NY Religious Corporations Law

[Marc Stern]

Generally the not for profit corporation leaves so much room to create a corporate form amenable to one's needs that this should not be a problem
Marc stern

----- Original Message -----
From: religionlaw-bounces at lists.ucla.edu <religionlaw-bounces at lists.ucla.edu>
To: Law & Religion issues for Law Academics <religionlaw at lists.ucla.edu>
Sent: Thu Mar 12 11:55:39 2009
Subject: Re: NY Religious Corporations Law

Having statutes with apparently mandatory organizational provisions directed at religious organizations is problematic for the reasons Doug and the other signatories of the Connecticut letter mention. There are subtler but none the less troubling issues if a state says that a religious organization can, if it wishes to incorporate, use the generic nonprofit corporation law, without providing ample "opt-out" provisions for those aspects of the normal corporate structure that conflict with the religion's tenets. By and large, this isn't an issue when the statute allows the charter or bylaws to override statutory defaults, since an individual church can implement any changes in organization later mandated by the church's denomination without resort to any public body. Where such opt-out is lacking, though, there might be a problem of unconstitutional conditions, since the benefits of limited liability and perpetual existence have long since ceased to be discretionary with the state just by virtue of its issuing a corporate charter. When Madison vetoed the Arlington church's charter, that wasn't the case--corporations had to be chartered by special act of the legislature.

It seems to me that income tax exemption, whether federal or state, is a different issue entirely. Exemptions, at least at the federal level (many states simply rubber-stamp the federal exemption), are not entirely ministerial for the general run of nonprofit organizations (and there's no requirement that the organization be incorporated). It seems that the only mandatory provisions noted on Form 1023 regarding organizational structure require a statement of exempt purpose and a commitment to using the organization's assets solely for exempt purposes on dissolution. I'm not aware of cases where these requirements have been challenged by anyone on religious grounds. I'm also not sure whether the organization would have to satisfy the same "non-inurement" tests that, say, an educational or civic organization would; if so, these might provide grounds for religious objection. 


On Thu, Mar 12, 2009 at 10:56 AM, Friedman, Howard M. <HFriedm at utnet.utoledo.edu> wrote:


	Probably the earliest development of the corporate form in Roman law and English law was the "corporation sole" that permitted property to pass from one bishop to the next when the bishop died. This avoided the inheritance problems that would be present if title were held in the personal name of the bishop.  Some of the same issues would likely arise if religious entities today tried to operate in non-corporate form. Beyond this, do we really want clergy holding property, often purchased with funds from their congregants, in their own names with the potential for abuse that this could pose? Also, to the extent that religious corporation statutes impose greater restrictions on incorporated churches than are imposed on other incorporated non-profits and charities, isn't there an equal protection problem?
	 
	Howard Friedman

________________________________

	From: religionlaw-bounces at lists.ucla.edu on behalf of hamilton02 at aol.com
	Sent: Wed 3/11/2009 3:57 PM
	To: religionlaw at lists.ucla.edu
	Subject: Re: NY Religious Corporations Law
	
	

	The question here is whether you can satisfy the rule against judicial
	oversight of ecclesiology and permit the states to serve their
	legitimate interest in overseeing those that obtain corporation status.
	Religious entities need and/or want to be able to operate with the
	benefits of a corporation, including property ownership by an entity
	that surpasses the lives of any particular individuals and limited
	liability. Incorporation is voluntary, so why isn't there an argument
	that if they choose incorporation and its benefits, they have to
	agree to certain state oversight? While it is relatively easy to point
	to potential constituitonal difficulties in the laws as written, there
	are difficult issues getting the balance correct.
	
	Marci
	
	Marci A. Hamilton
	Paul R. Verkuil Chair in Public Law
	Benjamin N. Cardozo School of Law
	Yeshiva University
	55 Fifth Avenue
	New York, NY 10003
	
	


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-- 
Vance R. Koven
Boston, MA USA
vrkoven at world.std.com

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