As a charity’s board of directors reviews the organization’s financial health, which it should do on a regular basis, the board may conclude that a sale of underutilized assets is a good way to generate cash to support and enhance other aspects of the organization’s charitable mission. The board may also determine that it is in the organization’s best interest to sell its assets and dissolve. Further, the board may determine that it is appropriate for the charity to transfer a large part of its assets to another charity in exchange for consideration that is less than fair value.
All members of the board have a fiduciary duty to the organization to ensure that they are being responsible fiscal stewards. When transferring charitable assets, such responsible stewardship may require the provision of notice of the proposed transaction to the Attorney General’s Non-Profit Organizations/Public Charities Division (the “Division”). Responsible stewardship may also require that the charity seek and obtain court approval before executing the transaction and/or obtaining court approval. Thus, before transferring charitable assets, the charity, its board, and its counsel should review the guidelines found in this section of the website, and determine whether the proposed transaction requires notice to the Division and/or court approval:
- G.L. c. 180, § 8A. If a charity intends to sell all or substantially all of its assets, G.L. c. 180, § 8A(c) may require that the charity provide notice of the transaction to the Attorney General. Please review these guidelines before consummating such a transaction.
- Massachusetts Charitable Mechanic Association v. Beede, 320 Mass. 601 (1947). If a charity intends to transfer a large portion of its assets for less than fair value, the Supreme Judicial Court’s decision in Massachusetts Charitable Mechanic Association v. Beede, 320 Mass. 601 (1947) may require that the charity obtain court approval before consummating the transaction. Please review these guidelines before consummating such a transaction.
If you still have questions after reviewing this guidance, please do not hesitate to contact the Division at email@example.com or 617-727-2200 x. 2101.