New York’s Donnelly Act makes it illegal to create monopolies in certain types of businesses in that State. Does this apply to a charitable organization? The Supreme Court of New York (the trial court) was presented with a case in which a charity took the position that it did.
The dispute in that case was straightforward: the charity was told that it was not permitted to solicit donations via employee payroll deductions. It argued that this was an illegal restraint of trade since other charities were permitted to solicit donations that way. The question was whether the Donnelly Act would prohibit such a monopoly when it involved a non-profit, rather than a for-profit business.
The charity’s position was unsuccessful. The Supreme Court held that the Donnelly Act was not intended to apply to the fundraising activities of charitable corporations or associations. International Service Agencies v. United Way of New York State, 437 N.Y.S.2d 533 (N.Y.Sup. 1981).
This is an important case for charities since it highlights another of the many ways that nonprofit organizations are treated differently than for profit entities.
© 2011 Nissenbaum Law Group, LLC