Florida enacted the most significant modernization of its nonprofit law in decades. Effective July 1, 2026, the new Florida Nonprofit Corporation Act (the "Act") makes broad changes affecting both routine governance and significant transactions for many Florida nonprofit organizations. The Act substantially rewrites the corporate governance law for nonprofit corporations organized in Florida, conforming it with the American Bar Association's Model Nonprofit Corporation Act and harmonizing it with provisions of Florida's Business Corporation Act, which was updated in 2019 to align with the American Bar Association's Business Corporation Act. Florida incorporated nonprofits should proactively review their articles of incorporation, bylaws, internal governance policies, and board training materials to account for the latest developments and ensure compliance with the unique aspects of the Act.
Major Changes
Below is a summary of some of the more consequential changes included in the Act:
- Board governance changes. The Act makes several changes affecting boards of directors, including:
- Reducing the minimum number of directors required to one, except that 501(c)(3) organizations must still continue to have at least three directors;
- Establishing default rules for the selection of directors and filling of vacancies;
- Creating a default one-year term for directors unless a different term is specified in a nonprofit's articles of incorporation or bylaws;
- Creating a mechanism for removing directors by judicial proceedings and allowing removal if a court finds that the director engaged in fraud, abused their position, or intentionally harmed the organization and removal is in the best interest of the nonprofit; and
- Updating the framework for addressing director conflicts of interest, including establishing a burden of proof for challenging interested-party transactions and making fairness to the corporation the central standard. Organizations should review their current conflict of interest policies and related disclosure procedures, and revise them to conform with the Act's updated guidance.
Nonprofits should review their governing instruments and meeting practices to ensure the practices are accurately documented and continue to conform with the Act.
- Revised procedures for derivative proceedings. The Act makes several changes to derivative proceedings brought on behalf of a nonprofit corporation. A complainant may now commence a derivative action without first making a demand on the board of directors if the complainant can establish that such demand would be futile. Additionally, directors and officers now have standing to bring derivative suits, whereas prior law limited standing to members to bring derivative actions. Nonprofits with ongoing or anticipated governance disputes should consider the expanded avenues for judicial intervention available to address board deadlocks and alleged misconduct by directors or officers.
- Codified director standards of conduct and expanded liability protection for directors and officers. Under prior Florida law, directors' fiduciary duties were not statutorily codified and were largely governed by judicial case law. The Act now establishes statutory standards of care for directors and provides guidelines outlining how directors must uphold these duties to avoid personal liability. Nonprofits should update their board orientation materials to reflect the modernized standards of director conduct and the expanded liability protections available to directors and officers. Nonprofits should also review indemnification agreements and liability insurance coverage to ensure they continue to provide appropriate protection for directors and officers.
- Updated procedures for nonprofit mergers, conversions, domestications, and dissolutions. The Act substantially revises procedures for reorganization transactions. Florida nonprofits may now merge with other types of entities, rather than only with other nonprofit corporations, although a nonprofit holding property for a charitable purpose must have a nonprofit corporation as the surviving entity. The amendments also add procedures for parent-subsidiary mergers and abandoning a merger and require additional disclosure by merging entities in the articles of merger over what prior law mandated.
The amendments add a framework for inbound and outbound domestications so that non-Florida nonprofits can more easily become Florida nonprofits. For organizations and nonprofit founders who have relocated to Florida, redomiciling affiliated organizations may now be a practical option to consider.
The Act also creates new provisions for converting from a for-profit entity to a nonprofit corporation, and from a nonprofit corporation to a for-profit entity. The Act revises provisions related to dissolution. Specifically, the Act creates a new process for claim-disposition procedures and provides new pathways to achieve involuntary judicial dissolution.
Nonprofits considering these types of restructuring transactions should evaluate the new procedures before approving or filing the related transaction documents.
- New process for amending articles of incorporation. The Act revises the process for amending a nonprofit's articles of incorporation, which will be important for nonprofits considering governance changes or which do not have a provision in their articles of incorporation. Furthermore, for nonprofits with voting members, the Act provides a discrete list of changes that the nonprofit's board of directors can make to the articles of incorporation without receiving approval of the members. The Act also incorporates new standards for the meeting notice that must be provided to members before a vote to amend the articles of incorporation.
- Corporate recordkeeping and inspection rights. The Act updates the rules for maintaining corporate records by establishing minimum retention requirements for certain documents and adds specificity to the required format of accounting records. The Act also addresses the inspection rights of members and directors. Nonprofits should review their current record retention practices and inspection procedures to ensure the required corporate records are maintained and accessible upon request.
- The end of mutual benefit nonprofits. The Act removes the distinction between mutual benefit corporations and other kinds of nonprofit corporations. Under prior law, Florida distinguished between nonprofit corporations and mutual benefit corporations, which were nonprofits not recognized as exempt from taxation under section 501(c)(3) of the Internal Revenue Code. The removal of this distinction means that nonprofit corporations will generally be treated similarly under the Act, regardless of their IRS tax-exempt status classification.
- Updated rules for membership interests. The Act prohibits a nonprofit corporation from acting as a member of itself. It also establishes rules for transferring interests, which the prior law prohibited, except for mutual benefit corporations.
Florida nonprofits should understand that the Act includes changes that have particular significance for their current practices and future plans. If your nonprofit has not reviewed its governing documents and governance practices in recent years, or if it is considering governance changes, now is an ideal time to conduct a governance review and update board orientation materials to ensure your governing documents and practices reflect the changes in the law that took effect on July 1, 2026. Please contact our Nonprofit Organizations Practice with any questions about how these changes may affect your nonprofit.