Dissolution

Significant restrictions govern how nonprofit corporations may distribute their assets upon dissolution. When a nonprofit corporation can no longer continue its purpose and/or mission, its assets must be distributed according to the corporation’s dissolution clause, usually found in the nonprofit’s incorporation papers and/or under the state nonprofit code. Most state laws require nonprofits to transfer all of their assets upon dissolution to another nonprofit corporation that has a purpose similar to the dissolving nonprofit.

A for-profit can distribute its assets to private individuals and is under no obligation to continue to use the assets consistent with the original corporation’s purpose.

Click here to learn more about how assets are protected upon dissolution of a nonprofit.