Representing Nonprofits (i.e., the Good Guys)
| Publication year | 2018 |
| Author | Lisa A. Runquist |
Lisa A. Runquist
Lisa A. Runquist has represented nonprofits for over 40 years. She has authored numerous publications on nonprofits including authoring and editing Guide to Representing Religious Organizations, 2009 and authoring The ABC's of Nonprofits, 2nd edition, 2015 which is also now available in Spanish. She is a member and former chair of the ABA BLS Nonprofit Organizations Committee and the California Bar Nonprofit Organizations Committee, serves as an Editorial Advisor for ChurchLawAndTax.com, and is an adjunct professor of law at Trinity Law School.
When people ask me what I do, I tell them that I represent people who wear the white hats—the good guys. I can say this because I have found that most people who work with nonprofits do so with the best of intentions. Unfortunately, there is sometimes a large gap between these intentions and the end result. Often this is because of a lack of knowledge or a lack of understanding of what is actually required to comply with the law in organizing and operating a nonprofit organization. You may well already be involved with such an organization—for example, you might be involved with your church or synagogue, the school your children attend, your local sports league, museum, local soup kitchen, or scouting organization. In fact, you might already be a volunteer for the organization or serving on the board. Or you may have wanted to give the organization some legal advice but realized that you really know nothing about nonprofits. Hopefully, this article will give you an impetus to get going!
Most nonprofits that are formed by attorneys are corporations, formed pursuant to state law. It is generally best to form the corporation in the state in which it is operating, unless you have concerns about that particular law (many New York nonprofits are formed as Delaware corporations). If the corporation operates in a number of states, compare the laws of these states to see if one is better than another. The principal areas that will differ between state laws involve indemnification and limitation of liability of volunteers (including directors and officers).
A corporation is formed by filing articles of incorporation with the secretary of state or similar officer. It also adopts bylaws, which set forth the internal workings of the organization (whether it has members, how directors are elected, requirements for holding meetings, provisions concerning committees, officers, etc.). The articles are the birth certificate for the organization and include the name, the nonprofit purpose, the agent for service of process, and, for tax-exempt charitable organizations, provisions required by the Internal Revenue Service (IRS) mandating that all assets be used for these charitable purposes and providing that upon dissolution the assets will go to another similar organization.
Sometimes articles have other provisions (such as whether the organization will have members). Sometimes these provisions are required by state law, but often they are not. If these provisions conflict with the actual operation of the organization, or with provisions of the bylaws, the articles will control. Once the articles are filed with the secretary of state, the organization will often store them and forget about them, as they do not need to be referred to regularly. The...
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