How should a nonprofit organization distribute its assets upon dissolution?

When a nonprofit organization dissolves in New York, it must distribute its assets in a way that abides by the law. According to the New York State Attorney General, any remaining assets must be distributed for one or more exempt purposes in the public interest—in other words, the assets must be used for a purpose related to the organization’s mission. The organization should first pay off all of its creditors and any outstanding debts. After that is taken care of, any remaining assets must be carefully distributed to benefit a new nonprofit organization with a similar mission, or to some other charitable cause or organization. It’s important to note, however, that these assets cannot be redistributed to the original nonprofit’s founders, officers, or employees, nor can they be returned to the original donors. The organization must also provide written notice to its members and to the New York Attorney General’s Office and file a dissolution report. This report must include a statement of purpose, the organization’s dissolution plan, and the plan of asset distribution. The Attorney General must approve the report before the assets can be distributed. Nonprofit organizations must carefully follow these rules to ensure that their assets are distributed in an appropriate way upon dissolution. Doing so protects both the organization’s members and the public, and it is the only legal way to handle the dissolution process.

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How should a nonprofit organization distribute its assets upon dissolution?

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