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Is a nonprofit organization protected from the founder and

Sent to Legal Experts November 17 2007 at 8:06 PM
   

Is a nonprofit organization protected from the founder and ceo if he or she becomes involved in finacial hardship, case in point I am currently starting a nonprofit organization and because some contractors have ruined my house I may be unable to complete the project and may latter have to settle into debt consolidation or bankruptcy do to there negligance. I want to make sure the compay is protected from creditors who may be seeking damages and may try and use the nonprofit organization against me. the non profit will consist of more then 90% volunteers and of course i see none of any grant money as it goes directly to the orginization. I do not want to lose the status as founder and ceo. Also can the bylaws of a non profit be changed to better keep the orginization in compliance with all governing bodies and to increase its chance at ultimately getting 501c3 status after its initial filling?

 

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gloucester, Massachusetts

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i havent found a clear answer yet online, but i need to know asap

Customer (name blocked for privacy)
Status:  Closed   Value: $45
Info Request
November 17 2007 at 8:07 PM (1 minute and 7 seconds later)
         
REPLIED to Info RequestCheck Mark

Dear Customer (name blocked for privacy),

Do you have a board of directors?



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Edward M. Johnson
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Ed Johnson -- International HR Consultant -- 99% Positive Feedback on 3293 Legal Accepts
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November 17 2007 at 8:10 PM (3 minutes and 32 seconds later)
         
Reply to Ed Johnson's Post: we are forming the corporation as we speak, and the real situation is if it looks as though i may be in financial hardship down the road i do not want to lose the company, and yes i already have appoint board members, we will be forming the articles and bylaws this week and will be ready for business very soon
Customer (name blocked for privacy)
Answer
November 17 2007 at 9:00 PM (49 minutes and 13 seconds later)
         
ACCEPTEDCheck Mark

Dear Customer (name blocked for privacy),

AS long as this is formed as a non-profit, inc, llc, or c, you will have no problems as you protect your self with frequent board meetings.

It is the lack of a board or board meetings that leads creditors and others to be able to grab your business assets which you might think were protected by incorporation.

It is the lack of corporate functioning at the board level, that leads the courts to determine that the corporation is merely an alter ego of the founder and owner. If the court determines it is an alter ego organization, then in that instance, the creditors can grab the assets.



YOUR PAYMENT AND BONUS IF ANY MAY BE TAX DEDUCTIBLE

Edward M. Johnson
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Ed Johnson -- International HR Consultant -- 99% Positive Feedback on 3293 Legal Accepts
GPHR cer BS, U.S.C. Pueblo; Immigration Law by Am. Mngmnt Association & USCIS Bus. Liaison ofc 1999
Reply
November 17 2007 at 9:15 PM (15 minutes and 54 seconds later)
         
Reply to Ed Johnson's Post: So to clarify, since this would be a newlly formed orginazation that honestly does not look to profit me and has additional board members who are active in the cause there should be no problem, in fact would it be even better to be certain that I receive no income (ie salary form them. Its a just cause and time is of the essense in its foormation, and i do ot want to ruin an acceotional vision for change offer anyhardship i may face personally
Customer (name blocked for privacy)
Answer
November 17 2007 at 9:24 PM (8 minutes and 8 seconds later)
         
REPLIEDCheck Mark

Dear Customer (name blocked for privacy),

Thanks for the additional information.

Many founders of non-profits do in fact take no salary, during the first year or so, in order to ensure the success of the organization and getting it running smoothly.

This is where the board comes in. The board, can in fact vote to give you a salary. If the board meets as a board and conducts the due diligence of running the company, then you are sheltered from the alter ego situation. IN essence, you are working for the board. The board is your boss, and writes your evaluation.

The board has to meet regularly. This means monthly or quarterly.



YOUR PAYMENT AND BONUS IF ANY MAY BE TAX DEDUCTIBLE

Edward M. Johnson
Picture
Ed Johnson -- International HR Consultant -- 99% Positive Feedback on 3293 Legal Accepts
GPHR cer BS, U.S.C. Pueblo; Immigration Law by Am. Mngmnt Association & USCIS Bus. Liaison ofc 1999
Reply
November 17 2007 at 9:33 PM (9 minutes and 42 seconds later)
         
Reply to Ed Johnson's Post: i will accept your answer and am very satisfied, however in question to the board, what is the minimum number of members on the board, and who picks them, after that i thank you kindly for your help and you have help me make my decission to go ahaead and continue the formation of our organization, i really don't care what happens to me I just want to protect the cause. Thanks again kindly and have a great evening!
Customer (name blocked for privacy)
Answer
November 17 2007 at 9:56 PM (22 minutes and 58 seconds later)
         
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Ed Johnson -- International HR Consultant -- 99% Positive Feedback on 3293 Legal Accepts
GPHR cer BS, U.S.C. Pueblo; Immigration Law by Am. Mngmnt Association & USCIS Bus. Liaison ofc 1999
Reply
November 17 2007 at 10:13 PM (16 minutes and 23 seconds later)
         
thank you so much!
Customer (name blocked for privacy)
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