Legal Question in Business Law in Utah

Non-Profit Foundation distribution of income and principal in By-Laws.

We are a 501(C)(3) Foundation. The Trustees of the Foundation have authority for distribution of the income from fundraising as written in the By-Laws. We have elected to support a core of five other non-profit organizations. We want the funds we raise from a particular fundraising campaign (hereafter called Campaign) to be distributed as determined by the five heads of these organizations. We have made these five heads into a Board of Directors for the Campaign, which is not a legal entity in and of itself. Can we write into the By-Laws of the Foundation a sort of ''second tier'' of fund distribution authority for the board members of the Campaign giving them authority for distribution of funds granted them from the Trustees of the Foundation without these five having any degree of liability? We want to give them this authority as well as outline the manner in which they will decide on distribution, but insulate them from liability. We thought of writing up a set of By-Laws for the Campaign, but since it is not a legal entity the members wouldn't really be bound by its By-Laws would they?


Asked on 10/27/05, 11:59 am

1 Answer from Attorneys
Alvin Lundgren Alvin R. Lundgren, L.C.

Re: Non-Profit Foundation distribution of income and principal in By-Laws.

Changes in not for profit corporations must be done very carefully and in conjunction with your current corporate by laws and operating agreements. Your question cannot be answered without reviewing these documents. In general such changes may be possible.

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Answered on 10/27/05, 3:32 pm


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