Closing / Dissolving a Charity
Oregon law requires written notification of an intention to dissolve every public benefit or religious nonprofit corporation at or before the time the corporation delivers articles of dissolution to the Secretary of State. The notification must include a detailed list of organizations or persons who will receive the nonprofit corporation's assets upon dissolution. The list must include names, addresses and amounts that are to be distributed to each beneficiary. You can provide the list on a letter or on a Closing Form.
Closing Form for Dissolving Oregon Corporations
Mail the letter or the form to: Charitable Activities Section, 1515 SW 5th Avenue, Suite 410, Portland, OR 97201.
Public benefit corporations must distribute all assets to an organization organized for a public or charitable purpose, a religious corporation, the United States, a state, or a person who is recognized as exempt under section 501(c)(3) of the Internal Revenue Code of 1986.
Please note that corporations organized in Oregon may not close their file with the Oregon Department of Justice until the corporation dissolves. Corporations which meet the registration requirements may not close their file regardless of whether the organization is currently active.
Private Foundation Rules
One restriction on private foundations is that they may not engage in certain "taxable expenditures." State law (ORS 65.036(5)) also prohibits these types of expenditures. The IRS identifies five types of taxable expenditures, further defined by regulations and procedures:
- §4945(d)(1) Taxable expenditures include those spent to carry on propaganda, or otherwise attempt to influence legislation, including grass roots lobbying and direct lobbying by communicating to the general public.
- §4945(d)(2) Taxable expenditures include those spent to influence the outcome of any specific public election, or to carry on a partisan voter registration drive (directly or indirectly).
- §4945(d)(3) Taxable expenditures include grants to individuals unless the grants are conducted pursuant to a procedure that is approved in advance by the IRS. Even if grants are made on an objective basis, the pre-approved process must be followed.
- §4945(d)(4) Taxable expenditures include grants to organizations which do not qualify for public charity status and for which the private foundation does not exercise "expenditure responsibility," including a pre-grant inquiry, written grant agreement, written report from grantee, and disclosing the grant on IRS form 990-PF.
- §4945(d)(5) Taxable expenditures include funds spent for any purpose other than proper charitable purposes. Although education of the public is a proper purpose, "educational purposes" are defined by IRS Rev. Proc. 86-43, and may not include biased, distorted, unsupported, or inflammatory statements.
The strict prohibition on lobbying contained in IRC §4945(d)(1) and ORS 65.036(5) applies only to private foundations. While there is no similar prohibition for public charities, IRS rules do provide that "no substantial part" of the organization's activities may be lobbying. A public charity has the opportunity to make an election by filing IRS form 5768, which helps identify the dollar limitations for the lobbying activity. Charities should contact their legal advisor to see if such an election is appropriate. Both types of §501(c)(3) organizations are prohibited from engaging in "political" expenditures, but this prohibition is limited to the support for or opposition to candidates for political office.
