Ownership Structure of Nonprofit Corporations
A nonprofit corporation has no owners. Some states refer to them as non-stock corporations. Incorporated nonprofits are separate legal entities from their founders, directors and employees. Many nonprofits are managed by boards, others by voting members.
Governance and Succession in Nonprofits
When forming a nonprofit, consider governance and succession planning. A founder typically has no ownership rights, despite feeling invested. However, founder’s syndrome symptoms like poor planning can harm organizations, though not limited to founder-led ones.
Nonprofit Structure and Management
The structure sets nonprofits apart. No single person or group can claim ownership, as nonprofits are for community service. Instead of owners, nonprofits have boards providing oversight.
- When first operating, the board and founders may perform organizational tasks.
- Control is often given to the person selecting the board.
- Board members make decisions for the organization.
Nonprofit Incorporation and Subsidiaries
After incorporating, nonprofits can create for-profit or nonprofit subsidiaries. Implications should be understood. Nonprofits must have tax-exempt members to get IRS status. An LLC of charitable groups can qualify.
Founder’s Role in a Nonprofit
While no one literally owns a nonprofit, members, clients and employees have a stake in its success. Control is often given to the person selecting the board. Board members make decisions for the organization.
- Can the founder of a nonprofit be the CEO?