You are probably familiar with the legal structures that can govern your activities as a nonprofit organization, such as incorporation, trust, and association. What about the Uniform Unincorporated Nonprofit Association Act (UUNAA)?
In this article, we’ll look at what UUNAA is, how it works, and how it can help your nonprofit.
What exactly is the Uniform Unincorporated Nonprofit Association Act?
The National Conference of Commissioners on Uniform State Laws (NCCUSL) developed UUNAA, a model law that provides a legal framework for unincorporated nonprofit associations. It was first introduced in 1996 and has since been adopted by 19 US states.
An unincorporated nonprofit association is defined as “an unincorporated organization formed for a nonprofit purpose and consisting of three or more members” under UUNAA. The association, like a corporation or a trust, can carry out activities, enter into contracts, and sue or be sued in its own name.
How does UUNAA operate?
Unless the members agree otherwise, UUNAA provides a set of default rules that apply to unincorporated nonprofit associations. These rules govern the operation of the association in areas such as governance, decision-making, liability, and dissolution.
For example, UUNAA states that unless the members agree otherwise, each member has equal voting rights. It also states that the association is liable for its obligations and debts, but members are not unless they agree to be.
By adopting an operating agreement, members can also modify or supplement the default rules. An operating agreement is a contract between members that outlines the internal rules and procedures of the organization. Membership, officers, meetings, voting, finances, and dispute resolution are examples of topics that can be covered.
UUNAA Advantages for Nonprofit Organizations
UUNAA provides several advantages to nonprofit organizations that operate as unincorporated nonprofit associations.
First, UUNAA provides a clear legal framework that governs the operation of the association, which can aid in the prevention of disputes and confusion among members. UUNAA’s rules are designed to be flexible and adaptable to various types of associations by default, but members can tailor them to meet their specific needs through an operating agreement.
Second, UUNAA frees the association from the formalities and costs of incorporation. An unincorporated nonprofit association, unlike a corporation, is not required to file articles of incorporation or pay state fees. It also does not have to hold annual meetings or elect a board of directors, though it may do so if its operating agreement allows it to.
Third, UUNAA provides members with some liability protection. While the association is held accountable for its obligations and debts, members are generally not held personally liable unless they agree to be. This means that the member’s personal assets are generally protected from the creditors of the association, which is an important consideration for nonprofit organizations with limited resources.
UUNAA provides a legal framework that nonprofit organizations that choose to operate as unincorporated nonprofit associations can benefit from. UUNAA’s rules are designed to be flexible and adaptable to various types of associations by default, but members can tailor them to meet their specific needs through an operating agreement.
If you want to run your nonprofit as an unincorporated nonprofit association, schedule a consultation with us to see if UUNAA applies in your state and to draft an operating agreement that meets your needs.