Nonprofit Dissolutions & Mergers

At Abelaj Law, P.C., we provide thoughtful, individualized guidance when your nonprofit is in transition.

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Dissolution is not simply “closing the doors.” It is a regulated process, and the board’s duties do not end when operations stop. When a nonprofit dissolves, it must first address liabilities and pay debts from contracts, leases, vendors, and program obligations. If assets remain, any transfer must be handled in accordance with applicable law, donor restrictions, and the organization’s charitable purpose.

Generally, the organization must distribute assets to other charities—board members and nonprofit leaders cannot distribute funds to themselves, family members, or for-profit organizations. Transfers or sales require evaluating restricted funds, determining the fair market value of certain assets, preparing required filings, and considering whether notice to or approval from the Attorney General or Charities Bureau is required. 

Dissolutions Often Involve

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A plan for liabilities and wind-down logistics
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A compliant approach to remaining assets
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Handling restricted funds and donor/grant restrictions, often requiring careful documentation
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Filing requirements, including irs forms and state dissolution documentation
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Charities Bureau and Attorney General considerations

Selling vs. Transferring a Nonprofit’s Assets

Transferring assets to another tax-exempt organization is often the most straightforward path, particularly in a merger or mission-aligned wind-down.

If selling assets is necessary, the organization must receive fair market value. This rule exists to prevent leaders from circumventing the prohibition on personal transfers. Selling assets at a loss to family or friends is typically treated as a gift and can violate the law. Appraisals and clear records are part of doing this correctly.

How Abelaj Law, P.C. Can Help

We guide boards through dissolution and merger planning with attention to both state nonprofit law and federal tax-exempt rules. That includes preparing plans of dissolution, advising on asset transfers and sales, coordinating required filings, and helping boards document decisions in a way that holds up to scrutiny. 

Helpful documents to have at hand

  • Bylaws and certificates
  • Recent minutes/resolutions
  • Current list of assets and liabilities
  • Lease/vendor agreements
  • Donor restrictions or grant agreements
  • Recent tax and Charities Bureau filings

Request a Consultation

At Abelaj Law, P.C., we work closely with nonprofit boards and leadership to provide thoughtful, individualized guidance at moments that call for judgment, discretion, and clarity. 

Whether your organization is navigating a sensitive governance matter, responding to regulatory scrutiny, addressing funding concerns, or considering a significant structural change, we are available to help you evaluate next steps and move forward in a way that protects both your mission and your reputation.

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Or call us at: 212-328-9568