Red Cross

Red Cross



Red Cross

Introduction

Non-profit, or not for profit organizations exist primarily to help and assist those in need by providing charity or education. They have a mission to help the "greater good" of society. Corporations, individual enterprises, and foundations are all examples of non-profit organizations forms. These organizations can consist of churches, clinics, public schools, and public charities. The board does not benefit financially from the corporation. The board is made up of a group of individuals called trustees that manage and invest the assets of the corporation. Investorwords.com also states that "trustees are legally obligated to make all trust related decisions."(2006) Non-Profit organizations do not make a profit and the corporations are usually run using government funds as well as donations. All profit that is generated is put back into the organization. Red Cross is the national's number one emergency response organization. It was founded in 1881 and it's areas of service needs include community services that help the needy; support and comfort for military members and their families; the collection, processing and distribution of lifesaving blood and blood products; educational programs that promote health and safety; and international relief and development programs.

1. Explain the Applications of Agency Law in the Business Environment

A. Rules and Regulations

Non-profit organizations follow the same federal and state laws as other corporations as well as additional laws that deal with not for profit organizations. Federal laws such as the U.S. Constitution and well as the U.S. code and the code of Regulations with deal with IRS taxes and charitable activities. States cannot adopt additional rules for non-profit organizations.

B. Tax Exemption

Non-profit organizations are eligible for tax exemption. According to Federal tax laws, an organization is exempt from taxes if they operate exclusively for causes such as religious, charitable, scientific, public safety, and education. The IRS states, "To be tax-exempt as an organization described in IRC Section 501(c)(3) of the Code, an organization must be organized and operated exclusively for one or more of the purposes set forth in IRC Section 501(c)(3) and none of the earnings of the organization may inure to any private shareholder or individual"(2006). This means that no employees, shareholders, trustees, or directors can finically benefit from the corporation. Also all assets of the corporation must be dedicated to an exempt purpose and if the organization was to dissolve, these assets would be turned over to the state or federal government for distribution.

C. State Statutes

Non-profit organizations are organized under state law. The statutes vary from state to state. Many states have adopted different model acts. These model acts were developed to encourage states to update their laws to the best understanding of how appropriate regulation may be achieved. These models also assist with the legal and regulatory environment faced by organizations that operate in more than one state. The Model Nonprofit Corporation act is a set of statutes that can be adopted by states to regulate the operation of nonprofit corporations within their jurisdictions. The "Revised Model Nonprofit Corporation Act" was created ...