Page 20 - Washington Nonprofit Handbook 2018 Edition

PART 2. HOW TO FORM A NONPROFIT

CHAPTER 6. Common Nonprofit Organizational Structures

a. Types of Nonprofit Corporations

Historically, Washington has had a number of statutes permitting the
formation of nonprofit corporations. When the Washington Legislature adopted
the Nonprofit Corporation Act in 1967, it repealed a number of different types of
nonprofit corporations. However, several options still remain. The best option will
depend on the purposes and activities of the corporation to be established. The
types of nonprofit corporations include:

(i) The Washington Nonprofit Corporation Act (RCW 24.03)

Most nonprofit corporations, particularly those that qualify as exempt from
federal taxation under section 501(c)(3) of the Code, are incorporated under the
Washington Nonprofit Corporation Act (the “Act”). A fuller description of the Act
appears in Chapter 7.

(ii) Nonprofit Miscellaneous and Mutual Corporation Act (RCW
24.06)

Organizations can be incorporated under RCW 24.06, the Nonprofit
Miscellaneous and Mutual Corporation Act, for any lawful purpose including, but
not limited to, mutual, social, cooperative, fraternal, beneficial, service, and labor
organization. Mutual benefit organizations, such as business leagues,
homeowners’ associations, and social and recreational clubs, may incorporate
under this statute. Corporations may not be organized under this RCW 24.06 for
any purposes which by law are restricted to corporations organized under other
statutes. These include insurance companies, banks, savings and loan associations
and credit unions.

While this statute is very similar to the Act, RCW 24.06 does not contain the
limitations on activities or protections contained in the Act that serve to protect
charitable assets. This indicates that the intent of the Legislature was that
charitable organizations be organized under the Act rather than RCW 24.06.
Additionally, unlike a corporation organized under the Act, a corporation organized
under RCW 24.06 may issue shares to shareholders and may distribute surplus
funds to members or shareholders. RCW 24.06.025, .070.

WASHINGTON NONPROFIT HANDBOOK -9- 2018