Practical Considerations for Nonprofit Closure

Good Nonprofit Endings Part 2

Image description: A notebook with a blurred checklist of to-do items. Photo by Glenn Carstens-Peters on Unsplash.

There are certain steps required to sunset a nonprofit organization. The Nonprofit Association of Washington offers an excellent Dissolving a Nonprofit Guide. This guide covers many of the decisions that need to be made, legal requirements to dissolve an organization, paying outstanding financial obligations, and allocating any remaining funds to another nonprofit. I’d like to highlight a few other considerations that are vital to a good ending.

Get clear on your financial picture: What assets and actual and potential revenue do you have to work with? Is it enough to continue? How much does your organization spend each month, and how much runway do you have? If your revenue is insufficient and there is not a credible plan to raise more, what resources do you have to end well?

Operate as a team: Dissolution is a board decision, and board members will likely have to continue to work together to complete the legal requirements of closing the organization after staff are gone. It may take up to a year to wind down completely. Work together to share the responsibility and the workload.

Communication: Explain the circumstances early and often to your constituents. Prioritize information sharing and notification with internal constituents (all board members, staff, and volunteers) and then communicate outward/publicly. Let your supporters know you are struggling and give them guidance about how they can help prior to making the decision to dissolve. When the decision to close is final, share the rationale and the timeline. Let them know that the decision was not made lightly and share your plans to minimize the community impact.

Letting staff go: Have a thoughtful plan for staff layoffs. This will be a stressful situation no matter what, but consideration for staff transitions and appropriate notification are critical. Will you provide severance pay, and on what basis will severance be determined? How long can staff retain healthcare benefits? Are they eligible for unemployment benefits? How much notice will be given? Will it be necessary to retain a skeletal staff to complete some of the work associated with the closure? Your options may be limited if there is a financial crisis, but clarity, fairness and attention to the needs of the least well-compensated employees will soften the blow.

Continuity of services: Do what you can to ensure that clients are still served. Provide a referral list or let them know if some of your programs will be transferred to other organizations. If you have intellectual property such as a training curriculum or a service delivery model, can this be passed on to another nonprofit that may be able to utilize it? Even if you don’t provide direct services, think about how the people who participate in your work can find similar offerings elsewhere. For example, a theater arts organization might encourage audiences and donors to support other theater groups in the community, keeping the arts ecosystem healthier even though your closure will leave a hole.

Celebrate your legacy: Your organization has probably done important work for many years. What are your proudest accomplishments? How has your work mattered? What key contributors do you want to acknowledge? Is there an opportunity for people touched by your work to come together to celebrate and grieve together? Affirming the difference you have made will be meaningful to your community.