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Legal Alert: Important Changes to Washington Nonprofit Law!

Washington’s legislature significantly updated the Nonprofit Corporation Act (RCW 24.03A)! Nonprofits are automatically governed by the new act on January 1, 2022. Here are some highlights:

  1. Electronic notices and meetings are available automatically! Under the prior law, nonprofits had to have specific language in bylaws to allow electronic notices and meetings, and have board members sign a “Consent to Receive E-Notice” or a similar consent form.
  2. There is clarification of board member and officer fiduciary duties, as well as new rules on board qualification. The new rules likely reduce board members’ potential liability exposure and encourage board service. The law also explicitly allows organizations to have limited youth representation (people under 18) on boards.
  3. The law has new rules on protecting charitable assets (for example, ​​property, income, and profits) and gifts subject to donor restrictions. The Attorney General’s office has supervisory power to be sure charitable assets are not misused or wasted.
  4. There are revised financial provisions that align with federal tax-exempt law. There are new restrictions on nonprofit asset/property distributions/payments and compensation of insiders (members, directors, officers, or other persons who are in a position to exercise substantial influence). The law also adds liability for unlawful distributions. Exceptions include reasonable compensation for services provided, as well as other exceptions.
  5. The law has new rules on domestication and entity conversion. An organization can now more easily move/register a nonprofit organization to Washington from another state (with the caveat that that the other state must also allow for the transfer/move/domestication) and convert a for-profit entity to a nonprofit. Charitable nonprofits may NOT convert to a for-profit entity.
  6. There are special rules for membership nonprofits (where members have voting rights). To learn more about changes for membership nonprofits, register for our free webinar on February 8, 2022 at 12-1:30pm held in partnership with the Secretary of State’s office and Washington Nonprofits.
  7. To learn more about big picture changes to the law, watch our free recorded webinar (from December 2, 2021 at 12-1:30pm) held in partnership with the Secretary of State’s office and Washington Nonprofits.

ADDITIONAL RESOURCES

  1. Check out our additional summary document on many of the changes here.
  2. The Washington Nonprofit Handbook will be updated and published on our website in spring 2022.
  3. There will be template articles of incorporation and bylaws posted on our website in January or February 2022.
  4. Register for our free webinar on Youth on Boards on January 18, 2022 at 12-1:30pm held in partnership with the Secretary of State’s office and Washington Nonprofits.

LEGAL DISCLAIMER

Please note that this legal alert provides general information about state law and is not legal advice. This Legal Alert is dated December 1, 2021 and there may be updated information about state law after this date. This Legal Alert does not create an attorney-client relationship. You may want to speak with an attorney about your organization’s specific circumstances. For nonprofit-related support, email us at contact@communities-rise.org or check out our legal services for nonprofits webpage.