My corporate attorney sent me a copy of the November/December 1994 issue of Business Law Today: The Magazine of the ABA Section of Business Law. Between its covers is a special focus on nonprofits, which should be required reading for all nonprofit attorneys and chairs of nonprofit boards of directors.
The lead article, titled "A Job Description for Directors," is designed for attorneys counseling nonprofit boards of directors. Author Lisa Runquist does a very credible job of summarizing the legal concerns specific to nonprofit corporations and, more specifically, its board.
After a brief overview of the nonprofit sector, Runquist gets down to the business of legal issues. She defines what a legal counsel should tell the board about protecting its exempt status. She clarifies the role of the board in limiting its liabilities.
Runquist starts with a list of parties to whom the directors are accountable -- likening such duties to a for-profit company's responsibility to shareholders. She cites clients, donors, members, regulating bodies, employees and the Internal Revenue Service, in each case outlining the director's role. That alone is worth reading for anyone in a leadership role.
The article also talks about board compensation and director succession, before ending with suggestions on limiting liability.
The second article focuses on how nonprofits choose to grow their local programs into ones that are regional or national. The author, George Overton, a member of the Nonprofit Corporations Committee of the Business Law Section of the ABA, has much experience serving on nonprofit boards.
I found the third article most troubling, especially because it was written by Charles Tremper, who many of us know as the executive director of the Nonprofit Risk Management Center in Washington. Tremper has spoken at professional conferences in the Baltimore area and is widely respected for his knowledge on risk management.
Tremper cautions us that we should not be lulled into thinking that new laws designed to protect volunteers, in fact, will do so.
"One result of all the legislation [passed in the last decade]," Tremper writes, "is a false sense of security among some volunteers, combined with uncertainty among volunteers and lawyers about the scope and effectiveness of the new laws."
Tremper blames this uncertainty on a patchwork of laws passed as states reacted to problems with political fixes rather than solutions based on what was needed. Tremper's organization works to educate nonprofits in ways to reduce their potential liabilities.
Another interesting article is "Open or Closed Door?," which addresses the tug of war between privacy and freedom from discrimination, a daily battle for many of the nation's private, nonprofit clubs.
Increasingly, borders between nations are disappearing, in part due to potential economic gains possible from lowering tariffs and increasing electronic communications.
An article titled "Fundraising Across the Border" examines the increasingly prevalent practice by U.S. nonprofits to "test the waters," as it were, in Canada. Certainly more and more large nonprofits are testing Canadian donors through direct-mail pitches.
Finally, an article on how to determine whether a person is a volunteer or an employee involves a whole lot more than assigning a title. As an executive, you may think you know who is who, but the law may view the distinction differently. Better read up to be certain you are not incurring liabilities.
All in all, this issue of Business Law Today is worthwhile reading for anyone interested in the legal liabilities of nonprofit organizations. Single copies are available for $7, plus $2 postage and handling, from: ABA Service Center, 541 North Fairbanks Court, Chicago, Ill. 60611.
Lester A. Picker is a philanthropy consultant. Write to him at The Brokerage, 34 Market Place, Suite 331, Baltimore, Md. 21202; (410) 783-5100