September 2, 2004 | Read Time: 2 minutes
Governing Nonprofit Organizations: Federal and State Law and Regulation
by Marion R. Fremont-Smith
This book provides an overview of the laws and regulations governing nonprofit organizations and the roles of state attorneys general, the Internal Revenue Service, and other government agencies in enforcing those rules. Marion R. Fremont-Smith, senior research fellow at the Hauser Center for Nonprofit Organizations at Harvard University, says it is essential that government set rules that ensure that nonprofit groups are not being used for private purposes, and yet are not overly regulated. The author also offers recommendations for making state and federal laws more effective.
Ms. Fremont-Smith opens the book with a brief history of laws governing charities in England and the United States. She describes current regulations regarding the formation and termination of nonprofit organizations and IRS restrictions on excessive compensation and self-dealing. The book also offers examples of how charity laws are effectively enforced in several states.
Ms. Fremont-Smith says that enforcement efforts are often not as strong as they should be. For example, she says most state laws and penalties do not go far enough in preventing board members from receiving personal benefit at the cost of a charity’s goals. She writes that this failure to hold individual directors accountable has “seriously undermined enforcement efforts.”
The author also gives suggestions for changing policies concerning the composition of nonprofit boards, how much say donors should have on how their gifts are spent, and how charitable trusts can change their original purposes. Ms. Fremont-Smith asserts that regulations that are more restrictive as to how nonprofit groups operate, although appropriate for larger charities, could be too costly or cumbersome for smaller ones.
Publisher: Harvard University Press, 79 Garden Street, Cambridge, Mass. 02138; (401) 531-2800 or (800) 405-1619; fax (800) 406-9145; contact_HUP@harvard.edu; http://www.hup.harvard.edu; 550 pages; $95; I.S.B.N. 0-674-01306-9.
