How an Operating Agreement Can Help Ensure the Future of a Nonprofit Cemetery
In order to succeed from generation to generation, cemeteries require capital and managerial resources. For nonprofit cemeteries, it can be particularly difficult to ensure that these resources remain available. Much of this can be attributed to the unintended consequences of federal and state laws that require the assets of a nonprofit to remain dedicated to a charitable purpose.
Under state law, the attorney general is charged with enforcing the nonprofit law and with ensuring that nonprofit corporations observe their charitable trust and do not engage in private inurement.
The doctrine of charitable trust requires that assets that have been dedicated for a charitable purpose must remain so dedicated, and private inurement prohibits a nonprofit from conferring a benefit upon a private person or individual.
Similar concepts apply to nonprofit, tax-exempt corporations at the federal level.
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“How an Operating Agreement Can Help Ensure the Future of a Nonprofit Cemetery,” by Lewis J. Hoch was published in the March–April 2019 edition of ICCFA Magazine. Reprinted with permission.