Non-profit organization laws in the U.S.

United States non-profit laws relate to taxation, the special problems of an organization which does not have profit as its primary motivation, and prevention of charitable fraud.

If an organization is to qualify for tax exempt status, the organization's (a) charter — if a not-for-profit corporation — or (b) trust instrument — if a trust — or (c) articles of association — if an association — must specify that no part of its assets shall benefit any people who are members, directors, officers or agents (its principals).

If the organization purpose is one of those described in §501(c)(3) of the Internal Revenue Code,[3] it may apply for a ruling that donations to it are tax deductible to the persons or business entities who make them.

Some States lack Laws that require non-profits that do not get approved for Federal tax exemption to amend their business type to for profit.

[6] Non-profits can have vicarious liability for injuries caused by their employees or volunteers to third parties, such as by traffic accidents.

Non-profits which have paid staff must comply with minimum wage laws, and with the requirement in most states to obtain workers compensation insurance.

Under the Religious Freedom Restoration Act many generally applicable state laws regarding employment, zoning and the like are relaxed for churches.

The organizations must maintain an image, and they do this by managing stakeholder relationships to retaining donors, particularly during times of environmental change.

This places a premium on knowing which stakeholders really matter if an effective relationship marketing strategy is to be developed, according to the Journal of Business Ethics.

In addition to the direct cost of the diverted assets, disclosing a fraud may cause the charity to lose future donations or volunteers.

Moreover, other charities and society at large can suffer from the spillover effects of diminished trust in the nonprofit sector as a whole (Bradley 2015).