The Limits of Charity Fiduciary Law
Yale University, Program on Non-Profit Organizations Working Paper No. 242
102 Pages Posted: 5 Sep 1997
Trustees of charitable trusts and directors of nonprofit corporations operate under legal regimes designed for their for-profit cousins. In the absence of private beneficiaries or shareholders to look after their own interests, however, charity fiduciaries frequently escape accountability for their self-dealing and neglect or mismanagement. Few charities have members endowed with voting rights, and state attorneys general have limited resources to devote to monitoring the nonprofit sector. Similarly, at the federal level, the Internal Revenue Service is a tax collector, not a policing agency (although its new powers to tax excess benefits will undoubtedly draw it further into charity operations). As a result, the charitable sector must improve its own efforts to educate and review the behavior of fiduciaries, in order to retain the confidence of the donating public and the independence so cherished by all charities.
Keywords: charity fiduciary, nonprofits
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