Like any other business, California non-profit organizations do not always last forever. As a result, you should know the requirements and process for winding down the affairs and dissolving a non-profit organization. These requirements apply equally to all non-profit corporations, including religious organizations.
Deciding to Dissolve a Non-Profit Organization
A non-profit organization may not cease operations and dissolve until a majority of its board of directors voted to cease operations. This vote must occur before corporate assets are distributed, or the organization stops fully functioning. The board of directors is in charge of operating the non-profit, so it only makes sense that it has the final say in determining whether to continue operating the organization.
Prepare the Certificate of Election to Wind Up and Dissolve
A non-profit corporation must record the decision of its board of directors to dissolve and wind up its operations in a certificate format specified by the California Secretary of State. Depending on your situation, you must complete and submit one of the following forms to the Secretary of State:
- Form DSF NP – Nonprofit Short Form Dissolution Certificate
- Form ELEC NP – Non-profit Certificate of Election to Wind Up and Dissolve
- Form DISS NP – Non-profit Certificate of Dissolution
As part of the “winding up” process of your non-profit corporation, you will need to file your corporation’s final tax return and verify its status with the Franchise Tax Board, if you have not already done so.
Obtain a Dissolution Waiver from the California Attorney General’s Office Before Disposing of Any Remaining Assets
A non-profit organization holds all its assets in trust for the specific purposes set out in its articles of incorporation. As a result, you must use any assets remaining upon the dissolution of the corporation in a way that is consistent with its stated purpose. Otherwise, the Attorney General can object to the disposition of assets. Therefore, before disposing of these assets, you must obtain a dissolution waiver from the Attorney General’s Registry of Charitable Trusts. Your request for this waiver must include:
- A letter signed by a director of the corporation or its attorney detailing who will receive the assets or stating that there are no remaining assets, including identifying information about each proposed recipient of the assets
- A signed copy of the Certificate of Dissolution that has been prepared for the Secretary of State
- A copy of the appropriate IRS informational returns for the last three accounting periods, or, if the corporation does not file these returns, financial statements showing receipts, disbursements, and a balance sheet for the last three complete accounting periods and the most recent incomplete accounting period
- Endorsed-filed copy of the Articles of Incorporation and any amendments
Submit the Final Notice of Submission to the Secretary of State
Once you have received the waiver from the Attorney General, or a letter acknowledging that the corporation has no remaining assets, you can submit it along with the appropriate certificate of dissolution to the Secretary of State.
Submit the Final Notice of Submission to the Attorney General
Finally, you must submit a final dissolution packet to the Attorney General, which should contain:
- Certificate of Dissolution filed by the Secretary of State, or written confirmation that the certificate has been filed with the Secretary of State
- The final financial report for the corporation showing that all assets were distributed and leaving a balance of zero
Contact Us Today for Legal Assistance
Church Law Center gears its practice to legal matters that affect non-profit organizations, churches, and other religious organizations. This focus allows us to concentrate our efforts on keeping abreast of the ever-changing laws and policies as they develop over time. We are here to represent your interests throughout every stage of your legal matter. Call us today at (949) 245-3177 or visit us online and see what we can do for you.
