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Improving Charity Governance with Advance Rulings

Sugin, Linda

Governing charitable organizations isn’t getting any easier. Not only has the number of organizations grown, but their legal complexity has increased as well. Charities play a crucial role in the economic, social, and cultural structures of society, but they are privately governed organizations with legal structures that closely resemble businesses. The better charities are run, the more they can contribute to their public missions and overall social welfare. The state does not dictate “how to ‘do’ charity,” but state attorneys general (“AG”) are the primary overseers of charity behavior, responsible for enforcing the obligations of loyalty, care, and obedience that fiduciaries have under the laws of every state. The AG’s burden is great because very few other parties are allowed to bring suit to enforce these duties. This paper is primarily concerned with institutionalizing better nonprofit governance by helping fiduciaries understand their obligations in difficult cases. The advance ruling process it advocates aims to strengthen the private governance of charities by growing a body of law one real question at a time. Nevertheless, it is important to recognize that legal efforts to improve governance must continue along both a narrow path for individual charity problems and a wider one to better establish standards of behavior in the sector as a whole. There is a place in charity governance for best practices that are not law, and it is important to identify which issues are appropriate for attorney general enforcement as an application of law. General principles of good governance with the imprimatur of law can be made widely available either as legislation, regulation, or official state standards of best practices. These are worthwhile initiatives, but they are not my focus today.

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Another paper from the same panel is available in Academic Commons.

"The Fundamental Role of The States In Governance Issues" by Karen Gano - http://dx.doi.org/10.7916/D89K4866

Access all papers from the 2013 Charities Regulation and Oversight Project Policy Conference in Academic Commons
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