|
About the Project I Course Information & Syllabi I Country Information I Articles I Discussion Forums |
|
______
Discussion Material
The Law on Associations and
Foundations of “Kansasa” (sample law based on current legislation in
Central and Eastern Europe)
Required Reading
The Open Society Institute, Guidelines
for Laws Affecting Civic Organizations, 1997
Paper on Working
Group on Self-Regulation, compiled
in Regulating Civil
Society, 1994
Stephen G. Greene, The
Chronicle of Philanthropy (article: State Associations
Draft Ethical Standards to Bolster Trust in Charities), July 16, 1998
Optional Reading
Paper on Building
on Strength: Improving
Governance and Accountability in Canada’s Voluntary Sector, compiled
in the Final Report, February 1999
NGO Clinical Course
First Assignment
Barbara, Peter, and Michael are all teachers at a state-run center for
pre-school children of working parents, located in Boska, the capital city
of Kansasa. Each has a
university degree in early childhood education and each has taught for
several years at such state-run child care centers.
Based on their experiences, they believe that the state child care
centers do not provide good pre-school education.
Thus, they wish to set up a non-state center that will place
greater emphasis on educating the young children and preparing them for
their school years. The three
have talked about their idea with several parents, including Maria, the
president of a local bank, and it is clear that such a center would be
welcomed. It is also clear to
them that such a center should be set up as a not-for-profit organization
because using that form will attract greater community support.
They intend to call their center Boska BabySchool (BBS).
In addition to providing the type of education that Barbara, Peter,
and Michael think is appropriate, they intend that BBS will also engage in
education and advocacy about the early childhood education. They intend to
try to convince the public that their model is the best and perhaps to
thereby influence the way in which the state conducts its programs.
Each of the three organizers of BBS is going to contribute 5,000
Kansasa crowns from his or her savings to help get BBS started.
In addition, Barbara’s father, the manager of the local
automobile factory, has agreed to lend BBS 25,000 crowns to be paid back
as soon as grants and other funds have been received.
BBS intends to charge a fee to the parents who bring their children
to the center, but to also give some poor children free access once funds
are available to do so.
The group has located a possible
space to rent, which was previously used in the state system and is thus
appropriately equipped. The
building is now owned by a private landlord, having been privatized in
1997. Stephen, a parent who
works in an accounting firm, has volunteered to help BBS set up its
financial accounts in the correct manner and to develop a business plan
for the first three years of operations.
Each of the organizers expects to be a salaried employee of BBS,
and each will quit the state-run center as soon as funds are available to
pay their salaries.
Barbara, Peter, and Michael have come to you for advice about how to
establish BBS as a not-for-profit organization and to qualify it for
operating a child care center. They
would like your help in writing the statute for the organization and in
accomplishing other legal or administrative acts appropriate for a
start-up child care center.
Your first assignment is to draft a simple statute for BBS (no more
than three pages) so that it can be established in conformity with the
“Law of Kansasa on Associations and Foundations.”
In addition, you should prepare a memorandum discussing other
issues that may arise in setting up the organization according to the
facts described in this assignment (no more than five pages).
In working on both aspects of the assignment, you should consult,
where appropriate, Guidelines for Laws Affecting Civic Organizations.
NGO Clinical Course
Second Assignment
The second assignment is based upon the same set of facts as the
first assignment. The three
organizers of the Boska Baby School have come to you for advice on setting
up the internal governance structure of their not-for-profit organization. Please prepare a three to five-page paper outlining your
recommendations for the structure and composition of the organization's
governing body and the internal rules you suggest the organization adopt
with respect to personnel policies, accountability, conflicts of interest,
and other factors you believe to be important.
You may wish to consult the Guidelines for Laws Affecting Civic
Organizations, the paper prepared by the working group on self
regulation from the "Regulating Civil Society" conference in
Sinaia in 1994, and the Maryland Association of Nonprofit Organizations
"Standards for Excellence" guide, along with any other relevant
materials.
The organizers have asked you in particular to address the
following questions, which should be included in your recommendations:
1. Should the founders serve on the board? What factors should be considered in answering this question?
2. Stephen, the parent who works in an accounting firm and helped BBS
develop its business plan, is interested in serving on the board.
BBS plans to use his firm as its auditor.
Is that a problem?
3. Barbara's father, the manager of the local automobile factory, has
agreed to lend 25,000 crowns to BBS.
He has also indicated an interest in serving on the board.
May he do so? Why or
why not?
4. Maria, a parent and president of the local bank, has also expressed
interest in serving on the board. BBS
anticipates that it may need to apply to the bank for a loan once it
begins operation, and it would be helpful to have the bank president on
the board. What issues does
this raise?
NGO Clinical Course
Third Assignment
The Kansasa NGO sector has increased tenfold in the past five
years, playing a major role in building communities, providing educational
and social services, and engaging the citizens in democratic
participation. Public support, both financially and in terms of volunteer
participation, has increased significantly.
Under Kansasa law, donors may deduct from their taxable income
donations they make to public benefit organizations, which has helped to
encourage donations. At the
same time, however, there have been press reports about the fraudulent use
of NGOs to launder money and to avoid taxes.
The current system provides for fines to be levied if NGOs fail to
comply with administrative and other requirements (Article 42), but
otherwise there are few regulatory provisions which would screen out
fraudulent NGOs or provide mechanisms to curtail their activities.
While voluntary self-regulation
goes a long way towards helping NGOs to maintain public confidence and
attract donations, the government of Kansasa has determined there is also
a need for greater government mechanisms to ensure accountability.
Thus, the Ministry of Justice has asked representatives from
several NGOs, including BBS, to prepare recommendations for regulation of
the NGO sector.
Your recommendations (4 to 6
pages) should include:
·
Who should determine whether an organization qualifies as a public
benefit organization? How
should that determination be made?
·
What kind of
general (non financial) information should NGOs be required to provide to
the government, how often, and why?
·
What kind of
general information should NGOs be required to make available to the
public and how should that information be provided?
·
What kind of financial reporting requirements should exist, and
which government agencies should exercise financial controls?
What sorts of enforcement mechanisms should be available (e.g.
required filing of an audited financial statement?
Surprise inspections?)
·
What restrictions
(if any) should the government place on public fundraising activities?
·
Should there be
differences in the regulatory and reporting requirements for different
types of NGOs? (public benefit, large, small, etc.)
If yes, what differences do you recommend and why?
For ideas, you should consult the
Guidelines and also do some independent research.
One helpful source may be "Building on Strength: Improving
Governance and Accountability in Canada's Voluntary Sector," Final
Report February 1999, which may be found at http://www.pagvs.com.
NGO
Clinical Course
Fourth Assignment
Taxes and Civic Organizations
Legal Language:
The profit tax law of Kansasa
contains the following language:
Article 51
Organizations carrying out purposes and activities exclusively for the
benefit of the public, including but not limited to charitable, religious,
educational, scientific, health, ecological, cultural, research, and
amateur sports purposes and activities, are exempt from profit tax.
Article 52
Organizations exempt from tax
under Article 51 are subject to profits tax on commercial activities
unrelated to their public benefit purposes and activities.
Article 113
Donations to organizations exempt
from profits tax under Article 51 may be deducted from taxable income in
an amount not exceeding 10 % of taxation income (computed without
reference to the deduction provided by this Article).
The personal income tax law of
Kansasa contains the following language:
Article 31
Donations to organizations exempt
from profits tax under Article 51 of the profits tax law may be deducted
from taxable income in an amount not exceeding 10% of taxable income
(computed without reference to the deduction provided by this Article).
Questions
In
no more than 2-3 pages please answer the following questions:
a.
Referring to the facts
stated in the first assignment, is BBJ an organization subject to the
general profits tax exemption provided in Article 51? Briefly state the
reasons for your conclusion.
b.
Assuming that the
answer to question a. is yes, which of the following revenues are exempt
form profits tax?
1.
school fees
2.
contributions by
parents
3.
contributions by
businesses
4.
fees from
consultancies
5.
interest earned on
funds held in a savings account in the bank
c.
Is there any possibility that parents will be able to deduct under
Article 31 of the personal income tax a portion of the school fees they
pay for their children? NGO Clinical Course
Final Assignment
Your final assignment contains
three parts, all of which you must address in a paper of no more than 8
pages.
First you should identify what
you perceive to be the three most significant problem areas in the Kansasa
law, including the tax law. Please
list those in order of importance.
The second part of the assignment
is to write a substantive critique of the most important issue you have
raised and to explain what you think would be the best substantive
solution to the problem and why the proposed solution will work. You may
wish to draft alternative statutory language that would solve what you
consider to be the problem. .
The third part of the assignment
is to briefly describe the procedure you would follow to achieve adoption
of your proposed legislative change.
|