The Model Nonprofit Corporation Act
The American Bar Association (ABA) published the Model Nonprofit Corporation Act (MNCA) in 1987 and just published the act's third edition in 2008. Nonprofits are granted tax-exempt status by the Internal Revenue Service and are required to follow federal laws concerning nonprofit governance and operation; however, nonprofit organizations are organized and incorporated under state law. The ABA MNCA Committee developed the MNCA to provide uniform laws for state regulation of incorporated nonprofit organizations.
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MNCA Purpose
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The ABA committee charged with creating the MNCA considered the many disparate state laws and regulations governing nonprofit corporations and developed a uniform act that all states may adopt. The MNCA is a 145-page legal document which functions as a fill-in form, or a model for states to follow. State legislatures may insert state-specific information, including fees. Adoption of the MNCA is voluntary; states are free to reject the act, adopt the act in whole or in part, or amend all or part of the act at any time.
MNCA Content
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The MCNA includes statutes to govern the creation, registration, incorporation, operation and dissolution of nonprofit corporations. The statutes provide regulations for the organization of nonprofits, including bylaws, purposes and powers, membership organizations and board or member meetings. The nonprofit board's duties of governance are codified, and laws are clarified regulating individual benefit from the assets of nonprofit corporations. The document also details the legal duties of local secretaries of state concerning filing of incorporation documents.
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MNCA Adoption by States
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After the release of the 1987 Revised MNCA, 29 states, and the District of Columbia, had adopted the act in whole or in part. Many states have adopted the 2008 act with changes. It is difficult to learn which states have adopted the act, or to what degree, without checking with each secretary of state. Some states publish their version of the act online with notations of amendments. The MNCA continues to be a work in progress as concerns are addressed and the ABA committee continues its work.
Concerns About the 2008 MNCA
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The National Association of Parliamentarians cites several concerns with changes to the 1987 act regarding established parliamentary procedures. One of the association's primary objections is the change from the requirement that nonprofit corporation boards hold regular meetings to a requirement for annual meetings or, in the case of membership organizations, special meetings.
Revised Uniform Unincorporated Nonprofit Association Act (2008)
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In 2009, the ABA released a report intended to clarify the distinction between the Revised Uniform Unincorporated Nonprofit Association Act (RUUNAA) and the Model Nonprofit Corporation Act. The ABA's report states that it approves the RUUNAA and that there is no conflict between that act, which covers unincorporated associations, and the Model Nonprofit Corporation Act, which covers nonprofit corporations.
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References
Resources
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