Who Owns a Nonprofit?

I believe in coincidence—not that it is a sign from some higher power sending some message, but rather that I should look at the confluence of ideas and ask: what is going on here? Is there a trend brewing? The trend I’ve been seeing lately is about the ownership of a nonprofit.

First: no one—not the founder, the current executive director, the board, no one—owns a nonprofit. Nonprofits exist for the benefit of the public good, working on behalf of some portion of that public good. No matter how hard you might have worked to get that nonprofit off the ground or to keep it running, it isn’t yours. And it doesn’t belong to board members, either, who are there as the protectors of that public trust and must exercise their responsibilities to keep that trust. (Sometimes that means replacing the founder—but that is another blog).

Second, you cannot “buy” another organization’s charitable status and use it for your own charitable purposes. You can’t do this no matter what the condition of the nonprofit. It simply isn’t for sale. The IRS makes a determination of whether an applicant with a specific mission fits the criteria of a nonprofit and then, should it award nonprofit status, is doing so with the understanding that the nonprofit will execute that, and only that mission. Can one nonprofit merge with another? Absolutely. But that, too, is another blog.

Third, you can’t “sell” your nonprofit. You can’t sell what isn’t yours in the first place. Furthermore, the assets of a nonprofit—the property, goods, money, etc.—belong to the mission, if you will: they have all been acquired with the understanding that they will be used to further the mission of that organization. End of story. Thus, those assets must be used for charitable purposes. So, if you’re tired of operating the nonprofit, get another job, merge the organization with another charitable organization and then get another job. But selling?

Passion and great intentions are all wonderful and very much needed in the world of nonprofits. But understand the law and how to run a nonprofit before you enter into this world.