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• Is there dissension that might require court intervention?

• Is there an organization that might be interested in taking over the
nonprofit?

The directors may decide that greater efficiency in carrying out the
corporation’s objectives could be obtained by merging or consolidating with
another corporation. The directors may decide that bankruptcy and liquidation is
necessary to make arrangements with creditors, or the directors may determine
that the most sensible course is dissolution of the entity. A merger or consolidation
may be appropriate where another corporation with a similar purpose exists. If the
organization has substantial liabilities, however, merger may not be a good (or
available) option and dissolution will be the preferred route. In each case, the
Board must pay attention to applicable laws and to restrictions on gifts received by
the nonprofit. Normally, the directors or members control the operations. There
are, however, certain instances when the corporation will be subject to involuntary

dissolution or liquidation.

CHAPTER 78. Merger or Consolidation of a Nonprofit Corporation

a. Generally

This Chapter focuses on the legal mechanics of a merger or consolidation of
two or more nonprofit corporations. There is much more to the process, however,
than the legal formalities. Identifying a suitable partner for a merger or
consolidation, bringing together the cultures of the different organizations, and
handling public relations are just a few of the many business issues involved in a

merger or consolidation. Directors and, if applicable, members should consider the
potential economic, organizational, and strategic benefits and detriments of
merging or consolidating before any decision is made.

Washington law permits nonprofit corporations to merge with each other or
to form a new corporation by consolidating with each other. The law also permits
nonprofit corporations formed in this state to merge or consolidate with nonprofit
corporations formed outside of Washington. Merger and consolidation are similar,
but differ in one crucial way. In a merger, two or more corporations join together,
with one of those corporations emerging at the end of the process as the surviving
corporation. In other words, one of the corporations continues to exist, while the
other is merged into it. In a consolidation, by contrast, two or more corporations
join together to form a new corporation. Each of the consolidating corporations

ceases to exist, creating a new corporate entity by the act of combining. In this

WASHINGTON NONPROFIT HANDBOOK -283- 2018