What Board Members Need to Know During Nonprofit Dissolution

A 501(c)(3) just lost its fourth remaining board member, leaving three to remain, the base requirement. The board recently voted to dissolve the nonprofit and wind-down operations. The organization is currently tapping into its reserves. One of the remaining board members asks:

“What is my role and responsibility as a board member in this situation? The executive director submitted their resignation… but has offered to ‘stay on to support the wind-down operations,’ and it appears the expectation is for the board to complete the dissolution. Is this typical? What is my personal exposure in this situation? And finally, what happens if I also resigned?”

These are excellent questions. This is a pivotal (and sometimes confusing) moment that’s more common than most nonprofit board members realize. Let’s walk through each piece carefully.

1. Board Member Roles and Responsibilities During Dissolution

Yes, it’s typical for the board to oversee the wind-down once dissolution has been approved. The executive director may help carry out logistics, but the legal authority to dissolve the nonprofit rests with the board. Responsibilities during this phase generally include:

Ensuring proper legal dissolution filings — You’ll need to file a Certificate of Dissolution (or similar) with the Secretary of State and notify the IRS that the organization is dissolving. If you had 501(c)(3) status, you’ll need to file a final Form 990.
Paying off debts and obligations — Before assets can be distributed or the entity closed, the organization must settle all outstanding debts, payroll, and taxes.
Distributing remaining assets correctly — Federal and state law require that remaining charitable assets be transferred to another 501(c)(3) or to a governmental unit for a charitable purpose. This is a key fiduciary duty; assets can’t be distributed to board members or staff.
Maintaining records — Keep detailed documentation of all votes, minutes, financials, and dissolution activities. The board remains responsible until the process is complete.
Overseeing staff during the transition — It’s common for an ED to stay on to help wind things down under the board’s direction. Think of them as the hands carrying out the tasks the board authorizes.

2. Personal Exposure

Board members are mostly protected, but still have some fiduciary duties to fulfill:

Some by-laws include a statement to the effect of: “not personally liable for debts, liabilities, or other obligations of the Corporation.” This is standard and meaningful. It generally protects you unless there is:

Fraud, embezzlement, or other criminal acts;
Willful misconduct or gross negligence;
Personal guarantees (for example, if you personally co-signed a loan).

Personal risk arises if the board fails to exercise reasonable oversight. As long as the board member:

Attends meetings,
Asks reasonable questions,
Documents their votes,
Ensures proper dissolution steps are followed.

Board members must fulfill their duty of care and duty of loyalty, which is what protects you.

3. If The Remaining Board Members Also Resigned

If any of the remaining board members were to resign before dissolution was complete:

The board could lose quorum or fall below the minimum number of directors required by the bylaws and by local nonprofit law (determined by the state, which in this case required at least three directors).
Without a functioning board, the organization may be unable to legally complete dissolution, sign documents, or manage funds.
In this case, the Attorney General’s Charitable Law Section may need to step in to supervise or appoint temporary trustees.

So: Whenever possible, it’s usually best for board members to stay on through the dissolution, then resign once the filings and final financial distributions are done.

4. Questions You Might Still Ask

Here are smart follow-up questions the board and advisors may ask:

Who is handling the legal filings?
(A nonprofit attorney or CPA should review the dissolution paperwork and final 990.)
Has the board passed a formal resolution to dissolve?
Minutes should clearly reflect the vote.
What is the timeline and sequence of steps?
(e.g., pay debts → transfer remaining assets → close accounts → file paperwork.)
Who retains the final records, and for how long?
The board must ensure someone is responsible for keeping them for at least 7 years (financial) and permanently (board minutes).
Are there any restricted grants or donations that must be returned or redirected?
This is a common pitfall.
Has the Attorney General’s office been notified?
Charitable organizations must often report dissolution to the AG before filing with the Secretary of State.