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PUBLIC BENEFIT STATUS AND NOT-FOR-PROFIT ORGANIZATIONS
Prepared by the International Center for Not-for-Profit Law
Regulating Civil Society Conference
Budapest, Hungary — May, 1996
I. Introduction
The recent development and growth of civil society in Central and Eastern
Europe (CEE) and the Newly Independent St ates of the Former Soviet Union
(NIS) has necessitated re-evaluation and revision of the legal framework which
structures and regulates the not-for-profit/v oluntary sector. A rapid increase in the
number of not-for-profit organizations (NPOs), predominantly associations and
foundations, has outpaced legislative and administrative reform. Consequently,
the legal/administrative framework has become a constraint upon growth of the
sector. This is occurring at a crucial ti me, when citizens must learn new patterns
of participatory behavior, when pressi ng social needs require collective
responses, and when civil society must contribute to the strengthening of
democratic institutions. Despite these impor tant duties, the daily reality for most
NPOs, be they local clubs or national organizations, involves dealing with
registration requirements, complicated tax regulations, ambiguous administrative
mechanisms, and difficult organizational is sues (often in the face of public
indifference and funding shortages). In an e ffort to create and implement a legal
framework which adequat ely addresses these issues, legislatures and
governments have been enacting numerous new laws, entering into what is for
them essentially uncharted territory. This is no small challenge, particularly when
combined with the need to establish dem ocratic governance and free market
economies after decades of Socialism.
This paper will examine the concept of ” public benefit” status for NPOs, in an
attempt to provide practical advice for l egislators and regulators of not-for-profit
activity, as well as lawyers, academics, and other professionals involved with the
sector. 1 Although this topic currently has particular importance in the countries
of Central and Eastern Europe (CEE) and the Newly Independent States of the
former Soviet Union (NIS), it is relevant wherever there are laws and regulations
covering the not-for-profit sector. 2
Although it is widely accepted that public benefit organizations (PBOs) deserve
either direct or indirect governmental support, the difficulty of translating this
principle into law and successfully implem enting it confronts legislatures and
governmental officials around the world. Accordingly, a number of paradigms for
the parameters and significance of public be nefit status exist. This paper begins
with an exploration of the historical and t heoretical development of public benefit
organizations, highlighting their important role in society. This will be followed by

analysis of the prerequisites for and privileges resulting from public benefit
status, focusing upon accountability and taxation. The balance between
responsibilities of and preferences for NP Os will emerge as a constant theme.
Comparative patterns for implementing t hese principles will then be analyzed,
along with the rationale for different approaches, with emphasis upon the
decision making-processes involved. Fina lly, current trends and patterns relating
to the categorization and regulation of PBO s, as well as difficult conceptual
issues, will be considered.
Before beginning, it is necessary to point out that no two countries in the world
handle the regulation of NPOs, or the so-called third sector of society, in an
identical manner. This is true despite si milarities in other aspects of legal
systems, and common historical antecedent s. Indeed, there are few calls for
uniform legislation in this field. Relevant international agreements, such as the
Universal Declaration of Human Rights, the Internat ional Covenant on Civil and
Political Rights, and the European Conv ention for the Protection of Human
Rights and Fundamental Freedoms, do not go much beyond establishing basic
principles such as the rights to free speech and free association (which are
generally although not exclus ively granted to individuals rather than legal
persons). The Convention on the Recogn ition of the Legal Personality of
International Non-Governmental Organiza tions is concerned for the most part
with the recognition of legal status for operational purposes. The European Union
is working on an agreement to create a “single market” for certain NPOs.
However, this is a rather modest st ep towards bridging large differences
concerning matters ranging fr om the meaning of charity to the establishment and
operation of foundations. Interestingly, t hese differences do not exist exclusively
between common law and civil law countries. Often, there is great variety
concerning the structure of the not-for-profit sector between countries applying
otherwise similar legal traditions.
Under these circumstances, it is clear that each country maintains the right to
determine the details of public benefit status in accordance with its customs,
legal structure, and social reality. However, despite diversity concerning these
details, there is general consensus that a fl ourishing not-for-profit sector is both
necessary for and indispensable to pluralist society and democratic gove
rnance.
II. Public Benefit Organizations and Civil Society
A. Historical Background
Both principal legal systems of the world — the civil law and the common law —
recognize the value of organizations which are created by citizens and/or operate
in the interest of the public.3 Because PBOs strive to fulfill educational, cultural,
social, physical, and spiritual needs of the citizens and of society, often
supplementing the functions of the state itself, governments in turn grant these
organizations support through various means , including tax preferences.4 This

lost revenue serves as an indirect governmental subsidy, which helps PBOs to
pursue and realize their objectives.
The common law system allows almost any legal organization which operates in
the interest of the public to qualify as a PBO for tax purposes. The civil law
system usually requires that NPOs fit in to one of two distinct categories:
foundations and associations. Despite diffe rent approaches to the forms of legal
personality, both systems consider the pur poses of an NPO when answering the
essential question, namely whether the organization serves the public benefit
sufficiently to merit preferential tax treatm ent, either directly or for individual
contributors. 5
Common Law. Analysis of the codification of the common law system of charity
usually commences with the English Statute of Charitable Uses, passed in 1601
under the reign of Queen Elizabeth I. It s twofold purpose was to enumerate
charitable causes and eliminate abuse. T he notion of public benefit was for the
first time formally expanded beyond the relief of pover ty, to include care of the
sick, the training of apprentices, the bui lding of bridges, the maintenance of
roads, and other related beneficial purposes . The sovereign clearly wanted to
encourage wealthy citizens to contribut e to societal causes, and avoid undue
reliance upon controversial ecclesiastical trusts. Accordingly, the concept of
public benefit was to be more broadly construed. One of the principal historical
mechanisms utilized to achieve this purpose and provide incentives to the
populace has been the charitable trust, an equitable convention which separates
the ownership and use of property.
The common law system, perhaps in part due to its long and complicated
historical development, shows more conc ern for the purposes than the form of
organizations. However, a precise defin ition of charitable purpose has proven
elusive. English case law clearly refl ects the difficulty judges encountered in
delineating and applying this concept.6 Serious questions remained until 1950,
when the Nathan Commission proclaimed the need to avoid impractical
definitions and leave the c oncept “flexible and responsive to changes in the
structure of society.”7 However, England applies a narrower view than certain
other common law countries, excluding the promotion of human rights, and
mandating precise stat ements of purpose. 8
Despite its roots in the English common law, the American system is
characterized by a marked expansion in the number of accepted public benefit
purposes. In large measure this is due to the powers exercised by the judiciary,
along with American social traditions. 9 Wh ile registration and some regulation of
NPOs in the United States occurs at the state level, re sponsibility for the
determination of public benefit status for pur poses of federal taxation lies with the
United States Internal Revenue Servic e. In the 1950s and 1960s, the United
States Congress defined public benefit or charitable organizations by first
distinguishing public charities from private foundatio ns, and then separating the

latter into operating and the more traditional grant-making foundations. 10 Both
the extent of regulat ion and the tax benefits conferred depend upon these
distinctions.
Federal legislation in the United States lists eight ca tegories considered to be
charitable. According to section 501(c)(3) of the United States Internal Revenue
Code of 1986, as amended, organizations g enerally exempt from paying federal
income tax include those dedicated to relig ious, charitable, scientific, testing for
public safety, literacy, or educational purposes, to pr omote amateur sports, and
for the prevention of cruelty to children or animals. Each of these categories has
been extensively developed through addi tional United States Treasury
Regulations and interpretative legal rulings. 11
Common law has followed the British flag around the world. Ther efore, many of
the above principles relating to charitable activity apply in current and former
members of the British Commonwealth. Inte restingly, some countries which were
previously colonies, such as India, continue to apply laws and procedures which
have long since been supers eded in England itself.
Civil Law. Civil law countries generally re cognize two legal forms for NPOs:
associations and foundations. 12 Associ ations, which are derived from the
Roman principle of universitas personar um, consist of natural persons engaged
in common activity. Foundations, which derive from the Roman principle of
universitas rerum, consist of property (which essentially loses its private
characteristics) devoted to a particular pur pose. The existence of foundations in
numerous European countries since the fift h century BC demonstrates that this
form of philanthropic organization is a natural component of civil society. 14 For
example, the garden of Theophrast, later Pl ato’s Academy, was dedicated to the
use of his students for a period of 800 y ears. 14 European associations also
have ancient roots, in church movem ents, and various secular organizations
such as Roman colleges of craftsmen, guilds, mutual assistance societies,
cooperatives, and unions. 15
Civil law has been markedly affected by the development of comprehensive

codes, often tracing their root s to the works of Justinian in the sixth century. The
French Civil Code of 1804 is perhaps bes t known and most influential, but in
many countries the German Civil Code of 1896 and others are also valued. In
contrast to Anglo-American practice, the French system sees foundations as
standing between the individual and the state, and treats them less favorably. For
example, the perpetuation of uses after natural death (mort main) is prohibited
because it is seen to interfere with ri ghts of inheritance. Further, “la vie
associative” was not given formal protecti on until the twentieth century. While the
French Code Civil and this model of civil society have been studied and
borrowed both on the continent and in French colonial territories around the
world, the diversity of practice even within continental Europe is noteworthy. For
example, foundations flourish in the Netherlands, and are o ften related to political

parties in Germany. In some countries, such as Belgium and Poland, they are
restricted to public purposes, while in many others they ar e not (see below).
Today, most civil law countries extend tax preferences to bot h foundations and
associations. Traditionally, though, the civil law recognizes foundations to be the
form of organization designed to work in the interest of the public at large. 16
This distinction is based upon the prevai ling idea that associations are mutual
benefit organizations (MBOs) where indivi duals combine to serve their own
interests, whereas foundations involve t he dedication of property (patrimony) to
advance a specific purpose, generally of public utility, and traditionally by means
of awarding grants. However, in many countries such as England, France, and
Slovenia, the law specifically authorizes associations which act in the public
interest. Further, not all civil law countries require foundations to serve the public
benefit. Denmark, Greece, Italy, Holl and, Germany, and Switzerland permit
foundations to serve private purpos es. 17 Germany recognizes private
foundations, which are primarily utilized to promote family interests. When
foundations are permitted to serve private interests, then tax preferences are
contingent upon the actual purposes of t he foundation, rather than whether it
successfully meets the requirem ents for a specific legal form.

B. The Significance of Public Be nefit Status–Taxation Issues
There are many privileges which ma y be extended to PBOs, but often the
primary importance of obtai ning public benefit status lie s in the tax treatment
which an organization then receives from the authorities. In general, the legal
framework in most count ries does not make the capacity of NPOs to act
dependent upon having public benef it status. There are some exceptions. For
example, in countries which have a special legal form for NPOs serving the
public interest, rights and responsibilities obviously depend upon fulfillment of the
appropriate criteria. In the United States, an ordinary tr ust not devoted to public
benefit is governed by the rule against perpetuities, and has a limited duration
beyond the lifetime of the beneficiary. On the other hand, a charitable trust has
no definitive termination date, other than that which may be specified in its
founding documents. However, even in such cases, failure to qualify for public
benefit status should not preclude t he NPO from obtaining legal personality
under other applicable statutes. Thus, one of the primary advantages of obtaining
public benefit status for an NPO remains t he fiscal and tax treatment that results.
For this reason, the core treatment of the public benefit issue can generally be
found in tax policies and tax codes. As a consequence, public benefit status is
often evaluated and supervised by differ ent governmental bodies than issues
such as registration and governance. Further, there can be a divergence in

legislative responsibility, particularly when a committee system is operative.
Finally, there can also be differences in dispute resolution systems, which may
be primarily administrative, judicial, or even vest jurisdiction with special quasi-
governmental agencies such as the Char ity Commission of England and Wales.
In any event, the determination of public benefit status can affe ct the disposition
of large sums of money. A foundation required to pay income tax on its
endowment might not be able to accomp lish its statutory purposes, and an
association required to pay taxes on donations in kind may be effectivel
y
precluded from accepting them. Thus, tax policy constitutes a collective decision
concerning the types of or ganizations which merit suppor t, a redistribution of the
public purse, a message to natural and lega l persons concerning social policy,
and a guide to the actions of specific NPOs. Enforcement policies exercise
similar roles. Indeed, tax policy may spell the difference between financial
viability and insolvency for an NPO, and can severely affect development of the
entire sector. This point is crucial fo r countries in a state of transition.
In certain countries, the tax status of an organization depends upon its
classification under the not-f or-profit laws. For example, in Belgium successful
registration as a foundation automatically results in tax exemption. 18 Under
such circumstances, the authorities may have an increased right and/or
obligation to the public to scrutinize an organization during the registration
process. In other countries, registration is not directly related to taxation. In the
United States, federal tax status is determined independently from state
registration. In Canada, tax authorities also determine public benefit status,
although the provinces retain significant rights. 19
Several types of favorable tax treatment exist for not-for-profit organizations,
including exemptions from income and profit taxes, property taxes, transfer
taxes, excise taxes, value added taxes, and sales taxes. 20 Favorable treatment
can extend to local or regional as well as national taxes. In addition to direct tax
exemptions, government financ ial support can be granted indirectly by permitting
contributors to claim a tax deduction or exempt ion. Whether this is in the form of
a deduction from income or a credit agains t tax liability, particularly if tax rates
are progressive, can determine the incentiv es provided to different segments of
society. Rules may distinguish between individual and cor porate donors, or
monetary contributions and those in kind.
C. The Significance of Public Benefit Status–Public Accountability
Organizations which are deemed to act in furtherance of the public interest, and
which receive preferential tax treatment from governmental authorities, are
generally required to demonstrate their elig ibility therefor. The authorities have a
legitimate interest in ensu ring that NPOs which claim to serve the public actually
do so. Additionally, they have a responsibilit y to make sure that tax preferences

are not wrongfully claimed or used. In short, public benefit status is a privilege,
not a right. It must be sought and justified, and it entails reciprocal obligations.
Different countries, naturally, have di verse requirements for obtaining and
maintaining public benefit status, and t he ensuing tax privileges. Because of
differences in management structure, and the need to recognize the wishes of
the founders, there may be gr eater scrutiny of foundations. 21 Nonetheless, such
requirements can be summed up in the c oncept of accountability. MBOs have a
responsibility to their mem bers, and to the public at least as far as compliance
with the law. However, PBOs have the so ciety at large as their constituents.
Accordingly, they must submit to the mechanisms whic h the society establishes
to qualify for this status.
Although the means of exercising public accountability vary, typical provisions
include tax returns (even if the NPO is tax exempt), and an nual reports to the
ministry or agency with oversight respons ibility (and perhaps also significant
contributors).22 In the Un ited States, the Internal Revenue Code requires most
exempt organizations to file annual retu rns with extensive information concerning
the sources and uses of f unds, the identity of large donors, the compensation of
officers and directors, the nature of business activities, etc. Appropriate
disclosure of information also enables the public to exercise oversight
responsibilities. This lends crucial credibi lity to the work of the not-for-profit
sector. For this very reason, NPOs in the Czech Republic and Hungary are
required to publicize their status in t he newspapers. Another attractive option
which promotes openness without undue burden or cost to NPOs is requiring that
certain information be available to the public at their premises. In any event, the
primary goal is enhanced trans parency on the part of PBOs.
In spite of the nearly universal requirem ent for the disclosure of information to
promote accountability, t here are other mechanisms available to public
authorities. For example, in Italy it is necessary to obtain government approval
before changing the statutes of a not-for-p rofit organization receiving preferential
tax treatment. Additionally, the law itself serves as an element of accountability.
Clarity in the rules and regulations governing NPOs, detailed provisions

concerning ethical requirements such as fair dealing and the non-distribution of
assets, a clear delineation of the require ments for public benefit status, and fair
administration and applic ation of the law, all go a long way towards laying the
groundwork for public accountability. 23
D. Public Benefit Status and the Decision-Making Process
One of the key issues associated with public benefit status is the decision-
making process. Who makes the determi nation, and what procedures should be
followed? (The criteria for this determi nation will be discussed in Section III
below). While the answer to this question derives in part from historical and
socio-cultural experiences, significant c hanges during the course of the twentieth

century indicate that considerable modification is possible, and that the line
between civil law and common law appr oaches is far from well defined.
Essentially, there are three main models for determini ng public benefit status.
The process can be under the supervi sion of national tax authorities/an
administrative agency, a ministry with a much more diversified portfolio, or a
specialized quasi-governmental agency. In each case, the courts can play a
number of diverse roles, depending upon whether they are involved in
registration or enforcement, or merely se rve as an arbiter of disputes. Issues
such as the federal or unitary natur e of the state, whether there is a
parliamentary or presidentia l system, the general role of the judiciary, and the
organization of the taxing authority can pl ay a key role in determining which
model applies and how the system is implemented.
The first model is in place in the United States and Canada, where most relevant
national tax issues are handled by the Internal Revenue Service and Revenue
Canada, respectively. In the United States , this issue is governed by the Internal
Revenue Code, regulations issued by the IRS, tax rulings, and case law
developed in the court system. Certain organizations are considered per se
public charities, such as churches, educat ional organizations with regular faculty,
medical care facilities, and governmental units. In both countries the courts act
as the final arbiters of public benefit st atus, but most decisions are reached by
administrative handling of annual tax returns.
The second model, involving ministerial responsibility, is often found in European
countries. Approval by the appropriate mini stry is required in Belgium, Portugal,
Spain, and Denmark. In Luxembourg, the Mi nistry of Justice must grant qualified
status, and then tax benefits result from a formal “arrete grand ducal”. In France,
foundations must be approved by the Ministry of the Interior, on advice from the
Conseil d’Etat, and afterwards they automatically receive tax benefits. In many of
the former Socialist countries, such as Romania, Lithuania, and Estonia, it is the
Ministry of Finance which is most actively involved in this issue. There are, of
course, exceptions in Europe. President ial Decree is required for foundations in
both Italy and Greece. In Ireland, application is made to the Revenue
Commissioners. And in the Netherlands, appropriate documents need merely be
authenticated and approved by a Notary P ublic, and then filed (it is not even
necessary to notify the government unless annual profits exceed 13,000
Guilders). It is also important to note that in many of the former socialist
countries, such as Poland, it is the court system which has been chosen to play a
major role in both registration and other matters affecting NPOs.
The third model involves granting powers, such as registration, determination of
entitlement to tax benefits, and even enforcement, to a specialized or quasi-
governmental agency/organization. The most noteworthy example of this is the
Charity Commission of England and Wales. Although the Charity Commission is
nominally under the supervision of the Home Secretary, it maintains a great deal

of independence, and is extremely specialized. Great deference is normally given
by the courts and the government to its rulings on the qualifications of charitable
organizations, and the propriety of thei r operations. Steps are being taken to
introduce such a model in both Bul garia and Hungary at this time.
Public benefit status can become an iss ue for decision-makers at various stages
in the life cycle of an NPO. For example, there is debate as to whether NPOs
should justify their claim for public benefit st atus at the time of registration (along
with meeting the other basic requirements for legal personality). Most NPOs
prefer registration to be a simple adm inistrative act, involving no more than
verification of compliance with the standard pre-requisites. On the other hand, a
few governments in the CEE and NIS count ries prefer to carry out a more
thorough investigation, and require NPOs to demonstrate eligibility. This can turn
registration into a more adversarial process. It can also involve certain institutions
in activities beyond the scope of their aut hority. For example, courts might be
charged with investigatory duties. For t hese reasons, and in order to encourage
the formation of NGOs, registration should be kept as simple, procedurally fair,
and “user friendly” as possible. Unless publi c benefit status is inherently related
to organizational form, this issue shoul d be determined separately, at a later
date, although with retroactive effect.
Evaluation also occurs when the NPO s eeks retention and/or renewal of its
public benefit status. While many count ries require that eligibility be
demonstrated on an annual basis, in Belgiu m and Germany there is a standard
three year term before renewal/requalification is necessa ry. (Almost all European
countries mandate an annual filing, although there is often a threshold level of
income which triggers the requirement). Finally, the issue can arise when tax
authorities exercise their power to revoke public benefit status, in the event of
failure to maintain compliance with the appr opriate legal requirements. In all of
these cases, it is extrem ely important that there be procedural safeguards, such
as the right to appeal to an independent arbiter, in the event of adverse
decisions.
Finally, it is necessary to emphasize t hat there are definite consequences for the
legal framework governing NPOs and the status of PBOs, depending upon these
choices. To the extent t hat governmental agencies are specialized, professional,
and independent, they are more likely to administer issues related to public
benefit status in an impartial manner, which is fair to the not-for-profit sector.
Politicized agencies are most likely to admin ister the law in an arbitrary fashion,
depending upon political currents and recent electoral results. Ministries offer
existing administrative structures and professional staff with established
procedures, but may have an institutional bias or be isolated from current
conditions. A quasi-governmental agency, on the other hand, will need to create
its own bureaucracy and procedures at additional expense, but may be able to
adopt an unbiased approach (with no incent ive to maximize tax revenue, for
example).

Courts may be the most likely source of apolitical and independent judgments.
However, judges have discretion, which c ould create uncertainty or take the law
in unforeseen directions. Additionally, unless the court system is run efficiently,
with an eye to precedent based upon accessible records of previous decisions,
there is a significant chance of contradictory rulings, particularly in local/regional
jurisdictions. Local authorities may be more knowledgeable about NPOs which
they oversee, and the prevailing conditions, and thus able to make better
informed decisions. On the other hand, national authorities are more likely to
apply standard rules, and avoid bias resulting from close personal contact. Yet
national authorities may have their own predisposition, towards the major
players, to the detriment of the community based organ izations which often form
the backbone of the NPO sector. It is impor tant that these issues be considered
when countries adopt procedures governing not just public benefit status, but a
myriad of other issues affect ing the not-for-profit sector.
From the above, it is clear that the form of government does not directly
determine the handling of public benefit issues. Countries with either
parliamentary or presidential systems employ specialized governmental
agencies. Countries having parliamentar y systems vest responsibility with
different ministries, or even lesser author ities (such as the Notary Public in
Holland). The Charity Commission model appears to be fully exportable, in spite
of historical differences. Courts may pl ay a valuable role in structuring the
framework for NPOs, not merely deciding disputes. As a matter of fact, most
systems are best described as mixed, incorp orating elements of all three models.
This is not surprising, since what is at issue is essentially a process. Thus, a
certain degree of flexib ility must be retained.
E. Theoretical Justificati on for PBO Tax Preferences
The core element of a not-fo r-profit organization is the ob ligation not to distribute
profits or benefits to the founders, managers, or other in siders. This restriction,
known as non-inurement, or non-distributi on, prevents conflicts of interest, and
prohibits both direct and i ndirect allocation of the asse ts of NPOs to any source
other than the proper beneficiari es or statutory purposes. It also requires that
after liquidation, all remaining assets be transferred to a NPO with similar
purposes, or to the state. 24
Scholars have suggested several theories for granting additional tax preferences
to PBOs. First among these is the hypothes is that they deserve support because
they actually serve the state and soci ety by providing necessary goods and
services that government and/or the private sector cannot or will not provide.
Because they complement or supplement obligations of the state, or provide
services that are under-supplied due to market failure, PBOs merit subsi
dies
which will enable them to realize thei r goals. Indeed, PBOs may merit support
because they often identify and respond to social needs faster than

governments, harnessing the energy and resources of volunteers, and delivering
services more efficiently and directly than governmental bureaucracies.
A second justification for tax incentives points to the general benefit the public
receives from maintaining a pluralis tic society. Strong civil society both
contributes to and results from democra tic governance. Indeed, allowing citizens
to receive a reduction in taxes in re turn for contributions to PBOs empowers
them to commit resources to valuable social goals. This in turn serves to
complement electoral democracy, giving meaning to constitutional rights like
freedom of speech and asso ciation. However, it should be noted that some
countries (like Sweden) deny this form of tax relief, leaving such determinations
in the hands of public authorities.
Other theories such as the income measurement theory, the capital subsidy
theory, and the donative theory rely on pr actical considerations to explain
society’s willingness to automatically provide subsidies to public benefit
organizations. Under the income meas urement theory, PBOs are granted tax
exemptions because most systems of ta xation are not designed to accurately
determine their true level of taxable income.25 The capital subsidy theo
ry
suggests that tax exemptions are needed to compensate PBOs, which serve
certain consumers better t han for-profit companies, ye t have difficulty attracting
capital or taking advantage of other preferences granted to investors. 2
6 The
donative theory proposes that PBOs prove their value by attracting a large
amount of support from t he public, and that the government should follow the
lead of the public in the form of additional contributions. 27
III. Patterns for the Determination of Public Benefit Status
Determining which activities undertaken by NPOs constitute a benefit to the
public has both philosophical and pr actical components. Although certain
categories of activity are typically recognized as a public service, specific
decisions are often difficult. For example, while education is typically recognized
as a public benefit, what about schools whic h are operated privately, or which
teach languages for money, or which teach racist philosophy? Public authorities
must determine exactly what types of activity should be encouraged, and apply
the principles equitably. Parameters need to be set to prevent both over-
inclusiveness and under-inclusiveness.
A. Western European Practice
Although it is customary to use the term public benefit in a generic manner, each
country defines and applies this concept in its own unique way. Examples of
countries which identify a public benefit purpose directly by law include Denmark
(“public utility” and “public benevolent purpose”), Germany (“development and
well-being of the public at large”), the United Kingdom (“purposes beneficial to
the community”), and the United States (“charitable”). 28 Tax laws often, but not

always, set forth the boundaries of and prescribe the treatment for PBOs. Case
law has been particularly important in common law countries, such as the United
States and Australia. In the United Kingdom , courts have defined the principle of
“purposes beneficial to the community.”
In many countries there is no precise definition of public benefit in any legislation,
but the authorities which register or tax NPOs nonetheless recognize the
concept. The following countries fit into this category: France (“humanitarian
activities”), Greece (“for the good of peopl e in general”), Ireland (“general benefit
to the community”), the Net herlands (“welfare of the public”), Portugal (“purposes
contributing to the cultural or general development of the country”), and Spain
(“purposes for the public good”).
Many countries include a “catch-all” ca tegory, which simply mentions “other
activities” which are deemed to serve t he public benefit. This is an effective
means to ensure that enumerated purposes are not interpreted in an overly
restrictive manner, and that t he concept of public benefit remains flexible over
time, in response to changing social conditions. After all, public benefit is a
dynamic, not a static concept, and mechanisms to enable its
expansion/development are appropriate.
In addition, it is common to enumerate certain specific purposes which are
deemed serve the common good. These often include promoting health,
education, science, the arts, traditions, culture and the preservation of cultural
monuments, relief for the poor and underprivileged, a ssistance to physically
disadvantaged people, children, and the aged, reducing the burdens of
government, enhancing knowledge and civi c participation, protecting the
environment and nature, supporting religion and human values, furthering social
welfare, minority rights, and human rights, supporting public works and
infrastructure, sports, etc. 29 For example, German tax law includes public health
care, general welfare, environmental prot ection, education, culture, sports,
scientific purposes, the support of persons unable to care for themselves, and
church and religious purposes. Belg ium, without stating any general public
benefit purposes, accomplishes a similar resu lt by extending benefits to cultural
associations. The enumerated categories demonstrate and define a societal
decision to support spiritual, physical, intellectual and cultural needs. 30
Individual countries often include additional categories of public benefit purposes,
which result from particular circumstances and cultural traditions/heritage. 31
This is natural, and should be encour aged. On the other hand, individual
countries can also exclude certain types of activities. For example, sometimes
there are restrictions upon political and legi slative activities of NPOs, such as
lobbying and campaigning (this is more generally the case in common law
countries). 32 Sports is also subject to divergent treatment. Whereas Belgium,
France, Germany, and Luxembourg all specifically designate sports as an
acceptable public benefit pur pose, the United Kingdom specifically precludes

sporting organizations from receiving preferential tax treatment, unless they
operate for another permissible purpose (such as helping handicapped people).
Religion presents a third example of divergent practice. Although accepted and
promoted in many countries, religion is excluded from preferential tax treatment
in Australia.
As mentioned previously, common law and civil law countries diverge concerning
which types of legal forms are authoriz ed for PBOs. Common law countries often
allow several different legal forms to qua lify. In Ireland, for example, trusts,
companies limited by guarant ee, corporations, and unincorporated associations
can all qualify. Civil law countries, su ch as Denmark and France, allow only
associations and foundations to qualify for ta x benefits. However, certain civil law
countries are much less restrictive. In Germany, Italy, and the Netherlands,
NPOs such as corporations, partnersh ips, institutions, and limited liability
companies, in addition to traditional foundations and associations, can be
formed.
In recognition of the higher level of scr utiny which applies to PBOs, there are
sometimes more procedural requirement s for the establishment and registration
of foundations than associations. Associat ions (most particularly when they do
not aspire to receive public benefit status) can often be created by merely
depositing notarized statutes or bylaws with a specified government agency.
Foundations or entities seeking prefer ential tax treatment sometimes need to
meet more stringent requirements established by governments and/or ministries.
In France, for example, mu tual benefit or simple associations can be registered
by depositing their statutes with the Prefecture de Police, while both foundations
and Associations Reconnues d’Utilité Publiq ue require approval from the Ministry
of the Interior, on advice from the Consei l d’Etat. However, as stated previously,
it is preferable to separat e the process of qualificatio n for public benefit status
from the process of registra tion, unless such status is an inherent characteristic
of the organizational form. And furt her, the requirements for obtaining public
benefit status should not be burdensome for the NPO.
There are three general models concerning the timing/procedure for obtaining tax
benefits. A priori qualification occurs when tax preferences are automatically
conferred upon an NPO which fulfills spec ified criteria for registration.
Accordingly, registration itself is the principle challenge, and the stage at which
eligibility must be demonstrated, often pursuant to investigation. This practice is
exemplified in France, where a public benefit NPO must first establish its identity
and eligibility in order to obtain legal personality. Having done so, it is
automatically eligible for ta x advantages due to its status.
The second model involves certific ation independent of and subsequent to
registration. In this case, registration is the first step. This is followed by
qualification for tax benefits, which may be obligat ory or optional. Luxembourg
exemplifies the obligatory pr ocedure, since after registration as a public benefit

entity with the Ministry of Justice, the NPO must still obtain an arrete grand ducal
to receive tax benefits. Holland follows the voluntary approach, whereby PBOs
may but do not need to obtain an advance ruling from Dutch Revenue
concerning their qualified st atus. In the United States, following registration under
state law, NPOs obtai n tax-exempt status by filing an application with the Internal
Revenue Service using Form 1023.
The third model involves scrutiny of t he public benefit status of the NPO only
during the taxation process itself. In such cases, NPOs must still be established
under law, with a valid form and legal pur poses. However, scrutiny concerning
public benefit status commenc es with a claim for preferential tax treatment, and
there is no procedure for resolving issues relating to tax status until a return is
filed with the appropriate aut hority. Since many countries create mechanisms for
determining tax status subsequent to regist ration but prior to tax filings, this third
model is often found in countries in tr ansition which lack fully developed tax
procedures.
In all countries of Western Europe, there are well developed and independent
mechanisms for resolving disputes between NPOs and the authorities which
handle issues ranging from r egistration to taxation. In both common law and civil
law countries, this responsibility ultimately lies with the courts. However, a great
variety of preliminary administrative mec hanisms is available. And there are also
differences concerning the authority and competency of courts. As a general
proposition, common law countries are more likely to grant expansive powers to
the courts, and rely upon j udicial precedents to build a body of applicable case
law. In civil law countries, the courts ar e more specifically charged with resolving
particular disputes.
B. Emerging Trends in Central and Eastern Europe
Transition from the st ate-dominated socialist system has opened many new
avenues for NPOs, while at the same ti me creating needs and challenges which
they must meet. The potential roles and activities of PBOs in the CEE countries
and the NIS are numerous. In part this is due to the diminished financial and
administrative capacity of previously c entralized states to meet the social,
cultural, educational, environmental, and medical needs of the public.
Additionally, the transition pr ocess itself has resulted in greatly diminished levels
of income and welfare. Thus, social needs are expanding at a time when the
state is less able to meet them. Priv atization constitutes an entirely new
mechanism for transferring these respons ibilities. Democratization has also
increased the level of opportunity for NP Os, and given them new duties to the
body politic. In short, the social and politic al space now exists for NPOs to play a
vital and dynamic role.
On the other hand, the reality facing many NPOs in this region is problematic.
Obtaining sufficient funding is a challe nge, and thus there is considerable

turnover. The public is often indifferent or disillusioned, unaware of the
importance of NPOs, and reluctant to s hed passive attitudes and contribute time
and resources which are in short supply. Traditions of corporate and other types
of philanthropy are not yet well establishe d. Capital resources are very limited,
leaving many NPOs dependent upon intern ational sources of funding. Image
problems have resulted from the (infrequent but over-publicized) use of NPOs to
engage in political and economic activities. Governments are, with some
exceptions, not very inte rested in communicating with the sector. Lobbying skills
(as well as others, such as management and fundraising) are only slowly
developing. The legal framework for NPOs is not yet firmly in place, in part due to
the incredible number of political, economic , and social issues which legislatures
face simultaneously. This creates uncerta inty, and results in administrative,
fiscal, and other disincentives. While t here are large numbers of intelligent and
motivated individuals, and in credible opportunities, the not -for-profit sector has
not yet lived up to its potential.
The legal framework for NPOs in CEE and NI S is a central and critical issue. The
post-socialist transitions have unleashed a fl urry of legislative activity. Yet the
pace of legal change in the region varies greatly. Certain countries, such as
Poland, the Czech Republ ic, Hungary, and Estonia have made considerable
progress towards the establishment of a viable legal framework for PBOs.
Certain other countries hav e not moved as quickly.
The incomplete and changing legal framework for the not-for-profit sector in CEE
and NIS makes direct comparison of laws difficult. However, some emergin
g
trends, particularly regarding acceptabl e legal forms for NPOs, are readily
identifiable. The basic legal framework for NPOs in this region, both historically
and even to a limited extent under socia list governance, has been based on the
civil law. Thus, as a general rule, relig ious organizations, political parties, and
trade union movements are subjects of separate legislation, and the principle
forms of both PBOs and MBOs are the a ssociation and the foundation. However,
in many instances, variations upon t hese basic forms, and even novel legal
forms, are being established in order to meet current social, administrative, and
other challenges.
A common variation, which exists in Hungary and is proposed in Poland (with
disapproval from the sector) is the Public Foundation. In Hungary, Public
Foundations secure the continuous provis ion of certain public tasks, and can be
formed by both national and local governm ents (German lä nder have certain
comparable rights). Hungary also has Pub lic Chambers, with self governance
and registered membership, which are est ablished by special law (such as the
Academy of Science, and certain professional organizations). In Slovakia,
Professional Chambers are established by special law, as are Funds, which are
essentially the public law equivalent of private law foundations. The Czech
Republic has recently passed legislation creating Public B enefit Companies,
which may serve as a vehicle to transfo rm state-owned and run institutions into

PBOs (although the absence of a minimum level of endowment may make them
an attractive alternative to operating foundat ions). This is not unlike the Public
Benefit Company which exists under H ungarian law, based upon a letter of
incorporation, and often governed by t he rules applying to Limited Liability
Companies. A comparable entity is the subject of proposed legislation in
Slovakia. And Russian law includes a related legal form, called the Non-
Commercial Organization, as well as other possibilities under the Law on
Public
Associations (which are not in accordance with standard civil law concepts).
Lithuania has passed legisl ation which establishes Community Organizations,
which can be in the form of either foundatio ns or associations, but are limited to
Lithuanian natural persons.
To a certain extent, such experiment ation with different legal forms is
commendable, since it allows for innovat ive approaches which may better meet
social requirements. However, in the absence of systematic implementation and
carefully considered policy goals, the re sult can be increased uncertainty and
disarray in the sector, not to ment ion numerous administrative problems.
Particularly when countries find themse lves undergoing systemic transformation,
legal certainty is of great benefit to t he NGO sector and society, even sometimes
at the expense of perfection. In Rom ania, Law 21 of 1924 on Legal Persons was,
for inexplicable reasons, not repealed by the socialist government. For five years
now, it has been restored and given legal ef fect, and it is widely considered to
create a viable legal framew ork. However, despite some noteworthy problems
(such as outdated language and references to other institutions which no longer
exist), the desire for stability has temper ed initiatives to pass new legislation,
which have only recently accelerated.
As a general proposition, the concept of public benefit status is unevenly
developed and applied in CEE and NIS. At the heart of the problem is the fact
that taxation systems are bei ng recreated from scratch, particularly in countries
which were formerly part of the Soviet Union. However, in certain countries
recent legislation simply does not address this concept. For example, the Law on
Persons and Families in Bulgaria does not differentiate between PBOs and
MBOs (although recent draft laws do introduce this distinction). The same is true
for Slovakia. On the other hand, Mac edonia does provide tax concessions, in
different laws, not specifically aimed at particular organizations but creating
categories of public benefit activities. In Poland, income tax exemptions and
personal and corporate deductions are per mitted when NPOs support scientific,
technical, educational, and cultural activities, protection of the envir
onment,
social initiatives and charity, protection of public health, rehabilitation of the
disabled, and religious causes. Similar categories are recognized in the Czech
Republic. Hungary also has a particularly well developed system. Contributions
to foundations (although not generally a ssociations) are deductible for both
natural and legal persons, if used for qualifi ed activities in the fields of culture,
education, religion, social causes, etc. T here is a presumption that this is the

case with Public Foundations. In addition, provisions in the laws on value added
tax, customs duties, and local taxes also grant preferences to PBOs.
The diversity of examples above shows that there is little tendency towards the
harmonization of European laws relating to t he particular characteristics of public
benefit status. Nonetheless, it is hoped that the countries in transition will be able
to study and benefit from the experiences of the countries with more developed
legal systems, thereby maki ng intelligent and realistic decisions. However, it is
necessary to point out that many CEE countries, such as Poland and Hungary,
have long-standing traditions concerning civ il society organizations, and that the
process of transition itself results from the rupture caused by Soviet expansion.
IV. Critical Issues Concerning the Dete rmination of Public Benefit Status
It is extremely important to understand the hi storical derivation of public benefit
status, the privileges and re sponsibilities which result, how the determination is
made, the various legal forms which are appropriate, etc. However, the laws
covering these topics must in the final analysis be applied. While principles can
be established in legislation, either mi nistries or administrative agencies, and
ultimately the courts, must evaluate and reach conclusions concerning specific
organizations.
Initially, the laws and regulations which govern the not-for-profit sector should
clearly set forth the purposes which are acceptable for PBOs. If the parameters
are adequately defined, the potential for misinterpretation and/or abuse is
minimized. Secondly, the public authorities must implement these laws in a
professional, responsible, even-handed, and open manner. Decisions should not
be politicized, arbitrary or capricious, and should always be based upon the law
and the merits of the case. Employees of the decision-making entity should be
familiar with all applicable laws, regul ations, and procedures, and should be
knowledgeable about the NGO sector. Additionally, they should have the
necessary language skills to carry out thei r functions. NPOs themselves should
be encouraged to participate in the process of regulation, by creating umbrella
organizations with oversight responsibilitie s, and by being given opportunities for
consultation. Finally, the process must be subject to review by an impartial
authority, with sufficient power to correct not only abuses but also simple or
administrative errors.
When laws addressing public benefit st atus list the general categories of
activities which qualify, and the responsib ility for determining specific parameters
is left to some form of administrative agen cy, it is necessary to develop a body of
decisions or applications which will clearly set forth state policy, and serve as a
guide to the not-for-profit sector. In spite of the need for certainty, there must be
some degree of flexibility in these dete rminations, to reflect changing social
conditions. Because the concept of public benefit is dynamic over time, flexibility
should be enhanced by the inclusion of a “catch-all” category.

One of the principle issues raised by this taxonomic approach (enumerating
categories of public benefit purposes) is whether there is a rebuttable
presumption that activities fitting within one of the established categories should
be given preferential tax status. In other words, where does the burden of proof
lie? If successful registration as a particular legal entity in and of itself constitutes
acknowledgment of public benefit st atus, then the burden for any subsequent
disqualification seems to shift to the aut horities, unless of course there is a
periodic renewal or evaluation process. If the government keeps a register, the
initial responsibility to demonstrate elig ibility may fall upon the NPO. Once public
benefit status is obtained, however, there should be a presumption in favor of
continuity, until and unless revocation is warranted, based upon (prefe
rably
annual) monitoring/reporting requirement s. In any event, there must be
machinery to make case by case decisi ons in the event that NPOs do not fit
precisely within one of the enumerated ca tegories, or if disputes concerning
status arise. 33
A crucial theoretical and practical problem results from the fact that the term
“public” lacks a clear and precise definit ion. The expansion of the concept of
charity in the common law jurisdictions from relief of poverty to include a series of
“worthwhile” activities can in part be tr aced to a more expansive view of the
“public”. But it is clear than any given ac tivity, no matter how laudatory its nature,
directly benefits only a portion of the publ ic. MBOs may actually serve a larger
constituency than PBOs, and both norma lly benefit no more than a small
percentage of the public. In response, it can be argued that it is the nature of the
activity, and whether it should ideally be undertaken by government, which is
determinative.
A related conceptual problem arises with the distinction between PBOs and
MBOs. Even the term “benefit” suffers from some ambiguity. Employees of PBOs
still derive some “benefit”, if not from the operations of the entity then from its
mere existence. Salaries, experience, and personal contacts obtained by
individuals working for PBOs could easily be more valuable than what members
of a mutual benefit association receive. A dditionally, it is quite conceivable that
associations which are designed first and fo remost to promote the interests of
their members might indirectly provide considerable benefits to the public at
large. Thus, it is clear t hat the principles of non- distribution and mutual benefit
can be difficult to apply in a large number of instances.
Likewise, it is not always easy to apply the categories of public benefit
enumerated in laws or tax provisions . Should these categories be construed
expansively or restrictively? Should t he formal inclusion of an activity be
sufficient, or should there be further scrut iny based upon the specific purposes of
an organization? For example, is the promotion of religion sufficient ex ante, or
should preferable tax treatm ent depend upon a further showing that the beliefs
espoused by the religion are in the interest of the public? Such decisions may be
made by the authorities, or there may be a mechanism for the public to challenge

tax preferences. However, the latter process could lead to controversial and
ideological battles between opposing inte rest groups. The definition of public
benefit should not depend upon p opularity, since by their very nature PBOs, at
least initially and directly, serve defined se gments of society. In order to prevent
shifting public opinion from dictating social policy, the better practice may be to
vest authority with the governm ent and the courts to ensure that PBOs fit within
the parameters of public policy.
V. Conclusion
The foregoing discussion demonstrates t he complicated issues associated with
public benefit status, from criteria and procedures for evaluating NPOs to the
preferences which result from obtaining this status. Clearly, the issues which
arise are political, economic, social, admin istrative, and fiscal at the same time.
While certain countries enjoy a long hi story of precedents, case law, and
established practices, this by no means guarantees conclusive answers to such
difficult questions. Other countries which are in the process of reforming their
legal systems, while deprived of histor ical continuity, are uniquely able to
consider these issues anew. This creat es an opportunity to pass well-crafted
laws and implement efficient practices to govern the not-for-profit sector, at least
in part based upon the experience of neighbors. In either case, it is clear that a
process is at issue, not a search for perfect answers.
In order to create a workable process which both protects the legitimate interests
of the state and permits the formation of a viable and flourishing third sector,
certain basic principles apply. In the first place, a well constructed legal
framework should be established. The laws should be clearly drafted, with
participation from the gov erned, in an open and democratic process, and then
made accessible and intelligible to all those concerned. Secondly, the laws
should be administered fairly, efficiently, and openly, without conflicts of interest
or bias, and once again with consent and participation from the governed. Finally,
the process should have built-in proc edural safeguards which protect the
interests of the governed. This requires the establishment of an independent and
impartial authority, to which NPOs can appeal regarding any disputes with
governmental authority, be they procedural or substantive. In the final analysis, it
is not the particular struct ure of the system governing p ublic benefit status which
is most important. Whether it is the C harity Commission in England and Wales,
the Office of the President in Greece, or the Internal Revenue Service in the
United States, a consistent and equitable process for handling public benefit
issues, based upon the principles enunciated above, is the goal.

1. Further development of the meaning and implications of public benefit status was
requested during two international conferences on “Regulating Civil Society”, which were

organized by the International Center for Not-for-Profit Law in Sinaia, Romania in May of
1994 and Tallinn, Estonia in May of 1995. In addition, conference participants identified
two other themes requiring further analysis. They are: 1) the extent to which NPOs
should be permitted to engage in political acti vities, and 2) the extent to which NPOs
should be permitted to engage in commercial/economic activities. These topics are
addressed in two separate papers.

2. The general term “public benefit” is used throughout this paper to designate those
organizations with purposes which serve the public at large, in contrast to those
organizations which have private purposes, or which predominantly or exclusively interest
and/or benefit their members.

3. The legal system in the socialist countries will not be considered in great detail. While it
forms the basis upon which current reforms are being carried out, and is of great
historical interest, it does not constitute a vi able model for the creation of civil society, and
its legal and socio-political influence is therefore limited. However, it is important to note
that the socialist countries did recognize a form of civic association, albeit strictly
controlled by and subordinated to the state and/or party.

4. As a general principle, both PBOs and MBOs should be exempt from income taxation on
money or other items of value received from donors or government agencies, or in the
form of membership dues, interest, dividends, and capital gains when same are devoted
to the statutory purposes of the organization. However, additional tax preferences such
as deductions/credits for donors are generally reserved to PBOs. See The Blueprints
Project 6 (International Center for Not-for-P rofit Law, March 1995) and Sections 24-25 of
the Open Society Institute Handbook on Laws for Civic Organizations (prepared by ICNL,
1996).

5. Leon E. Irish & Karla W. Simon, Definition and Boundaries of the Nonprofit Sector: The
Role of Law 7 (1995) (on file with author) and the Open Society Institute Handbook on
Laws for Civic Organizations, Chapter H.

6. The civil law countries did not face this dile mma, since the traditional definition of charity
is limited to care for the sick and relief of poverty, and the courts were not given
interpretative powers. See Frits W. Hondius, The Law on Foundations: An International
Status Report 12 (Strasbourg, 1989) (on file with ICNL).

7. James J. Fishman & Stephen Schwartz, Nonprofit Organizations: Cases and Materials
(The Foundation Press, 1995) at 132.

8. For example, the purpose of “peace” has been found not to qualify as a charitable
purpose under English law. Frits W. Hondius, The Law on Foundations: An International
Status Report at 12, s upra note 6.

9. James J. Fishman & Stephen Schwartz, Nonprofit Organizations: Cases and Materials, at
132, supra note 7.

10. Id. at 310-311.
11. ICNL, Provisions of the United States Tax Laws Affecting Not-for-profit Organizations 4
(April 1995) (on file with author).

12. In some civil law countries, particularly in Central and Eastern Europe, additional legal
forms for NPOs have been created. For example, in the Czech Republic, a law was
passed in September of 1995 to create “public benefit companies”. These serve as a
vehicle to convert certain governmental we lfare programs to more “public” control, and
remove them from the state sector. See Act on Nonprofit Corporations, Czech Republic
(effective January 1, 1996) (on file with IC NL). Other countries are considering this
model. Hungary has created three additional fo rms, namely the Public Chamber, the
Public Foundation, and the Public Benefit Company.

13. Alain Anciaux et al., The Third Sector in Western Europe, in Citizens Strengthening
Global Civil Society at 238 (McNaughton and Gunn Inc. 1994).

14. Id. at 251.
15. Id. at 240.

16. Id. at 248, 251; Leon E. Irish & Karla W. Simon, Definition and Boundaries of the
Nonprofit Sector: The Role of Law at 5, supra note 5.

17. Alain Anciaux et al., The Third Sector in Western Europe at 252, supra note 13.
18. See Derek Allen, Tax and Giving in Europe: A Gu ide to the Tax Treatment of Voluntary
Bodies in the European Community and of Donations Made to Such Bodies (London: The
Directory of Social Change, 1993).

19. Frits W. Hondius, The Law on Foundations: An International Status Report at 21, supra
note 6.

20. The Blueprints Project at 12, supra note 4, the Open Society Institute Handbook on Laws
for Civic Organizations, Chapter H.

21. Alain Anciaux et al., The Third Sector in Western Europe at 252, supra note 13.
22. The Blueprints Project at 11, supra note 4.
23. Despite the need to protect the public from fraud or abuse, laws and regulations which
make PBOs accountable to the public should not be so burdensome as to make them
unable to function successfully. See Karla W. Simon, Principles of Regulation for the Not-
for-Profit Sector 2, 3 (ICNL, 1994).

24. Open Society Institute Handbook on Laws for Civic Organizations, Section 19.
25. James J. Fishman & Stephen Schwartz, Nonprofit Organizations: Cases and Materials, at
319-324, citing Boris I. Bittker & George K. Rahdert, The Exemption of Nonprofit
Organizations from Federal Income Tax , 85 Yale L.J. 299, 307-316 (1976).

26. James J. Fishman & Stephen Schwartz, Nonprofit Organizations: Cases and Materials, at
326-328 citing Henry Hansmann, The Rationale for Exempting Nonprofit Organizations
from Corporate Income Tax , 91 Yale L.J. 54, 72-75 (1981).

27. James J. Fishman & Stephen Schwartz, Nonprofit Organizations: Cases and Materials, at
329-333, citing Mark A. Hall and John D. Colombo, The Donative Theory of the
Charitable Tax Exemption , 52 Ohio St.L.J. 1379, 1381-1389 (1991).

28. For more information on tax treatment within the European Union, see Derek Allen, Tax
and Giving in Europe: A Guide to the Tax Treatment of Voluntary Bodies in the European
Community and of Donations Made to Such Bodies (London: The Directory of Social
Change, 1993) which has been heavily relied upon in this section.

29. The Blueprints Project at 6, supra note 4.
30. Frits W. Hondius, The Law on Foundations: An International Status Report at 5, supra
note 6.

31. Id. See also The Blueprints Project at 7, supra note 4.
32. The Blueprints Project at 7, supra note 4. See also the ICNL Paper concerning Political
Activities by NGOs.

33. James J. Fishman & Stephen Schwartz, Nonprofit Organizations: Cases and Materials, at
133.

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