The unincorporated churches option

Following up on two former blog posts, I want to introduce the Uniform Unincorporated Nonprofit Association Act. But what does the UUNAA has to do for UUs, or other people organizing religious congregations?

There are really two uniform acts — 1996 and a revised version from 2008. Fewer than a fifth of all states have adopted either, and only Nevada and Iowa have adopted the new one, so my comments reflect the older act. (The new version has been introduced in Pennsylvania, Oklahoma and the District of Columbia.)

Where enacted, the UUNAA makes a nonprofit unincorporated association a legal entity, upending the common law. (As I’ve said before, do I need to say I’m not a lawyer? Or a lawmaker? If you live where such an act has been passed, check the specific language and see if there’s an in-state opinion about it.) I’m excited — not just for all those new Esperanto teaching clubs, food pantries and animal shelters — because it allows an unincorporated nonprofit association to (1) hold real property and (2) protect officials and members from legal action (though not from “piercing the shield” from malicious acts, but neither would incorporation.) A passage from the reformed 2008 model act speaks better than I can:

[This] was drafted with small informal associations in mind. These informal organizations are likely to have no legal advice and so fail to consider legal and organizational questions, including whether to incorporate. The act provides better answers than the common law for a limited number of legal problems. Its answers are more in accord with the expectations of those participating in the work of a [unincorporated nonprofit association] and third parties dealing with a [unincorporated nonprofit association] than the common law.

That sounds like some churches — new and old — I’ve known. But I’m more concerned for new churches. It’s no secret I’m deeply disturbed by the lack of an organized (or functioning) church development plan from the Unitarian Universalist Association. The “leave it to the districts” line not only doesn’t work, but the districts themselves are struggling. Locally-started new congregations are going to need all the help they can get.

And yet there’s a principled reason to be encouraged by the UUNAA. Sarah J. Hastings, writing a note in the Drake Law Review (“Cinderella’s New Dress: A Better Organizational Option for Churches and Other Small Nonprofits”; 55 Drake L. Rev. 813) makes the case that corporate structure is a poor fit for congregational and episcopal polity churches. Wouldn’t it be better for the organizational system to be drawn from the theology and polity of the religious organization? What’s the theological grounding for corporate-law directors, or are they wedged into a theological role? And does it make sense for a group of ten or twenty? Because the UUNAA is remarkably vague when it comes to these questions. Check your local law library or Lexis-Nexus account for a copy of the journal note. Worth a look.

That is, if you live in

  • Alabama
  • Arkansas
  • Colorado
  • District of Columbia
  • Delaware
  • Hawaii
  • Idaho
  • Iowa (revised act)
  • Nevada (revised act)
  • North Carolina
  • Texas
  • West Virginia
  • Wisconsin
  • Wyoming

P.s. This might also be a handy way to organize “independent affiliate”-like groups. Hint.
P.p.s. This has nothing to do with tax-exempt status.

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