The Rules of the Road: A Guide to the Law of Charities in the U.S.

Have you ever felt lost or overwhelmed by the maze of tax laws, Treasury regulations, and IRS rules that apply to nonprofit organizations? In The Rules of the Road, author Betsy Buchalter Adler answers the questions of grantmakers and grantseekers alike concerning the laws governing charities in the United States.

Adler, an attorney who specializes in tax-exempt organization law, teaches at the University of California, Berkeley and lectures frequently on legal issues of interest to nonprofit organizations.

Her book begins with a look at the definition of a charity. The traditional common law definition, derived from English law, defines four charitable purposes: relief of poverty, advancement of education, advancement of religion, and other purposes beneficial to the community. According to the author, this multi-part definition had a strong influence on early American charitable law. But in the modern era the traditional definition has been largely superseded by a tax law definition of a charity as an organization that pays no tax on its income and whose donors receive a tax benefit for their donations.

Succeeding chapters of The Rules of the Road look at the economic benefits of charitable status, including tax benefits for a charity and its donors; categories of public charities; laws concerning private foundations; restrictions on advocacy and lobbying; American philanthropy and foreign charitable activity; allowable commercial activities of charities; the election and duties of directors; and accountability at the state and federal levels. There are, in addition, several appendices, including a sample articles of incorporation, a reading list, and several examples of tax forms.

Written in "plain" English, The Rules of the Road should prove helpful to both grantmakers and grantseekers who want to understand how the laws governing nonprofit organizations apply to them. And the chapter on American philanthropy and foreign charitable activity should be especially helpful to U.S. nonprofits that are active outside the United States.

For additional citations to materials on this topic, refer to the Literature of the Nonprofit Sector Online, using the subject headings "Laws regulating philanthropy-2000-2009" or "Nonprofit organizations-government regulations."