I know that private universities in the United States are nonprofit organizations. Are they or are they not corporations? Is there a legal category that private universities fall under, such as something like ‘nonprofit educational institution’?
I read that private universities in the Philippines are legally corporations, and was wondering what about US corporation law makes an organization a corporation.
Yes, they are non-profit corporations, generally classified under 501(c)(3).
There isn’t a “US corporation law,” but each state has a statute permitting incorporation of not-for-profit corporations. Most civic organizations, even block clubs, are set up this way. The requirements are very simple and they allow the organization to survive changes in board members, officers, and even the membership. This is exactly what you want in a private college that is independent of a hierarchy such as the Catholic Church. It allows the institution to be self-perpetuating and to not threaten the personal fortunes of its trustees.
The incorporation of colleges goes way, way back in the US, even before there were almost any other corporations. Dartmouth College is one of the first I think, and others received individual charters from the states until the mid 19th century.
Just to be clear, 501 (c)(3) is a classification under the federal tax code, which determines whether they pay federal income tax (and whether donations to them are tax-deductible for the donors).
Each state will have its own laws specifying how a corporation can be formed and what the requirements are. There may or may not be different forms for non-profits or other types of corporations.
Having been through it, let me say that while this description is completely correct the process getting there is much stricter than just deciding to incorporate. We had to be in existence for a year first and demonstrate other competencies. And being a board member exposes a person to legal responsibilities and liabilities.
This is trivial for something the size of a university but can be overwhelming for something as small or casual as a block club.
The 9 Colonial colleges were founded before the Unites States even existed, by royal charter.
I don’t know about the RCC’s colleges, but the several private colleges I’ve dealt with that are affiliated with religious denominations are legally separate entities. So the above incorporation system applies to them as well.
Are you sure that wasn’t to get the IRS 501(c)3 exemption? At least in Illinois, forming a not-for-profit corporation is as simple as sending a form (naming the officers and registered agent) and paying a filing fee to the Secretary of State. It wouldn’t make sense to require an entity to exist for a year before it’s allowed to become an entity.
You’re right. I’m probably conflating everything in my memory. I found the New York not-for-profit incorporation guide online and it doesn’t mention that.
Even so, while this is not technically part of incorporation, it’s definitely part of the real world total process that made us glad that one of us was a lawyer.
As an undergraduate I was told that French students are run by the students, English universities are run by the faculty, and American universities by the board of trustees.