The purpose clause is a statement that describe the organization’s reasons for operation. To be eligible for 501(c)(3) tax-exempt status, an organization’s purpose must be exempt in accordance with what the IRS defines as charitable. One example of an acceptable purpose clause, as provided by the IRS, is, “The corporation is organized exclusively for charitable, religious, educational, or scientific purposes under section 501(c)(3) of the Internal Revenue Code, or corresponding section of any future federal tax code.”
The dissolution clause is a statement that explain what said organization will do with its assets in the event that the organization dissolves. This clause is particularly important given that assets of a nonprofit are not owned by any person or group. A nonprofit may dissolve in the event that the organization has fulfilled its mission, if it faces challenges too great for the organization to overcome, or if a nonprofit decides to merge with another organization.
One example of an acceptable dissolution clause, as provided by the IRS, is, “Upon the dissolution of this corporation, assets shall be distributed for one or more exempt purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code, or corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose.”