The philosophy that drives nonprofit corporations is to effect positive change for educational, civil, religious, social or charitable causes. Inevitably for some not-for-profits, satisfying the original goals of the corporation becomes more and more challenging due to financial difficulties and other reasons. These reasons may not always be clearly defined and from time to time it may be necessary to ask the tough questions in evaluating if your nonprofit corporation should be dissolved.
Reasons for dissolving nonprofit organizations
Can your non-profit support itself financially?
Are unpaid debts mounting with no end in sight? Are contributions virtually nil? If your nonprofit corporation has been sustained by a handful of contributions, it may be time to review other feasible financial options. If fundraising possibilities are slim, it may be time to consider corporate dissolution.
Is the competition fierce?
Do you have a not-for-profit for helping stray animals and two other companies in the same town of 1500 people are doing the same thing? You may be vying for government funding and revenue for your cause while Bob and Cindy down the block are beating the same drum. If joining forces isn't a viable option, closing your doors and ceasing duplicate efforts may make sense.
Has your nonprofit organization's reputation been tainted?
Embezzling and mismanagement add up to disaster for a nonprofit corporation. While you think something like this may never happen within your nonprofit, you might be surprised how often it does happen. Public relations efforts can be stepped up to redeem the positive image your nonprofit entity once maintained. Some organizations successfully recover while others may continue a downward spiral making dissolution your best option.
Are you still helping your intended audience?
You may have originally formed your nonprofit corporation to help homeless individuals in your town. Now your local government has built numerous apartment buildings specifically to support these same individuals. Ideally, there are no individuals on the street anymore, but your not-for-profit's purpose may no longer be relevant. You may decide to repurpose your nonprofit corporation's mission or dissolve your corporation and start a new venture.