Non-Profit Risk Management
Non-Profit Risk Management
The following text is being provided for general informational purposes and does not constitute legal advice. Each case must be analyzed individually to determine applicable law.
Risk Management for Non-profit Organizations
Is legal counsel required?
Having been granted federal and state non-profit or tax exempt status does not relieve an organization of liability. Non-profit entities are generally speaking bound by the same laws which direct the conduct of “for profit” business entities. Issues exist with respect to entering into contracts, negligence and even concerns as to intentional and non-intentional torts which occur both within the scope of the activities of the entity as well as those which occur outside of the scope of what the entity is intending to do, for which there may still be liability due to the acts of employees and/or volunteers who conduct themselves inappropriately.
It is important for non-profit organizations to protect themselves from liability to the full extent permissible by law. Certain precautions should be taken to prevent or minimize liability. The way in which a contract is signed, the manner in which a non-profit organization advertises and the terms utilized to describe their programs are all matters for which legal counsel should be consulted. In many instances, broadly worded disclaimers and waivers, even if signed by the aggrieved individual who is now suing, are not adequate to protect an entity from liability. Insurance is not sufficient protection particularly given the fact that some acts are not covered under the scope of the policy thereby exposing the entity’s assets, and in certain instances, the individuals involved in the entity, to financial risk.
By way of illustration, one area of liability which leads to much litigation is that of organizations which offer support groups or counseling to the general public. When considering the implementation of such a program, one must ask: is there a licensed counselor who is qualified, running the program and what type of supervision exists as to those involved. Well meaning “counseling” programs run by non-profit entities, such as churches, may result in liability to not only the individual counseled but to others who may be harmed by that counseled individual. Liability issues are not limited to counseling programs but additionally exist with respect to advice offered on a smaller scale.
A Pastor, for instance, who offers advice to a church member, may be deemed to have been engaged in counseling and in turn may be sued under a negligence theory, particularly if he lacks qualifications and schooling in the area of counseling. Clergy may also be drawn into litigation involving other parties, being subpoenaed as a witness. The so called “clergy privilege” can be easily pierced by courts and found not to exist. Certain precautions should be taken before speaking to individuals in this context.
Further, mandatory reporting statutes exist as to certain facts revealed by those who are so called “counseled” particularly as to instances involving children. The well meaning employee or volunteer of an organization can be found criminally liable for failure to abide by these state imposed reporting requirements. One need not be operating in a “counseling” role to be subject to these laws. Day care workers, Sunday school workers, volunteers and teachers are just a few of those who are often faced with situations which may require mandatory reporting. Further, the statements for which reporting is required are not limited to those seeking advise but can include statements made by children, even in passing conversation. Non-profit organizations should regularly conduct programs educating employees and volunteers as to this as well as other liability issues.
The area of defamation is one which impacts non-profit entities. For instance many churches may choose to take disciplinary measures against a member for certain conduct. In doing so, however, does the church open itself up to litigation by the disgruntled member? Such measures should not be taken without first consulting legal counsel, once again, in an attempt to minimize the risk of liability and prevent future litigation which can be costly and embarrassing to an organization.
As one can see, liability issues extend well beyond what used to be the traditional negligence or “slip and fall” case of an individual who came to the organization to utilize its services. Courts, over the years, have seen an increase in the number of suits filed against non-profit organizations by individuals who allege that they, or their children, were some how harmed by the acts of representatives of the organization.
Does your organization have a method in place for screening workers? Are there mechanisms in place whereby workers are properly supervised? Are those coming to your organization clear as to what is offered? Does your organization make use of properly drafted disclaimers and waivers in order to minimize liability?
What about disputes involving non-profit organizations, particularly those involving employees, volunteers or members of the organization? Many times the state and federal courts are not the best forum to settle such disputes. Not only is litigation of these disputes costly in terms of finances, but adverse publicity can result which can impact upon the public’s image of the organization.
One avenue which many non-profit organizations, particularly churches and church boards, avail themselves to is mediation. Such provides a forum wherein the parties can sit down, with an experienced mediator, each expressing their concerns and views and work together to arrive at a resolution which is reasonable and equitable to all involved. The Porro Law Group has participated as a mediator in numerous matters involving non-profit organizations.
One avenue which many non-profit organizations, particularly churches and church boards, avail themselves to is mediation. Such provides a forum wherein the parties can sit down, with an experienced mediator, each expressing their concerns and views and work together to arrive at a resolution which is reasonable and equitable to all involved. Janet L. Porro, Esq. and Kristen M. Porro, Esq. have participated as mediators in numerous matters involving non-profit organizations.
Porro Law Group has extensive experience in the area of liability and laws which specifically relate to non-profit/tax exempt and church organizations.