A congressional charter is a law passed by the United States Congress that states the mission, authority, and activities of a group. Congress issued federal charters from 1791 until 1992 under Title 36 of the United States Code.
The relationship between Congress and the organization is largely a symbolic honorific giving the organization the aura of being "officially" sanctioned by the U.S. government. However, Congress does not oversee or supervise organizations with the charter (other than receiving a yearly financial statement).
Until the District of Columbia was granted the ability to issue corporate charters in the late 1800s, corporations operating in the District required a congressional charter. With few exceptions, most corporations since created by Congress are not federally chartered, but are simply created as District of Columbia corporations.
Some charters create corporate entities, akin to being incorporated at the federal level. Examples of such charters are the Federal Reserve Bank, Federal Deposit Insurance Corporation, Fannie Mae, Freddie Mac, and the Tennessee Valley Authority. Other national-level groups with such charters are the American Red Cross, National Academy of Sciences, Boy and Girl Scouts, the National Ski Patrol, the 4H Club, the National Safety Council, National Park Foundation and the Disabled American Veterans, Veterans of Foreign Wars, National Trust for Historic Preservation, the United States Olympic Committee, the National Conference on Citizenship, or NeighborWorks America. American University, Gallaudet University, Georgetown University, George Washington University and Howard University are the only congressionally chartered universities in the United States.
More common is a charter that recognizes a group already incorporated at the state level. These mostly honorific charters tend "to provide an 'official' imprimatur to their activities, and to that extent it may provide them prestige and indirect financial benefit". Groups that fall into this group are usually veterans’ groups, fraternal groups or youth groups like the USO, the Girl Scouts of the USA or the Boy Scouts of America. Congress has chartered about 100 fraternal or patriotic groups.
Eligibility for a charter is based on a group’s activities, whether they are unique, and whether or not they are in the public interest. If this is the case, a bill to grant a charter is introduced in Congress and must be voted into law.
There had been questions about the federal government’s power to manage corporations who have received charters. Amid dissatisfaction with the system, the subcommittee of the House Judiciary Committee decided not to consider applications for further charters in 1992, though several were still granted thereafter. The granting of a charter does not include congressional oversight.
- Congressional or Federal Charters: Overview and Current Issues
- U.S. Code Title 36, via United States Government Printing Office
- U.S. Code Title 36, via Cornell University