Nonprofit Dissolutions – What to Do When a Nonprofit Ceases Operations?
In addition to any information you find here and elsewhere, the bottom line is that any nonprofit seeking to dissolve or otherwise cease operations should consult with an attorney to assist with the process, if at all possible.
At the state level, a nonprofit typically has to file paperwork notifying the state government that the corporation is dissolving. For example, South Dakota’s forms for Articles of Dissolution and Notice of Sale or Transfer of Assets for a nonprofit corporation may be found here:
Articles of Dissolution
http://sdsos.gov/content/viewcontent.aspx?cat=corporations&pg=/corporations/corporationpdfs/nonprofitarticlesofdissolution20080701.pdf
Notice of Sale, Transfer, or Merger
http://sdsos.gov/content/viewcontent.aspx?cat=corporations&pg=/corporations/corporationpdfs/nonprofitsalesmergertransfer20090701.pdf
The process Minnesota uses may be found here:
http://www.legalcorps.org/files/LegalCorps%20Nonprofit%20Dissolution%20Guidelines.pdf
I include the Minnesota process because it helps with a checklist or procedural approach. Note that in South Dakota, the Secretary of State and not the Attorney General handles the business end of nonprofit corporations.
Each state has its own processes and its own web-based resources. A Google search for “nonprofit dissolution” plus the state where the nonprofit is incorporated will likely produce relevant forms and processes which can be verified with your legal counsel.
Donald Griesmann wrote a blog article titled “24 Factors In Developing an Exit Strategy for Nonprofit and Nongovernmental Organization (A Business Plan in Reverse)”:
http://dongriesmannsnonprofitblog.blogspot.com/2008/10/24-factors-in-developing-exit-strategy.html
The organization would have to file a final Form 990 or Form 990-EZ and include Schedule N to notify the IRS of the dissolution and distribution of any remaining net assets. Here’s a link to the Form 990/Form 990-EZ Schedule N:
http://www.irs.gov/pub/irs-pdf/f990sn.pdf
If the organization is too small to have ever filed a Form 990 or Form 990-EZ, they should still file a Form 990-N (e-postcard return) stating that they are ceasing operations. For more on this, see:
http://www.irs.gov/charities/article/0,,id=218162,00.html
and
http://www.irs.gov/charities/article/0,,id=169250,00.html