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.“
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