Nonprofits are formed with passion and purpose, but sometimes the best decision for the organization, and the community it serves, is to wind things down. Whether due to funding issues, leadership transitions, or mission completion, dissolving a Washington nonprofit requires more than just walking away. The Washington Nonprofit Corporation Act (Chapter 24.03A RCW) lays out a clear legal roadmap, and failing to follow it can have serious consequences for directors and officers.
Here’s what you need to know to dissolve a Washington nonprofit corporation properly and protect your board in the process.
Step 1 – Board Votes to Dissolve
Start with a resolution. Under RCW 24.03A.700, the board of directors must authorize dissolution, typically by majority vote unless your bylaws require more. If your nonprofit has voting members, you’ll also need member approval (RCW 24.03A.705).
This resolution should:
– Approve the plan of dissolution
– Authorize the filing of the Articles of Dissolution
– Delegate authority to one or more officers to handle the process
Step 2 – Develop a Plan of Dissolution
The plan of dissolution outlines how the nonprofit will wrap up operations and dispose of its assets. Key elements include:
– Paying off debts and obligations
– Notifying grantmakers and stakeholders
– Transferring remaining assets to another 501(c)(3) or similar tax-exempt organization
– Ensuring restricted funds are used consistent with donor intent
Important: You cannot distribute assets to board members, staff, or founders. Everything must go to another qualifying nonprofit or governmental entity.
Step 3 – Notify the Attorney General
Washington law requires charitable corporations to notify the Attorney General’s Office (AGO) at least 20 days before filing Articles of Dissolution with the Secretary of State (RCW 24.03A.730). Send your plan of dissolution and a cover letter explaining the reasons for winding down.
The AGO may reach out with questions, especially if your nonprofit holds charitable assets or restricted funds. Cooperation is key to avoiding delays.
Step 4 – Resolve Debts and Obligations
Before dissolving, the nonprofit must:
– Pay off creditors
– Cancel leases and contracts (where allowed)
– File final tax returns (IRS Form 990 and Washington state taxes, if applicable)
– Notify employees and follow employment law regarding termination, final paychecks, and COBRA (if relevant)
Step 5 – Distribute Remaining Assets
After liabilities are satisfied, distribute remaining assets in line with:
– The organization’s articles of incorporation and bylaws
– Federal tax law (assets must go to another 501(c)(3) or government entity)
– Any donor restrictions
Keep detailed records of where every dollar and asset goes. These records should be retained for several years post-dissolution in case of audit or inquiry.
Step 6 – File Articles of Dissolution
Once the AGO has been notified and assets are distributed, you can file Articles of Dissolution with the Washington Secretary of State. This is the formal step that ends your corporate existence.
The filing can be done online or via mail. Include the effective date of dissolution and confirmation that all requirements have been met.
Step 7 – Wrap Up Loose Ends
Don’t forget to:
– Cancel your EIN with the IRS (optional, but recommended)
– Close bank accounts
– Revoke licenses and permits
– Notify any vendors, donors, and partners
Final Thoughts
Washington makes it relatively straightforward to dissolve a nonprofit—but only if you follow the rules. Ignoring the Attorney General’s notice requirement or failing to properly distribute assets can expose board members to liability or create problems with the IRS.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on federal tax and fundraising regulations nationwide. Ellis also advises donors concerning major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.