For Whom Are Non-Profit Managers Trustees? The Contractual Revolution in Charity Governance

Laby & Russell, eds., Fiduciary Obligations in Business (Cambridge University Press, Forthcoming)

41 Pages Posted: 3 Aug 2020

See all articles by Jacob Hale Russell

Jacob Hale Russell

Rutgers Law School; Stanford University - Arthur & Toni Rembe Rock Center for Corporate Governance

Date Written: June 9, 2020

Abstract

This chapter chronicles an unnoticed aspect of the intellectual history of the “contractarian” paradigm, the descriptive claim that firms are best characterized as nexus of contracts. Although the paradigm’s rise in the 1980s in the corporate world is well known, little has been said about its success in rewriting both theory and doctrine in charitable and not-for-profit law. The contract paradigm has reshaped the questions that not-for-profit scholarship attempts to answers, and it is tightly linked to developments in not-for-profit doctrine and practice. Key examples include the growth of donor standing — the notion that not-for-profits have a fiduciary duty to their donors, and that donors may bring suit for breaches — and the growing obsession with “donor intent” throughout the not-for-profit sphere. I contrast contractarianism with an institutionalist “public trust” conception of charities, which was the prevailing intellectual paradigm for most of the 20th century.

Keywords: charitable law, not-for-profit, non-profit, donor intent, cy près, contractarian paradigm, law and economics, intellectual history, nexus of contracts

JEL Classification: B20, K22, L31

Suggested Citation

Russell, Jacob, For Whom Are Non-Profit Managers Trustees? The Contractual Revolution in Charity Governance (June 9, 2020). Laby & Russell, eds., Fiduciary Obligations in Business (Cambridge University Press, Forthcoming), Available at SSRN: https://ssrn.com/abstract=3647225

Jacob Russell (Contact Author)

Rutgers Law School ( email )

Camden, NJ
United States

Stanford University - Arthur & Toni Rembe Rock Center for Corporate Governance ( email )

Stanford, CA
United States

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