by EVELYN BRODY
in Nonprofit Sector : A Research Handbook.
Powell, Walter W.(Editor). New Haven, CT, USA: Yale University Press, 2006. p 243.
http://site.ebrary.com/lib/iupui/Doc?id=10210281&ppg=256
Copyright ? 2006. Yale University Press. All rights reserved.
Most challenging, there is no single “law of nonprofit organizations.” Much of the common law of charity, property, and wills and trusts has found its way into state statutes. We find state laws on nonprofit corporations, federal and state tax laws, and state (and sometimes local) laws on charitable solicitations. Like businesses, many nonprofits worry about laws (sometimes with special rules for nonprofits) on contracting, labor and employment, torts and insurance, employee benefits, antitrust, bankruptcy, and political activity, as well as laws that govern specific industries such as hospitals and day care. Of final importance are several sources that are not themselves law but that influence legal development. The American Law Institute (ALI) published the Restatement (Second) of the Law of Trusts in 1959, and has published two portions so far of the Restatement (Third) of the Law of Trusts (the first, issued in 1992, covers prudent investing; the second, issued in 2003, addresses, among other topics, the definition of charity and the cy pres doctrine). Also in 1992 the ALI produced the Principles of Corporate Governance, relating to business corporations, and in 2001 opened a project on “Principles of the Law of Nonprofit Organizations,” for which this author is Reporter. The American Bar Association’s 1987 Revised Model Nonprofit Corporation Act (the “Model Act”) has been enacted (sometimes with variation) in more than two dozen states; the ABA’s prior version was adopted in thirty-nine states. The National Conference of Commissioners on Uniform State Laws (NCCUSL) in 1972 adopted the Uniform Management of Institutional Funds Act (UMIFA), enacted (sometimes with minor variation) in forty-eight jurisdictions; a major revision of UMIFA had its first of two required readings in 2003. NCCUSL also approved a uniform trust code in August 2000, and states are beginning to adopt it. 5 In discussions below, for simplicity we usually refer to the ABA’s Model Act, UMIFA, the Uniform Trust Code, and the various ALI projects in lieu of specific state laws. Finally, an increasing amount of secondary legal guidance is being produced (see, for example, the very helpful ABA Section of Business Law 1993; Siegel 2006).
Choice of Form
Creators of a new charity can generally choose between two basic regimes: the nonprofit corporation and the charitable trust. 16 (Informal or other unincorporated voluntary associations, which traditionally function under the laws of agency and partnership, could expose the participants to personal liability.) State nonprofit corporation statutes vary. For example, New York State provides rules for four different types of “not-for-profit” corporations; states following the ABA’s Model Act differentiate between “public benefit,” “mutual benefit,” and “religious” corporations (as does California, whose law inspired the ABA); and Delaware and Kansas have a single statute covering both business and nonprofit corporations. Additionally, some states have enacted statutes for, among others, “unincorporated associations” (granting members limited liability), homeowners associations, cooperatives, health-care corporations, and mutualbenefit insurance companies. Finally, many states, again with variation, have codified the common law of charitable trusts, and adopted such specific statutes as UMIFA (Fisch et al. 1974; Bogert and Bogert 2000; Fremont-Smith 2004a). American advisers routinely recommend the nonprofit corporate form, although the trust form might be particularly appropriate for a charity (such as a grant-making foundation) that manages a fund of money and makes distributions.
Powell, Walter W.(Editor). Nonprofit Sector : A Research Handbook.
New Haven, CT, USA: Yale University Press, 2006. p 247.
http://site.ebrary.com/lib/iupui/Doc?id=10210281&ppg=260
Copyright ? 2006. Yale University Press. All rights reserved.
Powell, Walter W.(Editor). Nonprofit Sector : A Research Handbook.
New Haven, CT, USA: Yale University Press, 2006. p 246.
http://site.ebrary.com/lib/iupui/Doc?id=10210281&ppg=259
Copyright ? 2006. Yale University Press. All rights reserved.
Powell, Walter W.(Editor). Nonprofit Sector : A Research Handbook.
New Haven, CT, USA: Yale University Press, 2006. p 245.
http://site.ebrary.com/lib/iupui/Doc?id=10210281&ppg=258
Copyright ? 2006. Yale University Press. All rights reserved.
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