Exam 1 Flashcards
Characteristics of Nonprofit management
mission based, nondistribution clause, employees are volunteers mainly, corporation with special tax status
Salamon’s Definition of Nonprofits
Formal Organization Nonprofit distributing Private Self-governing Voluntary Public Good
Elizabethan Statute of Charitable Uses
British Colonial
tax break given to charities
imported the idea to US gov’t taxcode
Dartmouth v Woodward
nonprofits free of gov’t control, legislature wanted control of Dartmouth (originally contract w/ King of England
British Colonial Era
Elizabethan Statute - tax deductions/ Poverty & Education
New Republic Era
Separation of church & state
Dartmouth v Woodward
19th Century
arts & museums (Smithsonian)
1900-1960
1913 Tax Exemption for Nonprofits
1917 Tax Deduction for Donations
Science & Research categories added
1960-2000
Up federal funding
Up earned income (tuitions, hospital fees, etc)
explosive growth
secularization
2000-Present
Sector blending
nonprofits more business like
Federal Legal System
federal courts enforce federal law and interstate trade
state courts enforce state law and crimes, instrastate trade
Common Law
based on judicial decisions
precedence and rulings
not paying for cow - law
defective cow - new law
Legislated Law
constitution
overrules common law
statute
regulation
1st Amendment
Free Speech
Right to Assembly - Association
Free exercise (religion)
10th Amendment
any power not claimed by fed gov’t
goes to state
nonprofits are state incorporated
Persons
sued, owned property, taxed, natural rights
Corporations
sued, own property, taxed, Statutory rights
Trusts
Trustees sued, trustees own property, taxed, statutory rights
Civil Claims
tort - wrongful act - injury occurs
contract - agreement with promise to exchange
statutory claim - legal claim because of legislature
Standing - right to pursue
personal claim
unlawful cause
chance for “relief”
jurisdiction
authority to enforce law
Justiciability - matters that a court can rule on
nonadvisory - decision makes a difference
plaintiff has standing
ripeness & mootness (controversy hasn’t been resolved)
not political
Coporation Structure
shareholders
Nonprofit Structure
Possible Members
Normal Trusts
Settlor - Trustee - Beneficiaries
Nonprofit Trusts
Settlor - Trustee - Charitable purpose or Beneficiary class
Corporate Veil
personal assets protected
can be pierced
Corporate Formalities
requirements must be met to maintain status
Bylaws
rules not filed with state
board operations, executive & misc operations
Cypres
if trust purpose is thwarted, court can change to approximate original intent
Coporation
formal entity, complicated formalities, corp veil, owned and unowned
Benefit Corporation
formal entity, complicated formalities, corp veil, owned
Association
informal entity, no formalties, no veil, unowned
Trust
informal entity, complicated, no veil, specially owned
LLC
formal entity, simple formalities, corp veil, owned
L3C
formal entity, simple formalities, corp veil, owned
Benefit LLC
formal entity, simple formalities, corp veil, owned
Board Of Directors requirement
18 years or older
time/talent/treasure
no special ruling preventing it
should be a donor, come to meetings, diversity, connected, mission commitment
Director Selection Process
board of directors hires, fires, determines compensation
Good Governance
Public Discourse - tell donors what they should know
Diligent Board of Directors - come to meetings
Conflict of Interest Policy - know it’s working if brought to boards attention
Rigorous Financial Accounting
Appropriate Program Expenses 3:| ratio overhead
Ethical Fundraising $2 to $1
Donor Privacy - trustworthy
Duty of Loyalty
no self dealing - can’t use corp. assets to personally benefit financially, BYU says no food reward programs
disclosure of competitive endeavors (corporate opportunity doctrine)
Duty of Care
“reasonable care”
be informed - don’t make decisions like a villain (bad faith) Business Judgement Rule
Principal Agent Relationship
Principal gives authority to agent to act
principal bound by agents torts and contracts
Express
outlined boundaries/limitations on authority
Implied
agency by implication/assumption not expressed, but understood
Appareat
3rd party has good reason to believe in agent’s authority, appearance of agency
Volunteers
can be agents
