Your Nonprofit Deserves a Good Ending
Having taken another legal client through closing a nonprofit organization, I am reminded that every nonprofit deserves a good ending. However, keeping Board members and others engaged through painful and draining discussions and logistics is difficult. I’ve had Board members tell me they just didn’t want a nonprofit to close on their watch– that it would feel like a personal failure, even if it was the most sustainable and strategic decision for the organization and the community.
Here are a few things that I wish every nonprofit understood about when it’s time to close (AKA dissolution, closure, or wind-down) so that they can have a good ending:
Closure doesn’t mean personal failure.
About a third of nonprofits don’t make it to ten years and more than 80% struggle to secure funding. There are many reasons why nonprofits don’t last forever. Think of organizations as having life cycles and seasons. Sometimes, the funding doesn’t match the need. Other times, a passion took on a formal structure that maybe was too much for the concept. Nonprofits are affected by their environments. While strong, engaged Boards can assist nonprofits in weathering difficult times, sometimes the best governance decision they can make is to wind down.
Going through a wind-down in silence never served anyone well.
Sometimes, shame, avoidance, and overwhelm creep in and Boards don’t share what is happening with staff or community. I have been impressed by my clients who are transparent from the beginning of discussions about the organization’s future and make plans that honor staff, volunteers, and contractors. Closing a nonprofit is not the best time for winging important legal and financial documents, or pretending that things are fine.
Winding down a nonprofit reminds us that what we created always belonged to community.
As part of nonprofit closure, you have to give your assets to another nonprofit. The most important part of this requirement is not only accountability, but also reinvestment in the nonprofit community. While the best outcome might have felt like twenty more years of an organization, the second best outcome could be helping another organization that has an aligned mission and similar funding challenges.
Big feelings– frustration, grief, guilt, even relief– are part of the process of closing a nonprofit.
Grieving an idea, work role, even some storage room swag, is expected. Remember that how you honor those who stuck through to the end matters– including yourself, if you are a board or staff member during this period. If you think it’s difficult to keep Board members engaged, imagine the sentiment when your Board meetings are about reviewing dwindling account balances and approving items drafted by your attorney. Consider yourself a dissolution doula.
You will learn a lot from the process and you will hope you never have to apply the knowledge again. That’s understandable, but your next nonprofit Board or staff role will benefit from it.
Being intentional about winding down, realizing the roles of your accountant and attorney in the process, and tying up all the loose ends is probably the very definition of unsexy, but it’s vital. No one wants to be the person to turn off the lights, and hardly anyone will congratulate you on a job well done, but I will. You stayed with no rewards or accolades and you honored that the organization was never for you or about you. In the end, you took your responsibility seriously and cared about how you went out. I’d trust you to make good decisions, not easy ones.
If you need legal assistance with closing a nonprofit in Washington State, feel free to book an appointment.
