OVERVIEW OF THE REGULATION OF CHARITABLE FOUNDATIONS (FROM REGULATION OF CHARITABLE TRUSTS AND SOLICITATIONS, 1974, BY GREGORY MALHOIT - SEE NCJ-49565)

• NCJ Number: 49566
• Author(s): M FREMONT-SMITH
• Date Published: 1974
• Length: 5 pages
• Corporate Author: National Assoc of Attorneys General
• Publication Format: Document
• Language: English
• Country: United States of America

Annotation

TOPICS COVERED INCLUDE DEFINING A CHARITABLE FOUNDATION, THE STATE'S ROLE IN PROTECTING CONSUMERS FROM FRAUD, GOVERNMENTAL COOPERATION NECESSARY FOR EFFECTIVELY MONITORING CHARITIES, AND FEDERAL TAX LAWS AS REGULATION.

Abstract

THIS OVERVIEW BEGINS WITH THE PROBLEM OF THE DEFINITION OF CHARITY AND THE HISTORY OF REGULATING CHARITIES. BEFORE THE TAX LAWS THAT WERE PASSED BETWEEN 1943 AND 1949 ENCOURAGED DEVELOPMENT OF 'CHARITABLE FOUNDATIONS' WITH NO CHARITABLE PURPOSE, STATES WERE GENRERALLY UNINTERESTED IN REGULATION IN THIS AREA. FEDERAL LAWS REGULATING CHARITIES WERE PASSED IN 1950 AND SIMILAR LAWS WERE ENACTED IN THE STATES OF RHODE ISLAND, NEW HAMPSHIRE, MASSACHUSETTS, OHIO, AND SOUTH CAROLINA THAT SAME YEAR. THE TAX REFORM ACT OF 1969 WHICH RESULTS IN A $70 MILLION A YEAR TAX ON CHARITIES IS CRITICIZED. IT LED TO THREE MAJOR CHANGES: PRIVATE FOUNDATIONS WERE DEFINED BY LAW; CHARITY WAS SUBJECT TO FEDERAL INCOME TAX FOR THE FIRST TIME; AND THE STATES' ROLE IN REGULATING CHARITY WAS FORMALLY RECOGNIZED WITH PROVISIONS FOR INFORMATION EXCHANGE BETWEEN THE U.S. INTERNAL REVENUE SERVICE AND STATES ATTORNEYS GENERAL. THE STATES ARE URGED TO ENACT UNIFORM LAWS FOR THE REGULATION OF CHARITIES SO THAT THIS FUNCTION WILL NOT HAVE TO FALL TO THE INTERNAL REVENUE SERVICE, WHICH IS CALLED AN INAPPROPRIATE AGENT FOR SUCH REGULATION. A GENERAL OVERVIEW OF THE LEGAL ROLE OF THE STATES IN REGULATION OF CHARITIES AND PROTECTION OF THE PUBLIC CONCLUDES THE DISCUSSION. (GLR)