Legal Structure of a Non-profit Organization

Running Head: NON- PROFIT ORGANIZATIONS 1
Legal Structure of a Non-profit Organization
Name:
Institution:

Legal Structure of a Non-profit Organization 2
Introduction
According to Tury (2016), non- profit organizations can get identified as charitable trust
or society that got prohibited from operating for purposes of making a profit. Furthermore, the
NFP organizations are formed to further educational, cultural, professional or cultural objectives
with no aim of making any profit from their activities. Moreover, the funds used to startup an
NFP organization gets often provided by trustees, members present in the organization or other
partners who do not expect any repay of the funds they invested in the NFP organization. Also,
the members any other funder who helped in the startup of the NFP organization are not entitled
to any profit or loss that the non-profit organization may incur. Hence, all registered NFP
organizations get exempted from taxes, and most of the contributions that got made to the
organizations are not taxed. The purpose of this study is to evaluate the legal structure of a non-
profit organization and creating an understanding of its relation to current practice.
Legal Structure of Non-profit Organizations
1. Trusts
Trust is essential in the legal structure of an NFP organization, and a trust document establishes
it. The trust must contain three significant components that are recognized by the court which
are; the intention certainties of the trust, subject matter of the trust an object of the trust. The
purpose of trust as a legal structure for non-profit organizations may be due to charitable
purposes or to obtain fund isolation that is being held by an individual. The aim of this is to
benefit some else from the assets of the individual that is holding the funds. Moreover, trust gets
created when one individual or more hold legal property titles through another group (NFP
organization) has the constitutional rights to the benefits of that property. Hence, the trust may
arise from the common law that imposes constructive trust which gets based on the equalities of

Legal Structure of a Non-profit Organization 3
the situation. Therefore, there is the importance of creating certainty with the intention of trust
creation either through actions or words. Also, the property that is subjected to trust must be, and
the objective of the trust must get identified. Furthermore, the trust beneficiary which is the NFP
organization must be readily ascertainable either by class description or name. It should get
noted that the court is playing an important role in accommodating charitable activities by
modifying the certainty of the object. It is made possible by the charitable trust including in its
object the purpose of the trust instead of mentioning the beneficiaries (NFP organization) by
class or name description. Thus, the charitable trust purpose should be specific which enables the
trustees to understand and determine how the charitable activities are getting carried out.
However, the charitable trust purpose should not be ambiguous instead it must be determinable
and satisfied to the specific fact situations. Moreover, the charitable trust may get applied on the
court which may change the terms set during the making of the trust and redirect the funds to
other court-approved charitable purposes. The approved charitable purposes must have a close
relation to the original goal set in the trust document.
2. Unincorporated Associations
It is a memorandum of association document that identifies the purpose of the NFP organization
and how it can operate and how it gets managed. The memorandum of association is naturally
contractual thus it does not mostly create a situation on a legal person. However, it creates a legal
relationship among the members who have contributed to the startup of the NFP organization
(Community Southwark, 2016). Hence, the memorandum of association is meant to create an
agreement among the members who have the common purpose of establishing the NFP
organization. It helps the members to achieve the common objective that they set out to make
through the establishment of the NFP organization. Most of the times the members of the NFP