Flexibility the corporation structure is the most flexible since the board – can change the terms of the purpose, size of board, change bylaws, and in how the corporation operates. Because of the flexibility afforded to as perpetual organizations this is the most common. Trusts are less flexible since if you want to change it you have to operate within the terms of the trust. Once the grantor is deceased charitable trust may live on. May need AG and court approval to change. Difference in standard of care. Trustees generally are held to a higher standard (not a substantially higher standard). With the non-profit corporation look for personal benefit to determine if there has been a violation of trust. You do not need evidence of personal benefit with a trust. Steps and Standards. Actions. Do you review policies? Do you ask questions when issues come to board? Did your review 990? Monitor programs and services. Insure adequate resources. Is board prepared and active? Showing that you have engaged in these activities will show that you have engaged in the appropriate standard of care. Duty of loyalty. Disclose any interests that may conflict. Keep information at meetings confidential. See state statute for guidance. Legal and ethical integrity. Urban institute found in 20% of organizations there were contracts between board members for professional services. Duty of obedience. Ensure that organization follows its mission. How are laws enforced? AG is responsible to enforce charitable laws and monitor charities in the state. More actions than ever before. AGs file suit against boards of organizations for accountings. This is occurring in a variety of states. A lot of this activities is coming from social outcry. With the internet disgruntled donors or board members or other organizations in the community put complaints on social media. When enough attention is given then the AG may intervene. If AG investigates a charity the IRS may also become interested. IRS audit. Securities laws. Employment laws. Prohibited Transaction rules.
Flexibility – the corporation structure is the most flexible since the board can change the terms of the purpose, size of board, change bylaws, and in how the corporation operates. Because of the flexibility afforded to as perpetual organizations this is the most common. Trusts are less flexible since if you want to change it you have to operate within the terms of the trust. Once the grantor is deceased charitable trust may live on. May need AG and court approval to change. Difference in standard of care. Trustees generally are held to a higher standard (not a substantially higher standard). With the non-profit corporation look for personal benefit to determine if there has been a violation of trust. You do not need evidence of personal benefit with a trust. Steps and Standards. Actions. Do you review policies? Do you ask questions when issues come to board? Did your review 990? Monitor programs and services. Insure adequate resources. Is board prepared and active? Showing that you have engaged in these activities will show that you have engaged in the appropriate standard of care. Duty of loyalty. Disclose any interests that may conflict. Keep information at meetings confidential. See state statute for guidance. Legal and ethical integrity. Urban institute found in 20% of organizations there were contracts between board members for professional services. Duty of obedience. Ensure that organization follows its mission. How are laws enforced? AG is responsible to enforce charitable laws and monitor charities in the state. More actions than ever before. AGs file suit against boards of organizations for accountings. This is occurring in a variety of states. A lot of this activities is coming from social outcry. With the internet disgruntled donors or board members or other organizations in the community put complaints on social media. When enough attention is given then the AG may intervene. If AG investigates a charity the IRS may also become interested. IRS audit. Securities laws. Employment laws. Prohibited Transaction rules.