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How do you effect a merger of charities

Your Legal Questions Answered

How do you effect a merger of charities

What needs to take place for a 501(c)(3) to merge with another 501(c)(3)? Does one have to file for dissolution for all of its assets to go to the other?

No.  In a true merger of two organizations, if each follows the applicable state law procedures, one organization can merge with another and the other organization will “survive” to continue operations. The surviving organization, in addition to retaining all of its own rights and obligations, succeeds to all of the rights and obligations of the organization that merged into it.  The organization going out of existence does not need to dissolve because it loses its separate existence by operation of law.
An organization may dissolve and transfer its remaining net assets to another, but that may be a more difficult and time-consuming route. There are many ways to effect a “merger” of charities (See Ready Reference Page: “Mergers and Acquisitions Can Take Many Forms.”) and the various possible alternatives should be considered carefully before deciding the best way to proceed in any actual situation. For more information on Mergers, Acquisitions and Affliations visit our bookstore. Our pre-recorded webinar is available for purchase.

Monday, March 3, 2003

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