All governance information was obtained from the following website: https://www.ag.state.mn.us/Charity/InfoNonProfits.asp
Thanks to the office of Minnesota Attorney General, Lori Swanson, for this information and guidance.
Minnesota nonprofit organizations are governed by the Minnesota Nonprofit Corporation Act, Minn. Stat. ch. 317A. A nonprofit corporation’s purpose and activities must serve the organization’s mission to benefit the public, and may not be operated to profit other persons or entities.
Tax-Exempt Status of Nonprofits
Most nonprofits are exempt from taxation. There are more than two dozen different types of tax exemptions under the Internal Revenue Code, with exemption under section 501(c)(3) being the most well-known. The IRS grants, oversees, and may revoke a nonprofit’s tax-exempt status. For more information about the IRS’s general oversight of nonprofits, you may visit its Charities & Non-Profits webpage. For information about federal tax issues affecting nonprofits, you may visit the IRS’s Federal Tax Obligations of Nonprofit Corporations webpage.
Key Laws for Minnesota Nonprofits
While Minnesota nonprofits must comply with the entirety of the Minnesota Nonprofit Corporation Act, Minn. Stat. ch. 317A, below is a list of selected provisions from the Act that impose specific requirements on nonprofits and those who run them.
Notice to the Attorney General’s Office. Minnesota nonprofits must provide the Attorney General’s Office with prior notice if they intend to transfer substantial assets, merge, consolidate, or dissolve. Unless waived, the organization must then wait 45 days before taking the action at issue. Minn. Stat. § 317A.811. The form to use to provide notice to the Attorney General’s Office about an asset transfer, merger, consolidation, or dissolution can be downloaded using the link below:
Notice of Intent to Dissolve, Merge, Consolidate, or Transfer Assets
Other Key Laws. Other keys laws for Minnesota nonprofits include:
Board members have various fiduciary duties imposed on them as a director of the nonprofit, including the duties of care, loyalty, and obedience, among others. Minn. Stat. § 317A.251.
Nonprofit officers, or those exercising the functions of officers, similarly have various fiduciary duties imposed on them with respect to the organization. Minn. Stat. § 317A.361.
A nonprofit organization must satisfy certain criteria in order to properly transact business with a related party. Minn. Stat. § 317A.255.
A nonprofit may not lend money to a director, officer, or employee of the organization (or a related organization) unless the board of directors reasonably expects the loan to benefit the nonprofit. The same is true regarding loans and guarantees to spouses, parents, children and spouses of children, and brothers and sisters or spouses of brothers and sisters of a director, officer, or employee of the nonprofit. Minn. Stat. § 317A.501.
A nonprofit is required to maintain complete and accurate books and records regarding its operations and affairs, including its articles and bylaws, accounting records, voting agreements, and meeting minutes. Minn. Stat. § 317A.461.
A nonprofit’s board of directors must consist of at least three members, and a board member may not serve for a term that exceeds 10 years. Minn. Stat. §§ 317A.203, .207.
The Minnesota Attorney General’s Office enforces chapter 317A, and monetary relief, including civil penalties, may be levied for noncompliance with these statutes. Minn. Stat. § 317A.813.
Nonprofits can review the provisions of the Minnesota Nonprofit Corporation Act, Minn. Stat. ch. 317A,online. Below are publications from the Minnesota Attorney General’s Office for use by nonprofit organizations.
Fiduciary Duties of Directors of Charitable Organizations: A Guide for Board Members
In addition, nonprofits may access information provided by other organizations using the following links below.