Running head: DISCUSSION 1: CHAPTER TWO 2
Discussion 1: Chapter Two
The Legal Framework of the Nonprofit Sector in the United States by Bruce Hopkins and
Virginia C. Gross.
The theme of this discussion is the legal framework applied in the nonprofit sector across
the US. Nonprofit law assumes various forms such as the laws enacted by the United States
Congress and legislatures at the state level, which is publicly declared by agencies of laws and
policies. Nonprofit legal framework also constitute court opinions at federal and state levels that
may be categorized as nonprofit law. According to the law that govern nonprofit organizations
does not deter such organizations from pursuing or undertaking activities that generate profit. In
fact, many nonprofit organizations freely engage in profit generating undertakings. The legal
framework governing nonprofit organizations became a matter of interest to me because I would
like to know understand how nonprofit making companies pursue goals of revenue creation and
examining if the law permits them to do so.
Legal framework for nonprofit organizations is a matter of interest for the public sector
due to various aspects including tax collection terms and classification by the IRS. As pointed
out in the chapter, the federal law demands that nonprofit organizations require categorization to
determine their eligibility for the tax-exempt status to allow for IRS recognition. Tax exemption
is a critical concept that involves all organizations and agencies in the public and private sector
as well as nonprofit companies. In this particular context, tax-exempt becomes an important
subject in the public sector, for example, regarding the duty of care which compels directors of
such organizations to “be reasonably informed about the organization’s activities” including
