Affiliation Agreement Merger

Cooperation with external partners is often seen as a top priority to enable non-profit organizations to advance their missions more effectively and effectively. Cooperation can take many forms: from informal agreements between organizations to the exchange of information, to formalized affiliation agreements for the creation of regional chapters and joint ventures between non-profit and for-profit organizations, to mergers between two or more non-profit organizations. Implementing due diligence prior to the conclusion of a collaborative relationship, establishing appropriate conditions in a written agreement (to ensure compliance and risk management) and understanding the nature of the transaction and possible alternatives are essential for management and governance in the best interests of the organization. Faced with the serious consequences of current health and economic crises, many non-profit organizations are considering mergers and other forms of cooperation as a strategy to maintain or strengthen their programmatic activities, brand and influence, and, for some, their survival. Before the opening of negotiations on a… One of the drawbacks of this type of concentration is that the parties may not realize the efficiency gains that a merger can generate. In particular, there will still be two separate entities that will have to submit their own 990s form to the IRS. It will also be necessary to maintain two separate boards of directors (although the board of directors may be quite small and rarely meets, provided that the mother`s board deals with issues relevant to the subsidiary). Some organizations that choose this type of structure, through a merger, will plunge the “subsidiary” into the “mother” at a later stage, if it is established that the combination should be permanent. The chapter affiliation agreement defines the chapter`s right to use the parent organization`s name and obtain some support in exchange for approval of certain behaviour, monitoring and form requirements. Indeed, the non-profit version of “franchise agreements” is found in the business world. If properly reissued, the Chapter Membership Agreement is an essential tool to communicate expectations and protect the reputation of the General Organization. A well-developed chapter membership agreement must contain at least these eight essential provisions: one of the main advantages of a wealth transaction is that the non-profit, working-age organization is able to be selective about the assets and liabilities it acquires.