When I tell people that I am an attorney focusing on nonprofits, I sometimes hear, “Oh! I have a nonprofit!” While I know that these speakers are just trying to connect with me and make conversation, I cannot help but cringe at their statements. Why is that?
You do not “have” a nonprofit.
You may serve on the board of one, or work at one, or maybe you even founded one. You do not, however, “have” one, because you cannot own a nonprofit.
Nonprofits do not belong to any one person, or even a group of people, even though those people may have paid to create and operate the organization. They are not like businesses that can be bought or sold, either. A U.S. nonprofit belongs, in a sense, to all of us, or as some like to characterize it, to the American taxpayer. It is a tax-exempt public entity.
Yes, you can be “kicked out” of a nonprofit that you started.
When I meet with people who want to turn their informal projects into registered nonprofits with a legal structure, I am often asked, “How can I retain ownership of the organization? I mean, they won’t be able to kick me out, right?”
Well, not only do you not own a nonprofit, as we have established, but also you can be removed from its leadership, even if you are the founder. In this sense, nonprofits have something in common with the business world, where there are many high-profile examples of founders and top executives being removed by corporate boards. In the same way, nonprofit founders and executives can be voted out by the organization’s board of directors, or their term limits may just expire in accordance with the bylaws.
Look on the upside: the organization can outlive you.
It can be frustrating to realize that your project will no longer belong to just you, even if you pay to create the organization. However, it can be comforting to think that the fact that the nonprofit does not belong to you also means that it can outlive you, creating a type of legacy. I represent several organizations that have operated continuously since the late 1800s. Their founding documents were written out longhand in delicate script by Pittsburgh lawyers who likely retired before the first radio station was established here, and I continue to meet these organizations’ legal needs over 100 years later, using the Internet and virtual document storage. The men who signed the documents to create those organizations have long since passed away, but they put things into motion that still serve the public today.
Have any questions on this post? Contact me at firstname.lastname@example.org.
Please note: This blog is intended as general educational information only, and should not be considered legal advice or a substitute for consulting a lawyer.