Nonprofit legal review
Transcript of Nonprofit legal review
Nonprofit Legal ReviewStep One Of An Effective
Risk Management Program
Robert J. WeilLaw Office of Robert J. Weil, PLLC
4031 University Drive, Suite 100Fairfax, Virginia 22030
(703) 934 2036 O(703) 277 7730 F(703) 399 5671 [email protected]
Why Nonprofits Need A Legal Review
• Reduced third party liability exposure• Reduced risk of fraud / embezzlement• More effective and efficient management• Protection of non-profit assets• Evidence of leadership due diligence• Education of organization’s professional and
volunteer (board) leadership• A more restful night’s sleep for leadership
Corporate RecordsLegally Operative Documents for Review
• Articles of Incorporation (confirm status and registered agent)
• Articles of Amendment• Bylaws/Constitutions• IRS Determination Letter• Administrative Policies and Procedures• Minutes• Employee Handbooks or Manuals• Governance Code of Ethics• Association policies: conflict of interest (with
annual disclosure form); document retention; whistleblower, gift acceptance; antitrust compliance)
Affiliated Organizations• Foundations: Independent 509(a)(1) or
509(a)2)organization;• 509(a)3) supporting organization – interlocking
boards – receiving greater IRS scrutiny• Differences in level of control
• Chapters – Individual or Group Exemption • Subject to enforceable chapter agreements or
charters – impacts level of parent control• An enforceable contract addresses reporting
requirements, financial matters and use of the parent’s name and IP
• Separately incorporated chapters
Policies and ProceduresEmployee Handbook
• Does the organization have one?• Is it followed? Is it periodically updated?• Does it confirm employment at will and avoid
creating a contract of employment (Virginia)?• Nondiscrimination Policy• Sexual Harassment Policy• Employee sign off• Identification of employee benefits • Compliance with both Federal and State statutes
Intellectual Property
Trade, service and certification marks:• PTO registration ®• TM or SM• Diary critical dates for affidavits of continued use
(5-6 year) or renewal (10 years)
• Copyrights – Proper noticeCopyright© 2011 Association Name, Date. All Rights Reserved• Publications and website content – thorough
disclaimers• Protection of membership lists
InsuranceDirectors and Officers Liability Insurance• Scope of coverage – no coverage for injuries to
persons or property damage• Inclusion of affiliated entities • Essential coverage – EPL, Libel/Slander, Anti-
competitive practices, infringement
Errors and Omissions Coverage
Commercial Property and Liability Insurance• Required as an additional layer beyond D&O to
protect for personal injury and property loss
Event Cancellation Coverage – Don’t overlookCertificates of Insurance - Frequently ignored
Lobbying DisclosuresIn House Lobbyist v. Outside Contract Lobbyist• Quarterly and semi-annual reporting for in-house
lobbyists• Heavy fines for a knowing failure to file• Organizations employing in-house lobbyists file a
single registration – Exempt from registration if total expenses for lobbying activities do not exceed $11,500 during a quarterly period
• Lobbying firms are required to file a separate registration for each client – exempt from registration if total income from client not in excess of $3,000 during a quarterly period
Commercial Property and Equipment Leases
Commercial Lease• Term of Lease• Escalation Clauses for rent, operating
costs• Events of Default – What are they?• Ability to assign or sublease
Subleases • Approval of form by Landlord
Equipment Leases• Personal guarantees – NO!
ContractsVendors
• Management services, software, event planning, publishing, website development and maintenance, equipment, and marketing
• Publishing and printing agreements• Professional Services: CPA’s, Attorneys, Lobbyists• Review contract term or length• Clearly define Scope of Services• Ownership of IP• Confidentiality• Insurance and Indemnification language• Independent Contractor/Consultant Agreements
Other RisksClient Website• Proper disclaimer of liability for content• Terms and Conditions of Use• Privacy Policy• Referral Programs• Listserv and discussion forum guidelines as part
of a broader Social Media Policy Certification/Accreditation Programs• Certification vs. Certificate programs• What is accreditation?• What is licensure?• Risks of Certification• Protecting against liability exposures
Educating Officers and Directors• Duties and responsibilities• Due Diligence – Act in best interests of
the organization• Fiduciary obligations• Conflicts of Interest and need for
disclosure• Corporate Opportunity Doctrine• Corporate Waste• Audit as tool for Officer/Director
education• Independence of Board – active, not
caretakers• Regular self-analysis by Board• Settling policy and providing oversight
Summary
A Legal Review Will:
• Educate and protect the organization and its leadership
• Identify critical risks• Lead to the development of policies and procedures
for avoiding liability risks and for addressing them efficiently and effectively when the occur
• Lead to the development of a plan for how the organization responds when something goes wrong
Robert J. WeilLaw Office of Robert J. Weil, PLLC
4031 University Drive, Suite 100Fairfax, Virginia 22030
(703) 934 2036 O(703) 277 7730 F(703) 399 5671 [email protected]