Nonprofit Organizations Law and Policy Third Edition - Libraries ...

SEC. I NATURE OF A NONPROFIT ORGANIZATION 3
QUESTIONS
1. What is a "nonprofit" purpose? Would the following organizations
have a nonprofit purpose: the State Rifle Association, an Abortion Rights
State Organization, the National Atheist Foundation, the Center to Advance
Rights of Aryan Persons, and the Holy Land Freedom Foundation (which
allegedly funneled donations to terrorist groups in the Middle East)?
2. What if a nonprofit's purpose is illegal? Consider § 501(p), which
provides for the suspension of the tax exempt status of any organization that
is designated or otherwise identified as a terrorist organization or a foreign
terrorist organization.
In Holy Land Foundation for Relief and Development v. Ashcroft, 333
F.3d 156 (D.C.Cir.2003), cert. denied, 540 U.S. 1218, 124 S.Ct. 1506, 158
L.Ed.2d 153 (2004), the D.C. Court of Appeals ruled that the Office of Foreign
Asset Control did not act arbitrarily and capriciously in designating a Muslim
charitable foundation as a terrorist organization and blocking its assets.
3. What is a "charity?" Would any of the organizations listed in question
1 qualify as a "charitable" organization?
4. Should there be restrictions on the ability of individuals and groups
to establish nonprofit organizations?
5. Who decides whether an organization has an "acceptable" nonprofit
purpose? Should a governmental official be given discretion to deny an
application for incorporation of a nonprofit corporation if the official takes
issue with the stated purpose of the organization?
Consider these questions in the following case.
FOSTER, JUDGE.
ASSOCIATION FOR PRESERVATION OF
FREEDOM OF CHOICE v. SHAPIRO
Court of Appeals, New York, 1961
9 N.Y.2d 376, 214 N.Y.S.2d 388, 174 N.E.2d 4t-1'i"
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The proposed certificate of incorporation, as presented for the approval
of a Justice of the Supreme Court, listed the following charter purposes:
'(a) to promote the right to individual freedom of choice and
association, constituting the right of the individual to associate with
only those persons with whom he desires to associate;
'(b) to conduct itself, and to encourage, promote, and aid in
scientific research into problems engendered by a multicultural soci-
of religion; advancement of education or science; erection or maintenance of public buildings,
monuments, or works; lessening of the burdens of government; promotion of social welfare;
lessening of neighborhood tensions; elimination of prejudice and discrimination; defending human
and civil rights secured by law; and combating community deterioration and juvenile delinquency.