Washington State Updates Nonprofit Law Consistent With UPMIFA

Faegre Drinker Biddle & Reath LLP
Contact

Faegre Drinker Biddle & Reath LLP

Washington State Governor Inslee recently signed SB 5034 into law. The law completely replaces the current form of the Washington Nonprofit Act, which was adopted in 1967, with more modernized provisions.

The new version of the Nonprofit Act covers donor-restricted institutional funds held by nonprofit corporations, which were previously regulated under trust law (Chapter 11.110 RCW “Charitable Trusts”). These changes are designed to conform to Washington’s version of the Uniform Prudent Management of Institutional Funds Act (UPMIFA), located at Chapter 24.55 RCW.

Sections 1501 through 1506 of the law apply to unrestricted and restricted gifts made to nonprofit corporations. These provisions distinguish between charitable gifts and charitable trusts, and they further outline the procedures for modifying and releasing gift restrictions.

The law also sets forth comprehensive governance provisions for nonprofits. For example, it prevents nonprofits from taking certain corporate actions such as amending their bylaws or articles of organization, and approving a merger or dissolution unless the modification occurs pursuant to certain procedures.

Nonprofit entities have until January 1, 2022 (the effective date) to ensure they are compliant with these new provisions. However, corporations can elect to use and manage their gift-restricted assets under current law for a one-year grace period that will end on January 1, 2023.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Faegre Drinker Biddle & Reath LLP | Attorney Advertising

Written by:

Faegre Drinker Biddle & Reath LLP
Contact
more
less

Faegre Drinker Biddle & Reath LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.