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voice in selecting at least 6 of the minimum of 8 members yet to be selected from the nominees of the 4 local community committees. [FAS 164, paragraph A25, sequence 126.1.1]

  • b.

    Charity C’s dominance in the selection of the key senior officers. The table in paragraph 958-805-55-25 indicates that early on it was decided that the chief executive officer of Charity C would be retained as chief executive officer and president of Charity E, that the chief executive officer of Charity D of County would become one of Charity E’s vice presidents, and that there was no need to open the chief executive officer search process to external parties. [FAS 164, paragraph A25, sequence 126.1.2]

  • c.

    Charity C’s dominance in terms of financial capability and viability. Charity D has been experiencing financial difficulties and since 20X1 has been somewhat dependent on Charity C to provide back-office and information technology support for a below-cost fee. [FAS 164, paragraph A25, sequence 126.1.3]

958-805-55-28 In addition, it appears that Charity C wanted to preserve and obtain certain aspects of Charity D’s operations and resources, including the following: [FAS 164, paragraph A26, sequence 127.1]

  • a.

    Charity D’s expertise in implementing new programs developed and promoted by the national entity [FAS 164, paragraph A26, sequence

      • 127.1.1


  • b.

    Charity D’s existing donor relationships [FAS 164, paragraph A26, sequence 127.1.2]

  • c.

    Charity D’s residual net assets. [FAS 164, paragraph A26, sequence

      • 127.1.3


958-805-55-29 Charity C also apparently wanted to restructure its governance to have a much smaller governing board of 20 to 30 high-impact community leaders (like the members of its existing executive committee). Charity C’s wishes concerning aspects of Charity D’s operations and resources and restructuring its governance do not relate directly to the indicators that help to distinguish a merger from an acquisition. But those additional factors are part of what is considered in making a judgment on the basis of the preponderance of the evidence, as this Subtopic requires. [FAS 164, paragraph A26, sequence 127.2]

958-805-55-30 On the basis of the preponderance of the evidence, it is determined that Charity C acquired Charity D. The acquisition was achieved by, in effect, a gift of Charity D to Charity C. Although each charity legally dissolved, the substance of the combination is much the same as if Charity C first restructured its board of directors along the lines desired and then absorbed Charity D and added five of its nominees to the restructured board. [FAS 164, paragraph A27, sequence 128]


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