PRIA Logo™
AlabamaSB2772026 Regular SessionSenate

Unincorporated nonprofit associations; decentralized associations provided for

Sponsored By: Lance Bell (Republican)

Enacted

Businesses & Financial Institutions

Personalized for You

How does this bill affect your finances?

Personalize government policy and PRIA will tell you what this bill means for your household, plus every other piece of legislation we track. PRIA reads each provision against your financial profile to show you exactly what matters to your wallet.

Free to download

Bill Overview

Analyzed Economic Effects

13 provisions identified: 1 benefits, 0 costs, 12 mixed.

Liability protections for digital nonprofit members

Beginning October 1, 2026, a digital nonprofit is legally separate from its members for contract and injury claims. Members, administrators, and management participants are not personally liable solely because of their roles; a group judgment does not automatically bind them. The group and its participants can bring claims against one another, and people remain liable for their own conduct under other laws. Membership alone creates neither authority to act for the group nor special duties of trust, unless governing rules say otherwise. A member acting for the group must act as they reasonably believe serves its best interest.

Digital nonprofits can govern through software

Beginning October 1, 2026, digital nonprofits can run some or all governance through shared digital ledgers and smart contracts. Their governing rules can set public or private access, member privacy, and votes on software, protocol, or rule changes. Groups can use reasonable algorithms to reach agreement, check records, and set ledger operating procedures. Changes to these algorithms must follow the group's governing procedures and Alabama law.

Digital nonprofits can cover legal costs

Beginning October 1, 2026, digital nonprofits can repay authorized, reasonable work expenses and cover members' or administrators' association-related liabilities. Administrators must meet the law's duties to qualify, and governing rules can broaden or limit liability coverage. Advance payment or reimbursement of proceeding costs, including attorney fees, requires a written request and prior recorded approval by members without a conflict. The requester must affirm a good-faith belief in eligibility and promise repayment if not eligible. Groups can buy liability insurance; former members and administrators qualify for coverage of work done while serving.

Closing digital nonprofits must settle debts

Beginning October 1, 2026, dissolved digital nonprofits continue only to close their affairs, settle claims, and discharge debts. Other law controls required transfers to people or groups with similar nonprofit purposes; otherwise, governing rules control remaining property. Without applicable governing rules, current members share in proportion to their membership interests; property outside these distribution paths follows Alabama unclaimed-property law. Members can authorize administrators to handle proceedings, transfer property, settle disputes, and preserve operations as needed for closing. Administrators, or members closing without administrators, must avoid gross negligence, recklessness, willful or intentional misconduct, and knowing lawbreaking.

Court access and service for digital nonprofits

Beginning October 1, 2026, digital nonprofits can sue, be sued, and join court, government, arbitration, mediation, and related proceedings in their own names. Member claims require a member entitled to sue, a claim tied to the nonprofit purpose, and no required individual participation. Groups can appoint a service-of-process agent by filing with the Alabama Secretary of State, providing Alabama addresses, and paying the filing fee. If reasonable efforts to serve the agent fail, legal papers can be served on a member. Venue follows existing state rules or the county of the appointed agent.

Digital nonprofit members can transfer interests

Beginning October 1, 2026, a digital nonprofit's governing rules control how people join, leave, or lose membership. Without admission rules, buying or taking ownership of a membership interest makes someone a member. Without discipline rules, members must approve suspension, dismissal, or expulsion; without resignation rules, giving up all voting interests ends membership. Membership interests and related rights are transferable unless the group's rules restrict them. Earlier obligations survive departure or discipline unless the governing rules say otherwise.

Digital nonprofit profits face payout limits

Beginning October 1, 2026, digital nonprofits can earn profits, but must use or reserve them for their shared nonprofit purpose. Payments of money or property to members and administrators are generally barred without explicit authorization in governing rules. Allowed payments include reasonable pay or expense reimbursement for services and benefits that match the nonprofit purpose. The law also permits authorized membership-interest buybacks and distributions allowed when the group closes.

Digital nonprofits can continue or change form

Beginning October 1, 2026, digital nonprofits continue indefinitely unless their governing rules provide otherwise. Dissolution follows those rules, member approval when no method exists, or a court order. Below 100 members, a group automatically becomes an Alabama unincorporated nonprofit association if it still meets the stated statutory requirements, unless governing rules say otherwise. A group below 100 members can be dissolved if it no longer meets those requirements. Groups can also merge or change legal form by following applicable state-law requirements and their governing rules.

Digital nonprofits can limit administrator damages

Beginning October 1, 2026, digital nonprofits can limit or remove administrators' liability for money damages to the group or members. The limit must appear in a record within the governing rules. It cannot cover improper financial benefits, willful or intentional harm, intentional criminal-law violations, or improper distributions. A limit covering a specified loyalty breach requires full disclosure and approval or ratification by members without a conflict.

Member voting rules for digital nonprofits

Beginning October 1, 2026, default rules require a majority of participating voting interests to approve major digital nonprofit decisions. These include member discipline, administrator selection or dismissal, governing-rule changes, property sales or other transfers, and dissolution. Votes also cover actions outside normal business and decisions about policy or purpose. Voting interests follow each member's voting rights unless governing rules set another method; governing rules can also change these approval defaults. Administrators are optional unless governing rules require them, and members do not automatically become administrators when none are selected.

New legal status for digital nonprofits

Beginning October 1, 2026, Alabama provides a separate legal framework for digital nonprofit associations with at least 100 members. Members must join by mutual consent for a shared nonprofit purpose, which can include running a digital ledger network. The group must choose this framework and cannot form under another nonprofit-association law. Its governing rules must identify where it formed, and Alabama law governs groups formed in Alabama. The law measures established practices over the latest five years, or the group's entire life if shorter.

Record access and privacy for nonprofit members

Beginning October 1, 2026, digital nonprofit members and administrators can request electronic activity and financial records on reasonable notice. Information must matter to their rights or duties; the group need not provide information already available to the requester. Reasonable confidentiality and safeguarding limits are allowed, but the group must prove challenged limits are reasonable. Former members and administrators can make good-faith requests for relevant records from their time of service. Groups do not have to collect, keep, or provide member lists or personal member information, including names and addresses.

Property powers and filings for digital nonprofits

Beginning October 1, 2026, digital nonprofits can own, borrow against, and transfer property, or receive it through wills, trusts, and contracts. Their rules can limit these powers; Alabama property powers do not require another connection to the state. Real estate transfers require a recorded authority statement naming the group, its Alabama address, the authorized person, and the authority and approval granted. Statements and amendments go to the county probate office, carry existing recording fees, and remain effective until canceled, with automatic cancellation five years after the latest amendment. A recorded statement conclusively establishes the named person's authority for a buyer who pays value without notice of missing authority.

Sponsors & Cosponsors

Sponsor

  • Lance Bell

    Republican • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 303 • No: 11

House vote • 3/12/2026

Motion to Read a Third Time and Pass - Adopted Roll Call 887

Yes: 82 • No: 7 • Other: 16

House vote • 3/12/2026

Third Reading in Second House

Yes: 93 • No: 0 • Other: 12

Senate vote • 2/24/2026

Bell motion to Adopt - Adopted Roll Call 559

Yes: 32 • No: 1

Senate vote • 2/24/2026

Third Reading in House of Origin

Yes: 32 • No: 1

Senate vote • 2/24/2026

Bell motion to Adopt - Adopted Roll Call 560

Yes: 32 • No: 1

Senate vote • 2/24/2026

Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 561

Yes: 32 • No: 1

Actions Timeline

  1. Enacted

    4/2/2026Senate

  2. Signature Requested

    3/17/2026House

  3. Delivered to Governor

    3/17/2026Senate

  4. Enrolled

    3/16/2026Senate

  5. Third Reading in Second House

    3/12/2026House

  6. Motion to Read a Third Time and Pass - Adopted Roll Call 887

    3/12/2026House

  7. Ready to Enroll

    3/12/2026Senate

  8. Ready to Enroll

    3/12/2026Senate

  9. Read for the Second Time and placed on the Calendar

    3/5/2026House

  10. Reported Out of Committee Second House

    3/4/2026House

  11. Read for the first time and referred to the House Committee on Economic Development and Tourism

    2/25/2026House

  12. Pending Committee Action in Second House

    2/25/2026House

  13. Third Reading in House of Origin

    2/24/2026Senate

  14. Fiscal Responsibility and Economic Development 2nd Amendment Offered

    2/24/2026Senate

  15. Fiscal Responsibility and Economic Development 1st Amendment Offered

    2/24/2026Senate

  16. Bell motion to Adopt - Adopted Roll Call 559

    2/24/2026Senate

  17. Bell motion to Adopt - Adopted Roll Call 560

    2/24/2026Senate

  18. Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 561

    2/24/2026Senate

  19. Read for the Second Time and placed on the Calendar

    2/19/2026Senate

  20. Fiscal Responsibility and Economic Development 1st Amendment

    2/18/2026Senate

  21. Fiscal Responsibility and Economic Development 2nd Amendment

    2/18/2026Senate

  22. Reported Out of Committee House of Origin

    2/18/2026Senate

  23. Read for the first time and referred to the Senate Committee on Fiscal Responsibility and Economic Development

    2/10/2026Senate

  24. Pending Committee Action in House of Origin

    2/10/2026Senate

Bill Text

Related Bills

Back to State Legislation