The ‘Independent’ Sector: Fee-for-Service Charity and the Limits of Autonomy

73 Pages Posted: 29 Aug 2010 Last revised: 11 Apr 2012

Lloyd Hitoshi Mayer

Notre Dame Law School

Date Written: August 26, 2010

Abstract

Although numerous scholars have attempted to explain and justify the benefits provided to charities, none has been completely successful. Their theories share, however, two required characteristics for charities. First, charities must be distinct from other types of entities in society, including governmental bodies, businesses, other types of nonprofit organizations, and informal entities such as families. Second, charities must provide some form of public benefit. Given these defining characteristics, the principal role for the laws governing charities is to protect charities from influences that could potentially undermine these traits. This Article is the first to recognize fully the importance of this approach, which I term the autonomy perspective. Applying this new perspective to the law governing charities reveals that while existing law generally protects charity autonomy, it fails to do so in one major respect. Current law does not directly address the growing and often negative influence of consumers who purchase services from charities primarily for the consumer’s own benefit and with little if any regard to the public benefit charities must provide. This Article then considers under what market conditions the influence of these consumers, whether patients, students, retirement community residents, or others, is likely to be detrimental to a charity’s pursuit of public benefit, and what options exist for addressing this influence. It concludes with suggestions for further research that would help lawmakers target this influence and so better address questionable behavior by charities.

Keywords: charitable, nonprofit, taxation

Suggested Citation

Mayer, Lloyd Hitoshi, The ‘Independent’ Sector: Fee-for-Service Charity and the Limits of Autonomy (August 26, 2010). Vanderbilt Law Review, Vol. 65, p. 51, 2012; Notre Dame Legal Studies Paper No. 10-21. Available at SSRN: https://ssrn.com/abstract=1666421

Lloyd Hitoshi Mayer (Contact Author)

Notre Dame Law School ( email )

P.O. Box 780
Notre Dame, IN 46556-0780
United States
574-631-8057 (Phone)
574-631-4197 (Fax)

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