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Questions on Nonprofit Law

The following is an archive of answers to basic (and sometimes not so basic) questions on nonprofit law and is intended for informational purposes only.  Nothing here is a substitute for legal advice.  If you would like to discuss your particular situation, use the link below to schedule a free 30 minute call.

I want to file the papers to dissolve my California nonprofit organization.  Can I file the form in person?

There are only two locations where you can file documents with the California secretary of state:  Sacramento and Los Angeles.  However, ...

I want to open a non-profit for my theatre but I'm not sure how to handle the sublease income on a separate floor.

There are LOTS of issues lurking here, including some of the big ones that nonprofit organization attorneys deal with. Here are some thoughts.

Can an Illinois not-for-profit operate a for profit? We are thinking of transitioning but have a school we want to keep.

To answer your first question, "can a nonprofit operate a for-profit," there is nothing that prohibits this and it happens fairly frequently.

A nonprofit organization has existed for three years, but has not registered with the California Attorney General's Office.  It has been taking donations and doing other activities, but not much formality or normal meeting records keeping.  What are the consequences of this not registered status:  grounds for investigation?  Or even dissolution?

There are a lot of issues here. If this were to come into my office, we would probably spend a lot of time just talking about the facts and history before giving any advice.

Can I request nonprofit bylaws from the IRS without the nonprofit being notified of the request?

You can probably get a copy from with the New York Attorney General's Office or from the IRS.

Where can I find the Articles of Incorporation of a nonprofit?

There are a handful of ways to get a copy, including asking the organization, asking for Form 1023, and checking certain state websites.

Is a California nonprofit public benefit corporation required to distribute a percentage of its assets annually?

It depends, but there are some California nonprofits that are required to distribute a portion of their assets every year

What is California code 1502? We are running a small church and we received a letter that we should submit a form along with a check for $243.

The letter is probably talking about the requirement to file a "statement of information" with the California Secretary of State. But you can file it yourself for less than $243.

Can an 'administratively dissolved' non profit continue to make and enforce contracts?

A short answer is "no and yes." Here's a longer answer:

Former board member of our nonprofit stole intellectual property. What can I do?

The devil is going to be in the details on this, and there are probably dozens of follow-up questions that a nonprofit attorney (which I am) or an intellectual property attorney (which I am not) would ask you. But here are some thoughts.

Do we need to refile articles of incorporation or any other business docs when applying for NFP status for a for-profit?

You will almost certainly need to re-draft your Articles of Incorporation if you want to convert from a for-profit corporation to a not-for-profit corporation.

Does a president of a condo association have the right to hire and fire employees without board approval?

Like almost any good legal question, the answer is "it depends." Generally, an individual person can be given the ability to hire and fire employees without calling for a board vote. But a more specific answer is that you should look at your association's bylaws. Under Maryland law, the "council of unit owners" has ultimate responsibility for conducting the affairs of the condominium. But the council is permitted to delegate its powers to a board of directors or officers.

I am interested in starting a non profit fan site / fan group. What is the best 501 option?

It's not obvious to me that forming a nonprofit, or pursuing tax exemption, is a perfect match for starting a fan group website or club. Most lawyers who offer advice on a question like this will ask a lot of questions to dig deeper into the details before offering advice. I have about fifteen that I go through when somebody is asking for advice on whether to form a nonprofit.

Can a non profit 501(c) offer in a contract to pay a percentage of the profits?

It depends. Because you tagged this question with both "business" and "employment," I'm assuming that the profit-sharing contract you are asking about is a contract with an employee of the nonprofit organization.

A 501(c)(3) nonprofit with membership formed three years ago, but until today there was no election of the board. Then, people claiming to be the board published bylaws that will effectively let them stay in power forever. Is this legal?

If you came through my door my first question would be to ask what your relationship is to the organization. Incorporator? One of the executives of the organization? One of the members? A board member? The rights you have in this situation might depend on how you fit into this equation.
Another immediate question would be to look at the details of the articles of incorporation. A general rule of thumb is that bylaws have to comply with the articles, and the articles (and therefore the bylaws) have to comply with the nonprofit corporation law.

On the filing of article incorporation for a nonprift in California. there are two purposes available for ticking: Public purpose and Charitable purpose. What’s the difference? Will that effect 501(c)(3) tax exempt status?

A good question. It's not helpful that courts in California have frequently used the terms "public purpose" and "charitable purpose" interchangeably. Here are some thoughts.

If you run a non profit, can you sell items to help fund the organization? For example, can a pet rescue sell dog bandanas and treats if the proceeds goes straight back into running the rescue (buying dog food or covering vet bills)?

Let's start with the heart of your question: can a nonprofit sell items at a markup and use the proceeds to advance the mission? Generally, yes. It is not prohibited or illegal for a nonprofit to do that. But, that general "yes" doesn't mean that there won't be consequences, and a complete answer to the question of consequences involves ...

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