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Sample Essay on Not-for-Profit Law in the USA

November 4th, 2015

not for profit lawThe not-for-profit laws of the United States of America are related to the taxation issues, particular problems of corporations that don’t have any profit as their number one motivation. Some of the not-for-profit companies can be described as the so-called ‘charities’ (a good example is the US Red Cross). At the same time, some of the non-profit corporations serve firmly for the private benefit of its all members (for instance, country clubs), while the others are something between commerce chambers or unions of labor. Every segment includes its special legal issues.

The USA not-for-profit companies are, like the not-for-profit organizations, usually founded and managed in accordance with the state law, rather than the regulations of the federal government. At the same time, there are some charities that are operated by the federal government, such as the US Olympic Committee, US Red Cross and the US Boy Scouts.

In general, not-for-profit organizations and individuals that operate these companies must work in accordance with the whole range of the same laws that would apply to the businesses that gain profit. According to the US not-for-profit law, there are some exceptions related to the taxes and the ones regarding the concerns of the 1st Amendment. The officers and directors of the not-for-profit organizations owe a special fid duty to the not-for-profit as well as its beneficiaries that are alike to the duties that are owed by the for-profit companies’ directors. Not-for-profits may be provided with the vicarious liability for various injuries that have been caused by the members of the personnel to the third parties. That is why it’s recommended for every not-for-profit to get the liability insurance. The not-for-profits that have paid personnel should act in accordance with the laws regarding the minimum level of wages. When the question is about the religious not-for-profit organizations, it’s called a special case since the 1st Amendment does not allow the government to make a law that ‘respects the religion establishment’ as well as to ‘prohibit the free religion exercise’.

Likewise, some of the not-for-profit organizations are not subject to the United States anti-discrimination laws that may be applied to the same kind of companies serving the country for profit. A good example can be related to the US Boy Scouts that do not provide girls with an opportunity to join them.

Charity not-for-profit organizations face with the same range of challenges from corporate governance that the large trade companies do. Basically, all the troubles arise from the fact that the management that keeps the charity under control is essentially different from the individuals that the charity is originally founded to benefit. In a not-for-profit organization, this problem is even more aggravated than within the for-profit segment, since the not-for-profit company management isn’t even in theory subject to the elimination by the charity beneficiaries. The majority charities’ directors are typically self-perpetuating and make sure to pick the new members exclusively by the voting of the ones that already exist.

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