Learn how to dissolve a nonprofit company in New Hampshire.
The following is an outline of the major stages involved in dissolving and winding up a 501(c)(3) nonprofit organization in New Hampshire. Other sorts of nonprofits may have distinct regulations or processes, as well as scenarios such as forced dissolution.
Table of Contents
Dissolution Authorization
The Voluntary Corporations and Associations Act (“VCA Act”) of New Hampshire allows for voluntary dissolution in one of two ways:
a vote of the members, or a vote of the directors if there are no members.
If your organization includes voting members, the VCA legislation merely specifies that dissolution needs a two-thirds majority of the voting stock or membership. However, more chores may be required. For example, your board may need to first pass a resolution to dissolve the company before submitting it to the members, or you may need to give your members early notice before a vote is held. Check your articles of agreement and bylaws to see whether there are any particular requirements for permitting dissolution.
If your organization does not have members or shareholders, the VCA legislation merely provides that dissolution must be approved by the board of directors. Check your articles of agreement and bylaws for any extra regulations and procedures pertaining to the board approval process. You will almost certainly need to pass a resolution to dissolve, and you may discover that dissolution requires the consent of a majority of the directors in office at the time of approval.
Whether or whether your organization has members, you will need to establish a dissolution strategy as part of the approval process. The plan outlines how your charity will pay its creditors and distribute its remaining assets.
Make careful to accurately document the board’s resolution, plan of dissolution, votes of the directors, and, if required, votes of the members. This information will be required for filings with the state and the IRS.
Dissolution Statement
After your board (and, if appropriate, voting members) has authorized the dissolution, you must submit a statement of dissolution with the Corporation Division of the Department of State, detailing your plan of distribution (“DOS”).
The following will be included in the dissolution statement:
if your organization has members, the name and major place of business of your nonprofit, the date of the meeting at which dissolution was approved, a declaration stating the dissolution was authorized by a two-thirds majority of the members; a copy of the specifics of the vote to dissolve; and a copy of the dissolution plan.
The DOS website has a blank form for the statement of dissolution that may be downloaded. The filing of the statement is free of charge.
“Rising Winds”
Unlike in most other states, New Hampshire’s nonprofit statute does not identify any further responsibilities that may be associated with the closure of your organization. These activities, known as “winding up” the corporation, often include gathering all accessible assets, paying creditors, and then distributing any residual assets responsibly. (In certain jurisdictions, it also includes notifying creditors and other claims of the dissolution.)
In general, asset distributions are given only after you have satisfied all of your nonprofit’s commitments and obligations. If your organization has conditionally loaned things, the items must be returned to whomever borrowed them, pursuant to the conditions of the loan. Be aware that a 501(c)(3) organization that is dissolving must disperse its residual assets for tax-exempt reasons. In reality, this usually entails donating such assets to one or more other 501(c)(3) organizations. If you have any issues regarding how to split assets after a divorce, you should see a lawyer.
Note on Federal Taxation
You must submit IRS Form 990 or IRS Form 990-EZ for federal tax reasons. Schedule N (Liquidation, Termination, Dissolution, or Significant Disposition of Assets) must be completed, as well as copies of your articles of dissolution, resolution to dissolve, and plan of dissolution. When filling out Form 990 or Form 990-EZ, tick the “Terminated” box in the header section on Page 1 of the return.
Further Information
On the DOS website, you may discover further information like as forms, postal addresses, phone numbers, and filing costs.
Because New Hampshire’s VCA statute is somewhat short and lacking in substance, you are highly advised to get more dissolution assistance from an attorney.
Dissolving and winding up your nonprofit company is simply one part of the closure process.