An Administrator's Guide to California Private School Law

Chapter 2 - Governance

The purpose of the school should be clearly articulated but stated broadly enough to allow the school to grow and adapt over time. If it is too narrow, the school may be limited in its ability to adapt. For example, the creation of a “high school” would preclude an expansion into elementary education.

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Importantly, the Articles of Incorporation for a Nonprofit Corporation must also include a statement that the assets of the corporation shall be irrevocably dedicated to religious, charitable, educational, scientific, or hospital purposes. 14 This is necessary for tax-exempt status. 15 The purpose of this statement is to ensure that, upon dissolution of the corporation, all assets will be given to a nonprofit serving a similar purpose:

The property of this corporation is irrevocably dedicated to [charitable/religious] purposes and no part of the net income or assets of this corporation shall ever inure to the benefit of any director, officer or member thereof or to the benefit of any private person. Upon the dissolution or winding up of the corporation, its assets remaining after payment, or provision for payment, of all debts and liabilities of this corporation shall be distributed to a nonprofit fund, foundation or corporation which is organized and operated exclusively for [charitable/religious] purposes and which has established its tax-exempt status under Internal Revenue Code section 501(c)(3).

Sample Articles of Incorporation from the California Secretary of State for a Nonprofit Public Benefit Corporation and a Nonprofit Religious Corporation are included in the Compendium. Sample incorporation forms and information regarding filing fees are available at http://www.sos.ca.gov/business/be/forms.htm .

Schools must irrevocably dedicate their assets to a religious, charitable, or educational purpose to qualify as a non-profit organization. 16 However, to be exempt from local property tax, schools may be restricted to irrevocably dedicating their assets only to religious or charitable purposes. 17

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2. O PTIONAL P ROVISIONS In addition to the mandatory provisions, the Articles of Incorporation may also include optional provisions such as the following:  The names and addresses of the persons appointed to act as the corporation’s initial directors. 18

An Administrator’s Guide to California Private School Law ©2019 Liebert Cassidy Whitmore 29