Stand By Your Non-Profit Until The Bitter End

Interesting piece on the Chronicle of Philanthropy about the responsibilities of non-profit boards to attend to the dissolution of their organizations.

Janet Kleinfelter, a deputy attorney general in Tennessee, talks about a case where a non-profit abandoned their organization after they realized it could no longer continue. They passed a resolution essentially saying the bank could do whatever it wanted to dispose of the assets and then resigned.

Kleinfelter writes that boards are required to give proper notice to state and federal regulators about the impending closure of their organization and submit the documentation in support of that action.

It is actually better for board members to stay involved with the organization than disassociate themselves. (My emphasis)

“Legally the board is required to dissolve the nonprofit, but when it fails to do so, that responsibility falls to the regulators and the courts.

This process will probably involve subpoenas to members of the former board, which may require board members to retain personal legal counsel at their own expense. What’s more, by resigning, board members may no longer have the benefit of directors’ and officer’ liability insurance. Former board members may even be personally liable for actions done in the name of the nonprofit while it is unmanaged.

About Joe Patti

I have been writing Butts in the Seats (BitS) on topics of arts and cultural administration since 2004 (yikes!). Given the ever evolving concerns facing the sector, I have yet to exhaust the available subject matter. In addition to BitS, I am a founding contributor to the ArtsHacker (artshacker.com) website where I focus on topics related to boards, law, governance, policy and practice.

I am also an evangelist for the effort to Build Public Will For Arts and Culture being helmed by Arts Midwest and the Metropolitan Group. (http://www.creatingconnection.org/about/)

I am currently the Director of the Vern Riffe Center for the Arts at Shawnee State University. Among the things I am proud to claim are having produced an opera in the Hawaiian language and a dance drama about Hawaii's snow goddess Poli'ahu. Though there are many more highlights than there is space here to list.

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