What Is Dissolution?
Dissolution is the termination or closing of an organization in its present state. There are various reasons an organization would need or want to dissolve. For example, the organization might have fulfilled its mission or lack sufficient resources to effectively carry out its work. Perhaps there is no longer a need for the organization’s services, or it is dissolving as a result of a merger.
Click on a link below to jump to a specific topic:
U.S. law has not always prohibited tax-exempt charities from engaging in political campaign activities. In 1954, Congress approved an amendment by then U.S. Senator Lyndon Johnson to prohibit 501(c)(3) organizations from engaging in political campaign activity. This amendment came to be known as "the Johnson Amendment," and it is now codified in the Internal Revenue Code and accompanying Treasury regulations.
Expenditure responsibility, or ER, describes a set of monitoring and oversight procedures that a U.S. private foundation or donor advised fund (DAF) must follow when making grants to organizations that are not 501(c)(3) public charities or their foreign equivalents. The purpose of ER is to ensure that the grantor's funds are used exclusively for charitable purposes.
In a previous post, we introduced the concept of "nonprofit vs. charitable" under U.S. tax law. In this post, we will further expand on the definition of charitable, and will specifically focus on income-generating activities — a common source of confusion with respect to charitable activities.
A donor advised fund (DAF) is a separate fund or account held and controlled by a 501(c)(3) public charity. The donor or a designee of the donor has advisory privileges over the use of the funds.
The Internal Revenue Code (IRC) defines a DAF as