International Journal of Humanities and Social Science

ISSN 2220-8488 (Print), 2221-0989 (Online) 10.30845/ijhss

Control over Charities by a Grantor-Comparative Study between the U.S., German, and Korean Laws
Professor Dr. jur. Chin-Woo KIM

Control over charities by trustee is important for building a high level of trust in a society, especially within an organization where its constituents are unknown, such as a foundation or charitable trust. Any fraud or embezzlement cases could negatively impact charities and put them at risk by causing reduced amount of donation. According to the current Korean law, the competent authorities supervise incorporated foundations and charitable trusts; however, it is difficult for the authorities to effectively control them due to limited resources, lack of manpower, short-term rotations, and formalistic review on their legality. Moreover, in case of unincorporated foundations, they do not subject themselves to government supervision. On the other hand, even though charities can self-regulate, auditor that functions as an internal control agency is not a statutory agency according to Korean Civil Code and Trust Act. Especially, it is difficult to assure the integrity of a charity by an audit when directors/trustees have the power to appoint and dismiss the auditors. That is why intervention made by outside parties, such as stakeholders, could be a problem. In this context, we need to examine the issues that arise when founders, settlers, or donors (“grantors”) try to personally exert control over the charities. For this purpose, this article examines claim performance of duty, claim for restoration, claim for compensation/indemnification, right to information offering in Germany and the United States. Furthermore, it analyzes the relevant and applicable aspects to the Korean law.

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