Roughly half of U.S. states have some level of prior notice and/or consent requirements for one of several major corporate actions that a faith-based nonprofit may take over the course of its existence.

For example, for a nonprofit to amend its articles of incorporation or bylaws, merge with another corporation, voluntarily dissolve, or sell or otherwise dispose of substantially all of its assets, it may need to inform the state’s attorney general or secretary of state in advance of taking such action. In some instances, it may need to obtain the approval of a state court. Consent requirements are typically conditioned on other factors, but three states demand judicial consent in all circumstances.

These requirements may seem harmless and well-intentioned. And sometimes, giving a reasonable amount of notice to a state agency can be reasonable. Since a state foregoes tax revenue from nonprofit organizations, notice requirements can be a legitimate way to ensure that the property and assets of nonprofits are used for exempt purposes.

But these notice and consent requirements can impose serious costs and/or time delays when more effective means may already be available to regulators. Nonprofits may need to merge or dissolve because of high operational costs that exceed their limited resources. Articles of incorporation may need to be amended quickly to meet certain legal or fundraising requirements. Adding further time and financial burdens to these and other major corporate actions can limit the free operation and flourishing of faith-based nonprofits.