CHARITIES
Charities
Organizations created for the purpose of philanthropic rather than pecuniary pursuits.
A charity is a group designed to benefit society or a specific group of people. Its purpose may be educational, humanitarian, or religious.
A charity goes beyond giving relief to the indigent, extending to the promotion of happiness
and the support of many worthy causes.
The law favors charities because they promote goodwill and lessen the government’s burdens.
They are therefore ordinarily exempt from paying income or property taxes.
Charitable Gifts and Trusts
A charitable gift is something that is donated
by an individual or organization with the intent
to benefit the public or some segment of it as a
whole. It is meant for use by an indefinite number
of people. Similarly, charitable trusts or public
trusts are trusts of religious, political, or
general social interests, or for the relief of
poverty or the advancement of education.
Charities are ordinarily supported by gifts
from donors and most states have set forth
statutes controlling the manner in which funds
are solicited for charities. In addition, the state
will generally require charities to disclose their
financial structure and condition.
Charitable gifts are often testamentary, or
created by will. If there is a problem in determining
the actual donative intent of the testator,
the court might have to pass on his or her intent.
CY PRES is a doctrine applied by a court so that it can carry out a trust made by will for charitable
purposes even when the testator’s charitable
purpose can not be accomplished in the precise
manner specified by the testator. For example, if
a testator wished to donate money to a certain
hospital whose name had changed, for example,
this would not defeat the gift. With cy-pres the
court would interpret the donor’s intent to be to
give money to the hospital in spite of the change
of name.
Charitable Societies and Institutions
To determine whether an institution is charitable,
the test is whether its major purpose is to
aid others or to make a profit.
Charitable corporations are nonprofit corporations
that have been created to minister to the
physical needs of the indigent or to advance a
particular goal, such as the aid of a particular
religious group or country. In order to receive a
tax-exempt status, such organizations must
meet certain criteria.
Ordinarily, charitable corporations have no
capital stock and they obtain their funds primarily
from private and public charity. These funds
are held in trust to serve the charitable objects of
the institutions.
Beneficial associations also exist mainly for a
charitable purpose and not for financial gain.
Religious organizations, such as the Young
Men’s and Women’s Christian Associations and
the Salvation Army, are also considered to be
charitable societies.
The test for determining whether or not an
educational institution is a charitable organization
is the question of whether it exists for a
public purpose or for a private gain.
While charities may charge a nominal fee for
some of their services and still be considered
charitable societies, they are organized primarily
for the public good and not for profit.
