The Niqabi Paralegal

Question: Does this story have any implications for Muslim charities?

Response: According to the IRS, in order to file for tax-exempt status, a charitable organization must be a corporation, community chest, fund, or foundation

Incorporation is governed by state law and in addition to the requirements set out by federal law regarding tax-exempt status, charities must also follow the requirements of state law in regard to their incorporation, usually as a not-for-profit corporation.

Most state codes set out requirements relating to the name of a not-for-profit corporation. Generally, these requirements seek to prevent fraud or the use of misleading or deceptive names.

For comparison purposes, I studied the District of Columbia (where SUSA is located) and the state of Washington (where I'm located). D.C. St. S 29-301.07 governs corporate names in the District of Columbia while RCW 24.03.045 does so in the state of Washington.

NY Not-for-Profit Corporation Law S 301 governs corporate names in New York. At issue in the Benecke case is S 301(a)(8) which states that the corporate name:

"Shall not contain any word or phrase, or any abbreviation or derivation thereof, which, separately, or in context, shall be indecent or obscene or shall ridicule or degrade any person, group, belief, business or agency of government or indicate or imply any unlawful activity."

Neither D.C. St. S 29-301.07 nor RCW 24.03.045 contain this type of restriction on the corporation's name. Whether NY Not-for-Profit Corporation Law S 301(a)(8) is unconstitutional as a violation of the First Amendment is a question all its own and not something that I'm addressing here (though in my opinion, it is or should be).

Charities that wish to incorporate in the state of New York at the current time need to avoid names that in the judgment of the state of New York are:

1) indecent,
2) obscene,
3) ridicul[ing] or degrad[ing] any person, group, belief, business, or agency of government, or
4) indicat[ing] or imply[ing] any unlawful activity

A charity that has already incorporated in New York will not get in trouble after the fact for its name (an earlier article on the case raises the question of whether the state of New York would allow the National Association for the Advancement of Colored People (NAACP) to incorporate today when the term "colored" is considered offensive to African-Americans).

However, new charities that wish to incorporate in New York should be alert to whether their name might be considered indecent, obscene, to ridicule or degrade a any person, group, belief, business, or agency of government, or to indicate or imply any unlawful activity.

The paranoid mind imagines that in some political climates, an Islamic name might be taken to imply unlawful activity (i.e., terrorism). However, this does not yet appear to be a real concern. It is just something that Muslim charities should be aware of because even the smallest breach of the law may make them a target today.