Non-Profit Law: Guide to Charitable Organization Law

¶ … Non-Profit Organizations in United States of America and France COMPARISON OF NON-PROFIT ORGANIZATIONS IN UNITED STATES OF AMERICA AND FRANCE Non-Profit Organizations in France and the United States of America Creation Association Loi 1901 is the name given to a not for profit making organization that comprises of two or more people. This name has been derived from the convention that was entered in the French Law on the 1st of July in the year 1901. A not for profit in France can operate without declaration as well.

If the organization is not declared then it does not exist as a legal entity and comes under the collective membership of its owners. (Staff Members of the Cecaudit International Inc., 2014) Declaration The organization, however, is required to get itself declared if it needs to create a bank account or go for fundraising. In addition to that, the organization is also required to go for declaration if its members aim at buying, selling or taking any other legal action on its behalf.

(Staff Members of the Cecaudit International Inc., 2014) The process of declaration requires the following: Submission of declaration with Prefecture or Sous-Prefecture. Declaration of the creation of the association in the official journal. The official journal, here, can be defined as a daily paper that is edited by the French government. It consists of the official declarations, legal information and information in association with the creation of new organizations.

(Staff Members of the Cecaudit International Inc., 2014) The declaration of the organization is free but it must consist of the following information: The exact name of the organization that is to be created along with the abbreviation, if it is to be used. The objective or main aim that the organization would address. The address of the main building or office of the organization. Under this head, physical address of the organization shall be provided rather than the post box.

Information in relation to the members who would be in charge of the administration and management of the organization. This information would include, full names, addresses, dates of birth and places of birth of these members. A copy of the statute of the organization. This statute must be dated and certified by at least two people. The submission of a compte rendu, which must be signed by the incharge of the administration of the organization. A list of all the members of the association.

Addresses of all the members of the association. Other information that might be required for the purpose of declaration include the website of the association and email addresses of the important members of the organization. (Staff Members of the Cecaudit International Inc., 2014) Once the organization submits all the above mentioned information with the Prefecture or Sous-Prefecture, it will be provided with a receipt, also referred to as the recepisse, of declaration from the administration within a period of 5 days after the submission of all the necessary documents.

(Staff Members of the Cecaudit International Inc., 2014) Official Journal The organization is then required to submit an application form in the official journal in relation to the creation of the organization. This can be done at the same at which the declaration is made. The publication of the creation of the organization must appear in the official journal, also referred to as Journal Officiel, within a period of one month after the submission of declaration with the Prefecture or Sous-Prefecture.

A fee is charged for the publication of declaration in the official journal. (Staff Members of the Cecaudit International Inc., 2014) In the United States of America, not for profit organization is a broad term that encompasses a number of organizations including charity organizations, non-profit organizations, non-governmental organizations, civil society organizations, and private voluntary organizations. The not for profit organizations are regulated by the federal, local and state laws in the United States of America.

(Non-profit Law - Guide to Charitable Organization Law, 2014) The basic motive of a not for profit organization is to conduct business that would benefit the general business, irrespective of the interests and benefits of the shareholders. The organizations do not hold a motive of maximizing profit as well. These corporations are created in accordance with the state law. (Non-profit Law - Guide to Charitable Organization Law, 2014) The creation and management of a not for profit organization in the United States of America follows the procedure that is listed below.

This procedure is used by all the States and regions of the United States of America. The process begins with the selection of a name for the organization. The name of the organization cannot be registered unless and until the name can be distinguished from all the other names that are present on the records. In order to determine that whether the selected name is available or not the organization is required to visit the website of the office of Secretary of State.

Once the organization has determined that the name is available it can register it with the office of the Secretary of State. (Members of the Secretary of State, Government of State of Ohio, 2014) The next step is the filing of articles of incorporation with the Secretary of State. The articles must include the following information: The name of the corporation that is to be created. The place where the main office of the organization would be located. The major objectives and purposes for which the organization is being created.

The incorporator, who can be defined as the person who is creating the corporation, shall sign all the articles. The names of the people who would serve as initial directors and the people who would serve as the initial members of the organization. The statement of the purpose of the organization. This statement must be created very carefully as the organization. This is because the organization can legally operate for the purposes that are mentioned in the statement and no other purposes.

(Members of the Secretary of State, Government of State of Ohio, 2014) At the same time the organization is also required to appoint a statutory agent. This is because a not for profit organization is regarded as a non-fictious individual by the law. This statutory agent is responsible for managing, receiving and submitting various legal notices and documents for the organization. (Members of the Secretary of State, Government of State of Ohio, 2014) The organization is also required to file for the exemption of federal taxes with the IRS.

In addition to that, filings for the exemption from property tax shall be made with the government of the city in which the organization operates. Once the organization gets the tax exemption status from IRS, it then applies to get an exemption from taxes with the state. (Members of the Secretary of State, Government of State of Ohio, 2014) The organization is also required to get the solicitation license from the city offices if it aims at soliciting funds.

In addition to that, it is also necessary for the organization to get the federal employer number from the secretary of state or secretary of commerce, once it starts hiring people. (McNamara, 2014; Members of the Secretary of State, Government of State of Ohio, 2014) Management There are no set rules in relation to the structure of management in a not for profit organization, in both France and the United States of America. The concerned authorities can use ant management structure that best suits the objectives and purpose of the organization.

It is, however, necessary for the organization to invite all the members of the organization in the annual general meeting that is held by the administration of the organization. (Staff Members of the Cecaudit International Inc., 2014) If any changes are made in the organization then it is necessary for the concerned authorities to make a declaration of these changes at the Prefecture within a time period of three months.

These changes are required to be noted in a register that can be presented to the legal and administrative authorities and officials, by the organization, if and when required. These changes can also be published in Journal Officiel. This, however, is not a necessary requirement. (Staff Members of the Cecaudit International Inc., 2014) In France a not for profit organization can go through three major kinds of dissolution. All these types are listed below: Voluntary dissolution, also referred to as dissolution volontaire. Legal dissolution, also referred to as dissolution judiciaire.

Administrative dissolution, also referred to as dissolution administrative. (Staff Members of the Cecaudit International Inc., 2014) In the United States of America, after every five years the organization is required to file a statement of continuous existence with the office of secretary of state. The office of secretary of state generally notifies the statutory agent of the organization 4 months before the deadline that the statement of continuous existence is required.

(Members of the Secretary of State, Government of State of Ohio, 2014) In addition to that, if the organization makes any changes in the statutory agent then it must update the office of the secretary of state. Any changes in the contact number and address of the existing statutory agent shall also be updated with the office of the secretary of state. Furthermore, the office of the secretary of state shall also be informed about the death of the statutory agent as well.

(Members of the Secretary of State, Government of State of Ohio, 2014) Legal Forms and Tax Laws Not for profit organizations can take a variety of forms depending on the country within which they exist. In France, these organizations can take the forms of law and practice recognize associations, fund-raising committees, foundations, corporations of public interest, community service organizations, public benevolent institutions and limited companies. The organization adapts a form that best suits its mission and objectives. This form is generally selected through the deployment of a risk based approach.

(Staff Members of the Financial Action Task Force, 2013) The French Law generally exempts all the not for profit organizations from various commercial taxes including income tax, professional tax, corporate tax and turnover tax. Special conditions and rules, however, apply to value added tax. The income from economic activities of not for profit organizations is exempted from commercial taxes only if the income is not distributed among the members as profits and the other characteristics and factors distinguish it from other commercial activities.

(Staff Members of the Council on Foundations, 2014) According to the 261, 7.1 of the Tax Law, any not for profit organization that has annual revenue of more than €60,000 will be exempted from tax if: The disinterestedness factor, which means that the administration and management of the organization does not have any financial interest in the organization. (Staff Members of the Council on Foundations, 2014) The not for profit organization does not compete with the commercial organizations.

If the organization is observed to compete with the organizations in the commercial sector then it must be concluded by an inquiry that the organization does not conduct its activities in the manner that is similar to the manner in which the commercial organizations conduct their activities. (Staff Members of the Council on Foundations, 2014) The not for profit organization must conduct its activities in a manner that is alignment with the '4 P.

rule' that is stated by the 1998 Tax Instruction: The product offered by the not for profit organization satisfies a need that is not satisfied by the private sector. (Staff Members of the Council on Foundations, 2014) The public is not able to afford the good that is being offered by the private sector.

(Staff Members of the Council on Foundations, 2014) The prices of the goods or services that are offered by the not for profit organization is lower than the prices of the goods and services that are offered by the private sector. (Staff Members of the Council on Foundations, 2014) The promotion of public interest shall not be done through the deployment of the advertisement and marketing tools that are similar to the advertisement and marketing tools that are deployed by private sector.

(Staff Members of the Council on Foundations, 2014) According to Article 206, 1 bis, of the Tax Code, a not for profit organization, which has a revenue of lower than €60,000 will qualify to be exempted from tax only if the primary and principal activities of the organization are not for profit in nature and the organization does not distribute and of its proceeds, assets and incomes among the members for the sake of their private interest.

(Staff Members of the Council on Foundations, 2014) The legal forms and structures that can be adapted by the not for profit organizations in the United States of America are similar to those that can be adapted by the not for profit organizations in France. These structures include law and practice recognize associations, fund-raising committees, foundations, corporations of public interest, community service organizations, public benevolent institutions and limited companies. The selection of the form or structure depends on the objective or goals of the organization.

The organizations can select any form that best suit their goals and objectives. There are no stringent rules in relation to the selection of the form or structure of the not for profit organizations. (McNamara, 2014) Whether a not for profit organization chooses to be incorporated or not it would gain a tax exempt status from the federal government. There a number of tax exempt statuses for the not for profit organizations, but the most preferred tax exempt status in the United States of America is the 501 (c) (3).

This is a section of the IRS that only exempts the not for profit organization from the federal taxes but also makes positive contributions to the portion that is regarded as tax deductible from the amount received from a donor. (Dirusso, 2011; Staff Members of the P-Brain Media, 2014) In addition to that, the other sections of the tax code, including section numbers 501 (c) (4) or 501 (c) (6), also provide the not for profit organizations with exemptions from income taxes. These sections, however, do not allow the donors to deduct their contributions.

This is why section number 501 (c) (3) is regarded as the most favorable tax exempt section for the organizations that qualify. (Dirusso, 2011; Staff Members of the P-Brain Media, 2014) The groups eligible for the tax treatment under section number 501 (c) (3) are the groups that are created for special and particular exempted purposes. These qualifying organizations include religious organizations, scientific organizations, charitable organizations, educational organizations and the organizations created for literary purposes that provide evident benefits to the general public.

(Dirusso, 2011; Staff Members of the P-Brain Media, 2014) The organizations that have not been incorporated, also referred to as the unincorporated associations, can also be eligible for tax treatment under section number 501 (c) (3) if they fulfil all the necessary requirements. The organizations that do not qualify for the tax treatment under section number 501 (c) (3) become eligible for tax treatment under the other sections of the tax code.

(Dirusso, 2011; Staff Members of the P-Brain Media, 2014) In order to gain the status of 501 (c) (3), it is necessary for an organization to file an application with the IRS and then get it approved. It is necessary for the organization to submit certain additional documents with the application. These documents include the articles of incorporation and bylaws. This is done to prove that the organization is involved in one or more not for profit or charitable activities in real terms.

(Dirusso, 2011; Staff Members of the P-Brain Media, 2014) In most of the states in the United States of America, when a not for profit organization gains an exemption from the federal taxes then this indicates that it has gained an exemption from the state taxes as well. The word 'tax exempt organization', therefore, refers to an organization that is exempted from the federal as well as the state level taxes.

(Dirusso, 2011; Staff Members of the P-Brain Media, 2014) Not for Profit Universities in France There have been radical changes in the higher education market throughout the globe and the private as well as the not for profit organizations have been performing their operations on order to fulfil the demand for education.

(Staff Members of the International Institute for Educational Planning, 2007) The following section discusses the functioning of a not for profit university in France: Role of Ministry of Education In France, at the state level, the ministries that are responsible for initial and continuous vocational education are the ones that are responsible for school and higher education. The Ministry for National Education is responsible for the appropriate functioning of the not for profit universities in France.

(Staff Members of the Ministry of Education - Directorate of School Education, Government of France, 2010) In this context it performs the following functions: It draws up the courses for various diplomas. While performing this duty the Ministry for National Education takes into account the advice of various professionals. (Staff Members of the Ministry of Education - Directorate of School Education, Government of France, 2010) In addition to that, the examination rules are set up by the Ministry for National Education. furthermore, the ministry also awards the degrees and diplomas.

(Staff Members of the Ministry of Education - Directorate of School Education, Government of France, 2010) The teachers are recruited, trained and paid under the supervision of the ministry. In addition to that, it appropriately monitors the performance of the teachers as well. (Staff Members of the Ministry of Education - Directorate of School Education, Government of France, 2010) The universities are accountable to the Ministry for National Education for the results that are produced and the resources that are deployed by the not for profit universities.

(Staff Members of the Ministry of Education - Directorate of School Education, Government of France, 2010) The role played by the ministry of education in the United States of America, on the other hand, is listed below: The ministry of education in the United States of America is responsible for assuring the quality of education in the not for profit universities of the United States of America.

(Council for Higher Education Accreditation, 2014) In addition to that, the ministry is also responsible for assuring that equal education is provided to all the groups. (Council for Higher Education Accreditation, 2014) Furthermore, the ministry gets involved in the creation of courses and teacher training if and when required. (Council for Higher Education Accreditation, 2014) The ministry, however, does not play an influential role in the administrative tasks of the not for profit universities. Instead it focuses more on monitoring the performance of the non-profit universities.

(Council for Higher Education Accreditation, 2014) The not for profit universities in the United States of America are generally governed by a board of trustees of governors. These universities have varying responsibilities to the state government and the government does not intervene much in the operations of the universities. (Robert, 2005) Funding Most of the funding of the not for profit organizations in France comes from the State.

The government has developed a number of special budgets to finance the funding of the initiatives that are directed towards providing information and education to disabled, economically disadvantage, immigrant workers and prisoners. The regional government, on the other hand, is responsible for funding schemes that target young people whose age range between 15 and 25 years. The remaining funding for these institutions come from the private agencies as well as households.

(Staff Members of the European Centre for the Development of Vocational Training, 2012) In addition to that, a number of need based and affirmative action grants are provided to both French citizens as well as the foreign students by the French Ministry of Foreign and European Affairs. Furthermore, there are a number of regional councils as well. These councils play an active role in funding the education of students who are enrolled in the universities that are located in their region.

(Staff Members of the National Institution for Academic Degrees and University Evaluation, 2012) The not for profit organizations in the United States of America receive funds from a variety of sources including the following: Allocation for the payment to teachers by the state and federal government. Allocation for the research and training projects by the state and federal government. (Fielden, 2008) The receipt of tuition and other fees from the domestic as well as the international students. (Fielden, 2008) The income that is generated from various research and teaching contracts.

In addition to that, the proceeds generated from royalties. (Fielden, 2008) Income generated from the services provided within the boundaries of the campuses such as the provision of conference space to teachers, students and general public. (Fielden, 2008) The income that is generated through gifts, investments and endowments. (Fielden, 2008) It is necessary for the universities that created by the generous funding of the state to provide community services to the students.

One basic factor that differentiates the not for profit universities in the United States of America from the not for profit universities in the rest of world is that the students are required to fund large portions of their education by themselves.