Congressionally Chartered Nonprofit Organizations (“Title 36 Corporations”): What They Are and How Congress Treats Them
Released: 2011-06-17T00:00:00

Summary:
The chartering by Congress of organizations with a patriotic, charitable, historical, or educational purpose is essentially a 20th century practice. There are currently some 92 nonprofit corporations listed in Title 36, Subtitle II, of the U.S. Code. These so-called "Title 36 corporations," such as the Girl Scouts of America and the National Academy of Public Administration, are typically incorporated first under state law, then request that Congress grant them a congressional or federal charter.
Chartered corporations listed in Title 36 are not agencies of the United States, and their charters only rarely assign the corporate bodies any governmental attributes. For instance, the corporation's debt is not guaranteed, explicitly or implicitly, by the full faith and credit of the United States. The attraction of Title 36 status for national organizations is that it tends to provide an "official" imprimatur to their activities, and to that extent it may provide them prestige and indirect financial benefit.
In recent years, some in Congress have expressed concern that the public may be misled by its chartering process into believing that somehow the U.S. government approves and supervises the corporations, when in fact this is not the case. As a consequence, the House Judiciary Committee's subcommittee of jurisdiction instituted a moratorium on granting new charters in 1989. (The Senate generally defers to the House on chartering matters.) On several recent occasions, however, Congress has established Title 36 corporations despite the moratorium.
This report will be updated in the event of a significant development.

subsections: section_title: Current Context
paragraphs: This report discusses a category of congressionally chartered nonprofit organizations that have as their purpose the promotion of patriotic, charitable, educational, and other eleemosynary activities. Title 36 of the United States Code, where such corporate organizations are listed with their charters, was recodified by law in 1998 ( P.L. 105-225 ; 112 Stat. 1253).
Title 36 is comprised of three subtitles: Subtitle I: Patriotic and National Observances and Ceremonies; Subtitle II: Patriotic and National Organizations; and Subtitle III: Treaty Obligation Organizations. This report addresses Subtitle II, which includes 92 congressionally chartered corporations.
These chartered organizations have been collectively referred to under any of three terms: "Congressionally chartered organizations;" "Title 36 corporations;" and "patriotic societies." In this report, the term "Title 36 corporation" will be used, although it should be noted that even within this category of organizations, there are variations.
The United States Constitution, although not providing express power to Congress to charter corporations, is generally cited as the authority, under Article I, Section 8, Clause 18, by which Congress can pass all laws "necessary and proper" to implement the assigned expressed powers. Congress has authority to establish organizations within both the governmental and private sectors. In the governmental sector, the authority and responsibility to establish all agencies and all offices to be filled by appointed officers of the United States is clear. The permissible actions of all agencies and officers of the United States are determined by public law.
Congress also has authority to establish new for-profit and nonprofit organizations in the private sector. Congress, for instance, established the fully private, stockholder-owned Communications Satellite Corporation (ComSat) in 1962 (47 U.S.C. 701; 76 Stat. 419). Congressional authority with respect to organizations functioning essentially under state law, however, has not been free of controversy. The basis of the controversy often comes down to fundamental issues of managerial accountability, fiduciary responsibility, and rights that inhere to governmental organizations, but not to private organizations, such as the right to the full faith and credit of the U.S. Treasury.
Title 36 corporations constitute one of the categories of corporate organizations chartered by Congress. It should be noted at the outset, however, that since 1989 the House Judiciary Committee's subcommittee of jurisdiction has placed a moratorium on the chartering of additional nonprofit corporate organizations. This moratorium has been reaffirmed at the beginning of each new Congress, most recently by the Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law on March 5, 2009.
The current moratorium reads,
The Subcommittee [has re-adopted] the policy of not granting new federal charters to private, not-for-profit organizations. This policy has been adopted by the Subcommittee of jurisdiction since the 101st Congress [1989-1990], and it reflects the Subcommittee's belief that charters are unnecessary for the operations of any charitable organization and falsely imply to the public that an organization and its activities carry a Congressional seal of approval. This policy also reflects the Subcommittee's belief that the significant resources required to properly investigate prospective chartered organizations and monitor them could and should be spent instead on the Subcommittee's large range of policy matters.
section_title: Historical and Legal Context
paragraphs: There is no general law of incorporation at the federal level as there is in the states and the District of Columbia. If Congress wishes to establish or charter a corporation, it does so by enacting a law, and it is this specific legislation that provides for the mission, authorities, and restrictions that will apply to the chartered corporation.
The general practice has been for each state and the District of Columbia to exercise jurisdictional authority over the incorporation of for profit and nonprofit organizations within their boundaries. This exercise of authority by states devolved from the concept that states had authority at common law to create artificial bodies for the purpose of engaging in various enterprises and carrying on certain activities. Historically, state legislatures chartered each organization seeking corporate status on a situation-specific basis, in much the same way as the federal government does today. As time passed, states moved to provide for the creation of corporations pursuant to statutory procedures.
Today, states have general incorporation laws, and often separate laws for profit and nonprofit entities, which stipulate procedures, information, and standards to be met for the issuance of a charter ("articles of incorporation"). A fee is typically associated with the process.
Corporations operating in the District of Columbia are subject to the constitutional delegation of authority over the District of Columbia as provided in Article I, Section 8 of the United States Constitution. It was the practice of Congress in the early years of the republic to grant franchises to District of Columbia corporations on a case-by-case basis. For example, Congress incorporated the Trustees of the Presbyterian Congregation in Georgetown in 1806 (2 Stat. 356). In 1901, Congress enacted a general statutory procedure allowing incorporation in the District of Columbia by means of filing paperwork rather than by special action of Congress. This procedure, analogous to that now used by the states, is found in Title 29 of the District of Columbia Code.
Given that Congress has never passed a general body of law applicable to the operation and powers of the for-profit and nonprofit corporations it charters, it is necessary for Congress to include such provisions in each act granting a charter. There is considerable similarity between powers granted to federal corporations and those granted by states to their corporations. Among the powers typically provided are
(1) to sue and be sued;
(2) to contract and be contracted with;
(3) to acquire, hold and convey property;
(4) to enact by-laws;
(5) to have a seal;
(6) to appoint officers; and
(7) to borrow money for the purposes of the corporation.
There are also differences between a federal charter and a typical state charter. One feature peculiar to federal charters is that, in most instances, statutes granting federal charters require the submission of periodic financial statements to Congress on certain activities of the corporation. On the other hand, states often permit actions that are not permitted federally chartered corporations. For instance, under the District of Columbia Nonprofit Act, a corporation is permitted "to lend money to and otherwise assist its employees other than its officers and directors." (D.C. Code, 29-301.05(6)).
Title 36 corporations can, and generally do, function simultaneously under both federal and state charters. Indeed, in most instances, organizations were chartered and functioned under state law before, often long before, receiving federal charters.
section_title: Patriotic and National Organizations: Subtitle II
paragraphs: The chartering by Congress of organizations with a patriotic, charitable, historical, educational, or other eleemosynary purpose is essentially a 20 th century practice. Title 36 of the U.S. Code, where such corporate organizations are listed with their charters, was revised in 1998 ( P.L. 105-225 ;112 Stat. 1253), and in the process three subtitles of nonprofit corporate organizations were listed:
Subtitle I: Patriotic and National Observances and Ceremonies. Part A, Observances and Ceremonies , includes (1) the Benjamin Franklin Tercentenary Commission ( P.L. 107-202 ; 116 Stat. 739), (2) the Brown v. Board of Education 50 th Anniversary Commission ( P.L. 107-41 ; 115 Stat. 226), (3) the James Madison Commemoration Commission ( P.L. 106-550 ; 114 Stat. 2745), and (4) the Abraham Lincoln Bicentennial Commission ( P.L. 106-173 ; 114 Stat. 14). Part B, United States Government Organizations Involved with Observances and Ceremonies , has three entries: (1) the American Battlefield Monuments Commission, (2) the U.S. Holocaust Memorial Council, and (3) the President's Commission on Employment of People With Disabilities.
Subtitle II: Patriotic and National Organizations. The 92 corporate entries included under Subtitle II range from the Agricultural Hall of Fame to Big Brothers—Big Sisters of America to the Women's Army Corps Veterans' Association.
Subtitle III: Treaty Obligation Organizations. This is an organizational category with one entry, the American National Red Cross (ANRC), which was first chartered in 1900 and then re-chartered in 1905. The ANRC is an unusual organization because the federal government has charged it with fulfilling U.S. treaty obligations under the Geneva Conventions and aiding in disaster response.
The attraction of Title 36 status for national organizations is that it tends to provide an "official" imprimatur to their activities and, to that extent, it may provide them prestige and indirect financial benefit.
Congress, in chartering patriotic, charitable, professional, and educational organizations under Subtitle II, such as the Fleet Reserve Association (36 U.S.C. 701), does not make these organizations "agencies of the United States" or confer any powers of a governmental character or assign any benefits. These organization generally do not receive direct appropriations, they exercise no federal powers, their debts are not covered by the full faith and credit of the United States, and they do not enjoy original jurisdiction in the federal courts.
In effect, the federal chartering process is honorific in character. This honorific character may be misleading to the public, however, when such organizations feature statements or display logos that they are "chartered by Congress," thus implying a direct relationship to the federal government that does not in fact exist. In addition, there may be an implication that Congress approves of the organizations and is somehow overseeing its activities, which is not the case.
As with nearly all generalizations about congressionally chartered nonprofit organizations, there are exceptions. At least one of these nonprofits, the U.S. Olympic Committee (USOC; 36 U.S.C. 2005), receives much congressional attention due to its high profile responsibilities. For example, in early 2003, the Senate Commerce Committee held hearings on reorganizing the USOC.
section_title: Governmental or Private?
paragraphs: While it is correct to state that the congressionally chartered nonprofit organizations in Title 36 are not agencies of the United States, there are instances when the boundary between the private and governmental sectors is blurred at best. It is possible to argue that at least in a few instances the private character of the Title 36 corporation is reasonably in question.
For many years the Department of Defense administered the Civilian Marksmanship Program. The program came under political pressures for various reasons and the department decided to request Congress to "privatize" the program, which Congress agreed to in creating a federally chartered corporation titled Corporation for the Promotion of Rifle Practice and Firearms Safety (36 U.S.C. 40701). This "privatization" exercise raises questions about the limits, if any, to Congress's authority to assign a "private" label to functions of a governmental character. While the corporation has some admittedly governmental attributes (e.g., upon dissolution of the corporation, its assets are to be sold and revert to the U.S. Treasury), Congress has declared in its enabling statute that "the corporation is a private corporation, not a department, agency, or instrumentality of the U.S. Government." Furthermore, the law provides that "an officer or employee of the corporation is not an officer or employee of the Government." Whether Congress has the constitutional authority to assign an entity "private" status when in fact it has substantial "governmental" attributes has been subject to debate and judicial opinion.
In the 106 th Congress, a new entry was included in Part B of subtitle II of Title 36, the National Recording Preservation Foundation (Foundation). The background for this Foundation requires some explanation. A National Recording Registry (established under P.L. 106-474 ; 2 U.S.C. 1701) is to be housed in the Library of Congress and managed by the Librarian of Congress through an adjunct organization of the Library titled the National Recording Preservation Board (Board). This Board consists of 17 members, selected by the Librarian from the organizations listed in the statute. Personnel working for the Board are appointed by the Librarian and are employees of the United States.
Additionally, the statute provided for the establishment of a National Recording Preservation Foundation (Foundation) as a Title 36 nonprofit corporation (chapter 1524), not to be considered as an agency or establishment of the United States. The purpose of the Foundation is to accept and administer private gifts to the Board. The board of the Foundation consists of nine members, selected by the Librarian with the latter serving in an ex-officio capacity. The Foundation is governed by its own by-laws. The Librarian appoints a Secretary of the Board who serves as the executive director. Officers of the Foundation are appointed and removed by the board of directors while the Secretary appoints and removes employees. The Foundation has "the usual powers of a corporation acting as a trustee in the District of Columbia." The U.S. government "is not liable for any debts, defaults, acts, or omissions of the corporation," yet the Foundation is authorized to directly receive appropriated funds. The Foundation and its relationship to the Board and to the Librarian of Congress may raise questions as to how "private" the Foundation actually is. At a minimum, the Foundation represents something of a departure from the usual Title 36 nonprofit corporation.
Another departure from the usual Title 36 nonprofit corporation model was forthcoming in the 107 th Congress with its approval of the National Help America Vote Foundation. The foundation is "a charitable and nonprofit corporation and is not an agency or establishment of the U.S. Government." (36 U.S.C. 1526; 116 Stat. 1717). The foundation, which carries out its statutory mandate in consultation with the chief election officials of the several states, receives its funding through direct appropriations. Although it must follow provisions of a number of federal laws, it is nonetheless to act as a trustee under District of Columbia law which permits it, among other things, "to borrow money and issue instruments of indebtedness." All of which suggests questions regarding who is ultimately responsible for the indebtedness. Is the National Help America Vote Foundation really private with the right to declare bankruptcy?
Those private, nonprofit organizations seeking federal charters under Title 36 presumably perceive value behind such charters, and indeed, such may be the case. Less recognizable, however, are the risks to private, nonprofit organizations of having a charter. A chartered private organization may lose some of its private rights and be made subject to management laws and regulations generally applicable only to agencies of the United States. Such a situation came about in 1997 when Congress amended the Federal Advisory Committee Act (5 U.S.C. Appendix; 86 Stat. 700) so as to include two Title 36 corporations, the National Academy of Public Administration and the National Academy of Sciences, under specific provisions involving the appointment, permissible activities, and reports of corporation committees doing work for executive agencies ( P.L. 105-153 ; 111 Stat. 2689).
This is the first instance in which Congress has made Title 36, Subtitle II corporations subject to the provisions of a general management law, and while the action may be supportable on public policy grounds, it does, to the extent of the applicable provisions, diminish the private character of the affected organizations. As such, it constitutes a precedent with implications.
section_title: Congressional Procedures
paragraphs: Corporate charters are granted in law by act of Congress. The procedure for the grant begins like any other act of Congress, with the introduction of a bill by a Member of either the House of Representatives or the Senate. Bills proposing Title 36 corporate bodies are generally referred to the judiciary committees of each house. If the measure is reported out of committee and approved by that house, it is sent to the other house for approval, and then on to the President for signature, whereupon it becomes law.
Prior to 1965, requests for congressional charters were considered on a case-by-case basis without standards or criteria for incorporation. That year President Lyndon Johnson vetoed H.R. 339 (89 th Congress), a bill that would have granted a corporate charter to the Youth Councils on Civil Affairs. In his veto message President Johnson raised several questions about the wisdom of continuing to grant charters on a case-by-case basis "without the benefit of clearly established criteria as to eligibility." In the President's veto message to Congress, he noted:
For some time I have been concerned with the question of whether we are granting Federal charters to private organizations on a case-by-case basis without the benefit of clearly established standards and criteria as to eligibility. Worthy civic, patriotic, and philanthropic organizations can and do incorporate their activities under state law. It seems obvious that Federal charters should be granted, if at all, only on a selective basis and that they should meet some national interest standard.
The President requested in his veto message that the two judiciary committees conduct a comprehensive study on the entire matter. Various proposals had been made over the years to adopt federal statutory procedures for chartering nonprofit organizations, but Congress has not enacted any of them.
In 1969, in response to the President's request, subcommittees of both the House and Senate Judiciary Committees jointly agreed to a statement of policy, "Standards for Granting of Federal Charters." This statement set forth five "minimum standards" to be met by a private organization seeking a federal charter from Congress:
Any private organization petitioning Congress for the purpose of obtaining the status of a Federal corporation shall be required to demonstrate to the satisfaction of Congress that it is an organization which is—
(1) operating under a charter granted by a State or the District of Columbia and that it has so operated for a sufficient period of time to demonstrate its permanence and that its activities are clearly in the public interest;
(2) of such unique character that chartering by the Congress as a Federal corporation is the only appropriate form of incorporation;
(3) organized and operated solely for charitable, literary, educational, scientific, patriotic, and civil improvement purposes;
(4) organized and operated as a nonpartisan and nonprofit organization; and
(5) organized and operated for the primary purpose of conducting activities which are of national scope and responsive to a national need, which need cannot be met except upon the issuance of a Federal charter.
The status of a private, nonprofit organization receiving a federal charter does not appear to be substantially different from that of a similar organization incorporated under state law. Under the congressional standards agreed to in 1969, it became a "minimum requirement" that organizations seeking a federal charter demonstrate that they have been functioning properly under a state charter and that their activities are clearly in the public interest. However, there are two elements of a federal charter that appear to create some legal differences between federally chartered corporations and similar corporate bodies functioning solely under state charters.
First, there is a matter of the "citizenship" of the corporation. Generally, corporations chartered by states are deemed to have "citizenship" in the state of establishment. A corporate body created by Congress, however, may be designated as a citizen of the United states for judicial purposes. The latter rule has been supported in at least one instance involving a Title 36 corporation. In that case the American Legion was held not to be a citizen of any state for the purposes of invoking diversity of citizenship jurisdiction under 28 U.S.C. 1332(a)(1). Further, Congress can itself provide for federal judicial jurisdiction in the charter.
Second, because federal charters are laws of the United States, they may only be amended by another law of the United States. If an organization seeks to alter its primary purpose or change a provision in its charter, even a minor provision, it must return to Congress and subject its request to the full legislative process. While the process is generally routine, there are occasions when making even minor legislative changes in the charter may open the organizations to challenge from the outside.
section_title: Oversight of Chartered Corporations
paragraphs: At present, federal supervision of congressionally chartered nonprofit organizations is very limited. All "private corporations established under federal law," as defined and listed in Subtitle II, are required to have independent audits annually, and to have the reports of the audits submitted to Congress (36 U.S.C. 10101). In practice, the Subcommittee on Citizenship, Refugees, Border Security, and International Law receives the audit reports of Title 36 corporations and, where corporations have not submitted reports in a timely manner, attempts to communicate with said organizations and remind them of their legal responsibility. The House Judiciary Committee refers all received audits to the Government Accountability Office (GAO) for review. The committee's current role is strictly ministerial. A GAO official testified on its review procedures in 1975:
Our reviews of the reports are generally restricted to desk review unless serious questions or problems arise. When this occurs, we contact the independent public accountant or the organization for clarification. The purpose of our review is to determine whether in our professional judgment, the reports meet the standards for reporting set forth in law.
The major problems noted by us to date have been: (1) lack of timely submission of reports; (2) lack of sufficient explanations in the report; (3) financial statements which do not meet the stipulated requirements of law; (4) audits not conducted by independent certified public accountants; and (5) in some few cases failure to follow generally accepted auditing standards.
In addition, corporate bodies are required to make annual reports of their activities to the Congress. Public access to the records and reports of Title 36 corporations varies. For example, the charter of the National Ski Patrol System (36 U.S.C 1527) requires that its annual report be submitted each year to Congress but prohibits the public printing of it. Traditionally, the Senate Judiciary Committee has deferred to the House committee on these matters.
It is not the intention of the Judiciary committees of Congress or the Government Accountability Office to "look over the shoulder" of these organizations, or to conduct audits on their own authority. Congress is understandably ambivalent with respect to these chartered organizations; on the one hand it attempts to protect the public interest against abuse by those corporate bodies while simultaneously seeking to limit its involvement in the internal affairs of these private organizations. Thus far, in no instance has the charter of a Title 36 corporations been revoked although there have been several controversies in recent years involving chartered organizations and the chartering process generally.
In the 106 th Congress, there was a controversy involving the Boy Scouts of America (36 U.S.C. 309) with legislation introduced to revoke its congressional charter. The Supreme Court in Boy Scouts of America v. Dale (120 S.Ct. 2446 (2000)) ruled that the Boy Scouts of America were within their First Amendment rights as a private organization to exclude from a leadership position a person who was in fundamental disagreement with its purposes as an organization. In this case, the facts were that the Boy Scouts of America removed from an assistant scout master position a young man who professed and practiced a homosexual lifestyle. The national organization argued that this individual, whatever his personal merits, had no "right" to hold a leadership position in an organization which disavowed that lifestyle. The individual involved, James Dale, and some supporting organizations, argued that as assistant scout master, Dale had performed his assigned responsibilities well and that his lifestyle, irrespective of being contrary to one of the purposes of the organization, was not a legitimate grounds to deny him a position of leadership. To do so denied Dale his rights under New Jersey's public accommodations law. The issue, Dale's attorneys argued, was not a constitutional, First Amendment question.
Several Members of Congress introduced legislation ( H.R. 4892 ) to repeal the federal charter of the Boy Scouts. Against the wishes of its sponsors, however, a motion was brought to suspend the rules, an action that would pave the way for a vote in the House. The tactic intended to put Members on record as favoring or opposing the bill without having to vote directly. The motion failed; 12 to 362, thereby supporting the Supreme Court decision and, presumably, the chartering of the Boy Scouts of America. During this debate the character and utility of the chartering process was discussed.
More recently, in 2005, American Gold Star Mothers (36 U.S.C. 211) reportedly refused to admit to membership a woman whose son was killed while serving in Iraq in 2004 because she is not a citizen of the United States, as the corporation's constitution—not charter—required. Congressional concern over exclusionary membership practices grew when Members learned that the congressional charters of three Title 36 corporations explicitly limit membership to U.S. citizens.
In 2006, another Title 36 organization drew media criticism. The National Education Association of the United States (36 U.S.C. 1511) was chartered by Congress in 1906, and its purposes are "(1) to elevate the character and advance the interests of the profession of teaching; and (2) to promote the cause of education in the United States." (36 U.S.C. 151102) Reportedly the organization has been using the dues of members to make contributions to political organizations (e.g., Rainbow PUSH Coalition) and organizations with agendas that would not appear to be readily connected with teaching and schooling (e.g., the Gay and Lesbian Alliance Against Defamation).
section_title: Ending Charters—Maybe
paragraphs: In some cases, Title 36 corporations have ceased to exist without congressional action. The Grand Army of the Republic (43 Stat. 458) and the United Spanish War Veterans (54 Stat. 152) ceased to exist once their last members died. A similar fate awaits the Veterans of World War I (36 U.S.C. 2303) of the United States, whose membership has dwindled from over 800,000 to less than a dozen.
Hearings held by subcommittees of the respective judiciary committees of the House and Senate in the early 1970s indicated an increasing level of dissatisfaction by Members of Congress respecting the intent and practice of congressional chartering of private, nonprofit organizations. More organizations, through sympathetic Members of Congress, were requesting charters, and the requesting organizations were often extending the definition of congressionally chartered corporations beyond that typically associated with patriotic and service organizations.
In 1989, the chairman of the House Subcommittee on Administrative Law and Government Relations, Barney Frank, and the ranking minority Member, Craig James, announced that the subcommittee had approved "a motion for a moratorium on the granting of federal charters." In 1992, Chairman Frank called charters "a nuisance," a meaningless act; granting charters implied that Congress was exercising some sort of supervision over the groups and it was not. "When I first raised the issue, 'What is a federal charter?' The answer was, a federal charter is a federal charter is a federal charter.... You could make up an organization for the preservation of Albert DeSalvo, the Boston Strangler. We'd have no way of checking into it." Moreover, the subcommittee understood that the committee could be drawn into public disputes touched off by any controversial activities or statements by a Title 36 corporation or employees or members thereof.
Continuing to review applications on the basis of merit with the possibility of rejection, it was asserted, was subjecting the subcommittee to pressures and the potential for embarrassment to both the requester and Congress. By indicating an end altogether of the practice of chartering, it was hoped the subcommittee also would be "leveling the playing field" among worthy organizations. This view was formalized in the 104 th Congress when the subcommittee decided that it would no longer consider any legislation to grant new federal charters because such charters were unnecessary for the operations of any charitable, nonprofit organization and falsely implied to the public that a chartered organization and its activities somehow carried a congressional "seal of approval."
This moratorium has been reaffirmed at the beginning of each new Congress, most recently by the Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law on March 5, 2009. It is unclear whether the moratorium has been or will be renewed in the 112 th Congress.
This subcommittee moratorium did not, however, stop all requests for, or consideration of, charter requests. Notably, it remains possible for another committee, or for the full Congress in its plenary capacity, to "charter" nonprofit organizations and have them listed in Title 36. Indeed, this has been the case in several instances in recent years. In 1996, the Fleet Reserve Association was chartered (36 U.S.C 701) without the legislation being referred to the Judiciary committees of the respective chambers. The charter was included in the National Defense Authorization Act for Fiscal Year 1997 ( P.L. 104-201 , Title XVIII; 110 Stat. 2760). Also in recent years, corporate bodies (e.g., Corporation for Promotion of Rifle Practice and Firearms Safety, 36 U.S.C. 40701; National Recording Preservation Foundation, 36 U.S.C. 152401) have been created by Congress and listed by the House Office of Law Revision Counsel under Title 36.
In the 105 th Congress, the moratorium notwithstanding, two additional nonprofit organizations were chartered. Each case represented a specific and unusual set of circumstances. In the first session, the Senate Committee on Armed Forces approved a defense authorization bill that included a charter for the Air Force Sergeants Association (AFSA). This charter proposal had not been referred to the judiciary committees for their review and approval. When the bill reached conference, the jurisdictional issues were raised and a settlement negotiated. The AFSA received its charter ( P.L. 105-85 , Title XV; 111 Stat 1963; 36 U.S.C. 20201), but the jurisdictional authority of the judiciary committees, and thus the moratorium, was reaffirmed.
In the second session of the 105 th Congress, a bill to award a charter to the American GI Forum was approved, this time with the approval of the judiciary committees. In this instance, the circumstances involved an act of discouragement by the committee toward a would-be charter applicant under the rules followed prior to 1989. The organization believed that it had been improperly informed and unfairly evaluated during its earlier application and deserved to be reconsidered for chartering. The committee permitted the organization to make its case and concluded that due to exceptional circumstances, an exemption from the moratorium was warranted in this instance and thus a charter was granted ( P.L. 105-231 ; 112 Stat. 1530; 36 U.S.C. 21001).
Despite the moratorium, Congress chartered the Korean War Veterans Association, Incorporated in 2008 ( P.L. 110-254 ; 122 Stat. 2419). H.R. 2852 was introduced by Representative Steny Hoyer on June 25, 2007. The bill was referred to the House Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law, which took no action on it. Senator Benjamin L. Cardin introduced S. 1692 on the same date. S. 1692 was referred to the Senate Committee on the Judiciary, which reported it favorably on September 7, 2007. Five days later, the Senate passed S. 1692 by unanimous consent. S. 1692 was received in the House of Representatives on September 14, 2007, and held at the desk. On June 17, 2008, S. 1692 was passed by a voice vote under a suspension of rules. President George W. Bush signed it on June 30, 2008.
section_title: Conclusion
paragraphs: The congressional practice of chartering selected private, nonprofit organizations that engage in patriotic, charitable, historical, and educational activities was a 20 th century phenomenon. The chartering process itself tends to send mixed signals to the public. Although the charter does not award any material governmental status to the nonprofit corporation (e.g., right of eminent domain) there is an understandable assumption on the part of the public that somehow the charter signifies U.S. government approval of the corporation's activities and that the corporation is being supervised. Neither assumption is merited.
The House Judiciary Committee's subcommittee of jurisdiction concluded that the chartering process served no useful public purpose and issued a moratorium on bills to issue new charters in 1989. It remains possible, however, for another committee or the full Congress to bypass the judiciary committees and initiate on its own the approval process for chartering a nonprofit organization. This bypass strategy for chartering Title 36 corporations has been successfully pursued (concluding with a presidential public law signature) on several occasions in recent years. Partly in response to these actions, with each new Congress the House subcommittee of jurisdiction has reaffirmed its moratorium on approval of charters. It remains to be seen, however, how effective this moratorium will be against the many attractions of the chartering practice.
subsections: section_title: Appendix. Title 36, Subtitle II: Patriotic and National Organizations