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y Loan any money or credit to its directors or officers.

In addition, at dissolution or final liquidation, assets must be appropriately

distributed. This will be described in more detail in Chapter 9 under the discussion
of the articles of incorporation.

Nonprofit corporations may be organized under the Act for any lawful
purpose or purposes, including, but not limited to, charitable, benevolent,
eleemosynary, educational, civic, patriotic, political, religious, social, fraternal,
literary, cultural, athletic, scientific, agricultural, horticultural, animal husbandry,
and professional, commercial, industrial or trade purposes. The Act prohibits
certain organizations from being organized under it. These include labor unions,
cooperative organizations and organizations subject to any of the provisions of the
banking or insurance laws of the state.

CHAPTER 8. Pre-Incorporation Issues

Before moving into the practical legal discussion of how to draft legal
documents and incorporate, it is important to understand several organizational
issues that frequently arise during the early stages of forming a nonprofit
organization. It will be beneficial to the organization to address and resolve these
issues in the planning stage of forming your organization. These issues fall into
four categories: membership, board of directors, decision-making style and
mission.

a. Membership

Under the Act, a nonprofit organization may have members or it may be a
“non-membership” corporation. Members may be persons or entities, such as
corporations or limited liability companies. Under the Act, unless otherwise
provided in the organization’s articles of incorporation or bylaws, members have
certain voting rights. Members have the right to vote on issues including the
election of directors to the board of directors, amendments to the articles of
incorporation, and the merger or dissolution of the corporation. Proper provisions
in an organization’s documents may give members the right to vote for all or only
some of these purposes, or may give members no voting rights at all.

The decision whether to have members or not and what rights to give
members relates to the nature and purpose of the corporation. Membership is
often considered when an organization plans to raise funds from its supporters or
seeks active participation by a large group of people. Membership may help

WASHINGTON NONPROFIT HANDBOOK -12- 2018