Reforming Nonprofit Corporation Law

Abstract

Recent surveys indicate that perhaps as many as one-fifth of all of the corporations in the United States are nonprofit, and that this proportion is steadily growing. Nevertheless, the basic corporate law applicable to nonprofit organizations is at a remarkably immature state of development, and remains startingly uninformed by either principle or policy. Confusion continues to surround even the most fundamental issues, including the purposes for which nonprofit corporations may be formed, the distinction between nonprofit and cooperative corporations, and the appropriate limits on distributions from nonprofit corporations to individuals who are associated with them. This unsettled state of affairs is reflected clearly in the fact that there have been three major efforts to reform nonprofit corporation law in recent years, and that the resulting statutes-the Model Act, the New York act, and the California actall differ fundamentally in their most basic structural features.