How To Terminate A Non-Profit Organization

Since federal law requires a tax-exempt charitable nonprofit that is dissolving to distribute its remaining assets ONLY to another tax-exempt organization (see Schedule N of the IRS 990) the dissolution process necessitates identifying other nonprofit(s) to ask whether those organizations will accept certain assets of the dissolving nonprofit. (“Assets” could include cash, or tangible property, such as vehicles and office equipment, and/or intangible property, such as the contents of a database, or intellectual property owned by the dissolving organization.) The transfer of assets may also invoke legal documents such as property deeds, contracts, and trademark registrations. (You will need an “inventory” of assets to manage this part of the process smoothly.)

Action Steps

  1. Vote to Dissolve Non-Profit
  2. Draft the Plan of Dissolution-A “plan of dissolution” is essentially a written description of how the nonprofit intends to distribute its remaining assets and address its remaining liabilities. 
  3. Pay the Non-Profit’s Liabilities. 
  4. Distribute the Remaining Assets. 
  5. Dissolve the Entity with The Secretary of State
  6. Make Arrangements for The Final Filing of Quarterly and Yearend Payroll Tax Filings
  7. Make Arrangements for the Filing Final Form 990. The IRS also needs to be notified via Schedule N, of the IRS Form 990, Liquidation, Termination, Dissolution, or Significant Disposition of Assets. Include A Copy of Articles of Dissolution and plans to liquidate or merge your nonprofit (of applicable).  
Did this answer your question? Thanks for the feedback There was a problem submitting your feedback. Please try again later.