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The “Independent” Sector: Fee-for-Service Charity and the Limits of Autonomy

Posted by on Tuesday, January 31, 2012 in Articles, Volume 65, Volume 65, Number 1, Volumes.

Although numerous scholars have attempted to explain and justify the benefits provided to charities, none has been completely successful. Their theories share, however, two required characteristics for charities. First, charities must be distinct from other types of entities in society, including governmental bodies, businesses, other types of nonprofit organizations, and informal entities such as families. Second, charities must provide some form of public benefit. Focusing on these common characteristics reveals a previously not fully appreciated role for the laws governing charities: protecting charities from influences that could potentially undermine these traits. Applying this new “autonomy perspective” to the law governing charities reveals that while existing legal rules generally protect charity autonomy, they fail to do so in one major respect. Current law does not directly address the growing and often negative influence of consumers who purchase services from charities primarily for the consumers’ own benefit and with little if any regard to the public benefit charities must provide. Having identified this vulnerability, this Article then samples the existing empirical literature regarding fee-dependent charities to determine under what conditions the influence of these consumers, whether patients, students, retirement community residents, or others, is likely to be detrimental to a charity’s pursuit of public benefit, and what options exist for addressing this influence. It concludes with suggestions for further research that would help lawmakers accurately target this influence and so better address questionable behavior by charities.