Category: Nonprofit Posted on Apr 08, 2015

New Spin-off Nonprofit Organization

by Leah Cohen Chatinover
New-Spin-off-Nonprofit-Organization
We recently helped launch Young Judaea Global, Inc. as a newly independent nonprofit organization in a spin-off from Hadassah, the Women’s Zionist Organization of America. This was a particularly meaningful engagement for Stanger Stanfield Law, as Leah Chatinover and Bruce Stanger both have a decades-long commitment to Jewish education, Jewish camping and Israel.

The new nonprofit inherits the history, tradition and passion of the Young Judaea division of Hadassah, with programs and partnerships in Israel, Canada, the UK, Europe and Africa. Founded in 1909, Young Judaea is the oldest Zionist youth movement in the United States. It seeks to build Jewish identity and a commitment to Israel in Jewish youth and young adults, through leadership training, pluralist ideology, and activism.

In this 100-year old national “start-up,” a group of talented and dedicated alumni stepped forward to form the inaugural board of the new organization in order to fashion Young Judaea’s destiny in a changing youth landscape. With a board that includes leaders in business, academia, philanthropy, and public service, in both the U.S. and Israel, and Hadassah remaining as a major funding partner, the new Young Judaea is well on its way to a promising future.

What is a Spin-Off?

A spin-off is just one form of corporate restructuring open to nonprofit organizations. In a spin-off, one organization (known as the “parent”) hands over a division, in this case, the Young Judaea programs and assets, to an independent entity.

In a spin-off, one organization becomes two. With other forms of restructuring, two become one. Restructuring can conserve resources by joining two nonprofits with similar missions, re-energize a flagging operation, or preserve the legacy of a corporation that has decided to close its doors. Options include:

MERGER:

In this format, two corporations merge, and the surviving corporation takes on both the assets and liabilities of the other.

ASSET SALE OR GIFT:

This is a transaction in which one entity acquires the assets and programs of the other, but not the liabilities.

MEMBERSHIP INTEREST TRANSFER:

Here one organization becomes the sole member of another, with the right to control it by appointing its board of directors.

A restructure is not easy. The Board of Directors and staff of both nonprofits must demonstrate leadership and patience, engage in careful preparation and ground work to ensure that the philosophy, mission, culture and programs of the potential partners are compatible, commit to fully understand the finances and operations of both organizations, and appreciate the investment of time and resources necessary to complete a legal transaction.

For profiles of Young Judaea Global, Inc. board members, go to: http://www.youngjudaea.org/board. #

Leah Cohen Chatinover is a business lawyer for both for profit and not for profit clients at Stanger Stanfield Law- call her she can help. She can be reached at lchatinover@stangerlaw.com

Bruce Stanger

My litigation experience includes family law, divorce, product liability, construction law, professional negligence, shareholder disputes, medical malpractice, legal malpractice, and general commercial litigation.