How do you dissolve an organization?
Parliamentary Internet Newsletter 2015
By Robert McConnell Productions
Recently we received a question from a small unincorporated association. An officer was distressed because the small executive board wanted to dissolve the association without taking a vote of the members. This was a national association whose members had dwindled and the board felt that it was time to call it quits. The purpose of this association was educational. All business was conducted by mail and the yearly meeting was strictly for an instructional program. The question was did the board have the power to dissolve without a vote of the members. Bylaws were sent to us. We replied that "no they did have the power to do so because the bylaws did not provide for dissolution only amendment." The bylaws stated that the members voted to amend the bylaws. In this case the members could vote to adopt an amendment which stated how the association was to dissolve or they could vote to dissolve because that motion rescinds the bylaws.
If an organization is incorporated under state law, then the organization must follow these procedures. Again it is usually the members that vote to dissolve the organization and not a board of directors. If an organization is incorporated the bylaws should include the state procedures for dissolving. This is a legal entity. It was brought into existence by following the incorporating procedures and it must be dissolved by following the procedures provided in the state statutes.
The members must also be sure that the money left is distributed according to state laws, especially if one has a 501 3(c).
If an unincorporated organization wants to dissolve, it must follow the provision for dissolution that is in the bylaws. If no such provision exists, Robert’s Rules of Order Newly Revised, 11th edition, page 564 states that resolution can be prepared such as “Resolved, That the X Society be dissolved as of March 31, 20__.” This resolution could have a preamble that explains the reasons for dissolution. Since it is in effect a motion to rescind the bylaws, it must follow the procedure for amending the bylaws as stated in the bylaws. Roberts then states that the notice for this action must be sent to “all the members of record.”
Disbursing the funds should be done very carefully. If the organization is tax-exempt it must follow federal and state laws for where the money can go. Members should be able to vote on this, also.
Dissolution is a very serious action. It should be done with care and include the members in the entire process.