Share on other sites

Mr. Brown: Thanks for your response. It's very similar to what I suggested when I was informed that this action was being considered. My hope is that the organization followed this advice. bobby1011

Share this post


Link to post
Share on other sites
11 hours ago, bobby1011 said:

Jonathan: Thanks for getting back so quickly. I understand and agree with your point about the by-laws and the ability of the membership to change them. My question, and I'm neither a lawyer or a tax  authority, deals with the effect of this action, if it passes, on the status of the organization. When I became aware that this approach was being considered, I suggested that both a lawyer and a tax accountant be consulted; I don't know whether this has happened. I was hopeful that some member of this forum might have had exposure to this issue and had some comments/advice on how to proceed. bobby1011

That makes sense, but it is beyond the scope of what we can answer on this forum.  It is, as far as I can tell, a legal question dependent at least in part on state law.

Share this post


Link to post
Share on other sites
39 minutes ago, bobby1011 said:

jstackpo: I don't understand your comment or the reference to Proverbs 15:1

All too often we see questions here concerning bylaws that obviously weren't well considered by the members and they didn't seek outside help to assist with them.  The reference to Proverbs 15:1 is his signature and doesn't have anything to do with his response (I don't think ;) ).

Share this post


Link to post
Share on other sites
On 10/13/2017 at 12:52 PM, bobby1011 said:

Jonathan: Thanks for getting back so quickly. I understand and agree with your point about the by-laws and the ability of the membership to change them. My question, and I'm neither a lawyer or a tax  authority, deals with the effect of this action, if it passes, on the status of the organization. When I became aware that this approach was being considered, I suggested that both a lawyer and a tax accountant be consulted; I don't know whether this has happened. I was hopeful that some member of this forum might have had exposure to this issue and had some comments/advice on how to proceed. bobby1011

I have had indirect exposure to this issue with a non-profit that I was associated with.  It did not dissolve, but I know it had similar language in the bylaws, that assets would, in that event, be distributed to similar non-profits.  When I asked why, it was explained to me that if you're distributing assets to members, this could change your status from non-profit to for-profit. 

I suppose that makes sense.  But I am no lawyer, and have no experience with an actual dissolution, and even if I were, or did, I could not give legal advice here.  I only know enough to say that your instincts on consulting a tax attorney and/or tax accountant are good instincts, and should be followed.  

Share this post


Link to post
Share on other sites
12 hours ago, bobby1011 said:

jstackpo: I don't understand your comment or the reference to Proverbs 15:1

 

In case anybody still wonders...  at one point Dan H.  had a tagline reading "Beware the Wrath of Dan" in the "initial block" to the left of the comments block.  A reference to one of the Star Trek movies, I believe.

I thought a little reference to "turning away wrath" might help.

Perhaps it is time for a new quote  --  I'll see what I can find...

And as far as what I said:  "And just why should your bylaw ..." -  a bit of a joke:  it is a rare bylaw amendment that does indeed get the sort of proper scrutiny that you, bobby1011, describe; your concern would be exceptional, and wise.

Share this post


Link to post
Share on other sites
Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

×
×
  • Create New...