Judgments Against Non-Profit Entities

Judgment enforcement with a (judgment debtor) big nonprofit organization, gets done the same way as with any other corporate entity or business.

This article is about recovering judgments on (judgment debtor) small nonprofit companies. What if your judgment debtor is a non-profit organization, or an officer in a non-profit organization?

Whether a nonprofit organization is large or small, the method of levying an employee's wages at the company remains the same. If an employee works at a non-profit organization, their wages can usually be levied.

When the nonprofit employer does not answer the Sheriff's wage garnishment notification, one can sue the non-profit employer for the funds that they should have withheld, when state laws permit.

Whether a nonprofit company is a company entity registered at the Secretary Of State's office, or not; nonprofit organizations are less likely to pay dividends or salaries. Can their assets be garnished to pay your judgment?

Nonprofit entities have no stock shares, and most small ones do not pay the officers with conventional incomes.

While you can ask the sheriff to levy a debtor's office furniture, that can be a very expensive way to recover a judgment. It could cost more than would be recovered at the Sheriff's auction.

It's usually very difficult to garnish non-profit asset distributions or dues, to recover a judgment, unless they were proven as fraudulent transfers. If that is the case, enforcing would merely be difficult.

The term "nonprofit" only means that the structure of the entity isn't for profit, and there aren't any shares or stock certificates. In nearly every other respect, a non-profit company is run like every other company.

Certain nonprofits, for example, Sesame Street, have a spin off (for profit) corporation, that is where the money is sent if one buys an Elmo toy.

Certain more "profitable" and larger nonprofit companies pay good wages, and may offer matching with saving accounts funds. There may be a lot of cash in a non-profit company.

One-person nonprofit organizations are sometimes used as a personal tax shelter, and occasionally there may be some sort of scam going on.

With tiny nonprofit organizations, there might be a co-mingling of assets between the president of the non-profit organization and a personal checking account, treating the company as a personal piggy bank.

Just like for-profit companies, non-profits need to keep their company minutes, have meetings, be registered with the Secretary Of State, keep separate business bank accounts, etc.

If they do not follow the requirements to be or stay a nonprofit organization, they may owe a lot of taxes, and lose their liability protection.

If the nonprofit dissolves, perhaps the creditors will be paid something upon the dissolution.

Judgment debtor exams and post-judgment document production requests, served on the non-profit entity and possibly 3rd-parties, may turn up many hints on located assets, that might be used to satisfy a judgment.

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