Starting an unincorporated non profit organization

History and Background of unincorporated associations

Up till 1992, an unincorporated association was governed by common law and a combination of several state statutes. None of the state had dedicated laws governing unincorporated associations.

An unincorporated nonprofit organization was not awarded the status of a separate legal entity. It was considered as an aggregate of its constituting individuals quite similar to business partnerships.
This created many problems and confusions.

The association could not receive a gift because it did not have a legal existence. Some courts considered it as a gift to the constituent individuals while others proposed treating of association as an entity only for this purpose.

Unincorporated associations, not being legal entities could not sue or be sued in any court for the same reason. Not being a legal entity, all the members had to be joined as party plaintiffs or defendants. Some states amended their common laws to include the “Sue and be sued” clause to address this issue.

The question of deciding the personal liability of members posed another issue. Some courts started treating associations as partnerships and the members as co-principals thus making them personally liable. It was also noticed that in large associations not all members enjoyed the same kind of participation or control to be right to treat them as co-principals. At the other end, several states amended their common laws to excuse members of association from personal liability – thus going to the other extreme of treating them as corporations.

The association could similarly not be held liable in tort, contract, or otherwise for conduct taken in their names where as its members could be personally held liable.

Uniform Unincorporated Nonprofit Association Act (UUNAA)

Given all these confusions, the National Conference of Commissioners on Uniform State Laws (NCCUSL) drafted the Uniform Unincorporated Nonprofit Association Act (UUNAA).

The Act gives unincorporated nonprofit organizations the following advantages -

1) The associations can sue and be sued as separate legal entities from its constituent members.

2) The association now has the legal capacity to receive, possess, distribute or transfer property.

3) The associations have limited liability for tort (personal injury) and contract claims;

4) There is now a system in place for the disposal of assets of the nonprofit association in the event of its dissolution or becoming inactive.

5) The association can now appoint or designate a person as its agent upon whom all legal notices, demands and service of process can be served.

States that have adopted the UUNAA

So far, UNAA has been adopted by eleven states in the U.S.

Alabama Arkansas Colorado Delaware
District of Columbia Hawaii Idaho Texas
West Virginia Wisconsin Wyoming

Almost all other states have been reviewing the UNAA for its adoption.

Till that time, in all other states an unincorporated nonprofit association does not constitute a separate legal entity from its members and they will continue to be governed by a hodge podge of different statutes depending upon how courts decide to deal with specific cases.

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About the Author:


Adrian B. Bennett is an attorney and nonprofit consultant by profession. He provides development sector legal services in areas of formation of nonprofit organizations, choice of entity, tax exemption, private foundation tax law, corporate governance and advocacy. He serves as a legal adviser to several non profit organizations in and around Florida.

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16 Responses to “Starting an unincorporated non profit organization”

  1. Jihad says:

    can some one send me some more info on unincorporation

  2. Joseph Elionai says:

    Dear Sir
    Can we form unincorporation organization in Richmond Virginia?

  3. Question says:

    @ Joseph

    Virginia has not yet adopted the UUNAA. While nothing stops you from starting an unincorporated association – it does not have a clear independent legal standing from its founder..and the founders may be personally liable for all the actions of the organization.

    Having said that Virginia is likey to adopt the UUNAA by 2012. When that happens.. you can form an association.

  4. Dave C says:

    Hello-

    In New York State, can a newly formed church function as an unincorporated association in lieu of incorporation? Is there any indication of UUNAA adoption?

    Thank you.

  5. Vicky Emerson says:

    Are there any forms that an unincorporated association are required to file in order to be recognized by the State of Wisconsin. I know that there is an Appointment of Agent form (113-C) but I have not found any statute that says this is required, but rather that the association “may” choose to appoint a representative.

  6. Justin says:

    I am interested in forming an unincorporated association in Tennessee. I have not been able to find laws concerning the unicorporated associations in this state. Please feel free to look at my website to see what this association is about. I regulary host events in which all profits are given to another entity (Red Cross, Volunteer Fire Departments, etc…). I would like to be able to actually call them my own events as opposed to just fundraisers and not quite sure if I can legally do that as of right now. Any information would be greatly appreciated.

  7. Maurene Caplan Grey says:

    I am a council member of a professional networking organization, which serves the support needs for the unemployed, underemployed and employed. The organization’s council is all volunteer. We have over 400 members, of which about 60 attend our monthly meetings. We do not charge a membership fee nor a fee to attend meetings. A local church provides a meeting place. We do not pay a fee to speakers. We run on a zero budget and do not do fundraising. A local business reimburses us for meeting refreshments.

    We’re struggling on how to define the organization without assuming personal liability. Because of the non-uniform manner with which the term “unincorporated nonprofit” is interpreted, how best should we define ourselves in our mission statement?

    Thank you …

  8. Tre Sam says:

    Can UNNAs employ and pay a staff?

  9. Question says:

    Yes..UNNA do employ and pay staff. But if the state has not adopted UUNAA, the state employment laws sometimes become a pain.

  10. J says:

    Where can I find out about the processes to form an unincorporated association in Virginia before the UUNAA is adopted?

  11. Jacki says:

    Though the state of FL does not yet recognize UNAs, I still need to file articles of association with the IRS. For FL there are only forms for Articles of Incorporation. Can I use a draft form from a state which recognizes UNAs though our UNA is located in FL?

  12. Frank says:

    You can draft & adopt a article of association based on the uniform nonprofit association act(better than taking clauses from the laws of other states).But because FL does not yet recognize UNA, you are at some risk, if you start a association in Fl.

    Court have taken diverse stances in such matters. In some cases, they have considered the association as a legal entities and in others they have refused a legal stand to the organization.
    Development sector laws are still evolving and there are lots of issues that are not yet clear.

    You will not have any issues with the IRS, though. They do recognize associations across the country.

  13. Michael Jazbar says:

    Can you direct me, to the one of the Delaware Registered Agent, who can file UUNAA for me.

  14. Frank says:

    You can find the list of Registered Agent on the website of Office of Secretary of States, Delaware. Just google it.

  15. dave weber says:

    Re: unincorporated non profit organizations

    Which state has the lowest fees and do any of the states allow minors to be active members?

    Thanks

  16. Frank says:

    unincorporated non profit organizations have no filing fee – so i would say your question is wrong.
    and Minors are not allowed in any state.

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