Wednesday, April 20, 2022
Molk: The place Nonprofits Incorporate And Why It Issues
Peter Molk (Florida; Google Scholar), The place Nonprofits Incorporate and Why It Issues, 108 Iowa L. Rev. __ (2023):
Nonprofit firms account for over a trillion {dollars} of American annual GDP, make use of twelve million folks, and embody among the most well-known organizations on this planet. But regardless of their significance, many core company governance points about nonprofits stay a black field. This Article, utilizing newly obtainable knowledge, begins to treatment this hole within the literature.
Utilizing submitting knowledge from 300,000 charitable nonprofits, I study the foundational difficulty of the place nonprofits incorporate, a choice that determines each the legislation of nonprofit company governance affairs and public oversight equipment for governance and compliance. Not like publicly traded firms, I discover nonprofit incorporation alternative shouldn’t be a vigorously aggressive race to the highest or backside, however as a substitute is healthier characterised as a stroll. A nonprofit’s headquarters jurisdiction is the preferred incorporation vacation spot — much more widespread than for publicly traded firms. Nevertheless, amongst these nonprofits that incorporate out-of-jurisdiction, Delaware is the preferred vacation spot, with the District of Columbia a stunning second.
The findings are in step with nonprofits’ choosing weaker governance and oversight guidelines, suggesting a possible “stroll to the underside” amongst nonprofits. Utilizing these outcomes, I supply evidence-based coverage implications to enhance governance of nonprofits, to reverse the potential stroll to the underside, and to invigorate useful state competitors for nonprofit incorporations.
https://taxprof.typepad.com/taxprof_blog/2022/04/molk-where-nonprofits-incorporate-and-why-it-matters.html
