Learn lessons from the governance scandals that have plagued the nonprofit sector. Nonprofits continue to not be immune to the governance scandals that seem to recur every year. There are important tips and pitfalls to be gleaned from the mistakes of others to ensure they do not occur at your organization.
Avoid the most common pitfalls in meeting contracts. While hotel and convention center contracts may not be the most exciting subject in the world, it is incumbent on staff to understand the most common sources of liability for nonprofits, as failure to prudently address these issues in meeting contracts can leave your organization holding the bag for significant unforeseen liabilities.
Take full advantage of federal contract and grant opportunities, but understand the restrictions and requirements that come along with them. Federal grant and contract opportunities continue to abound for nonprofit organizations, but many recipients of these opportunities do not understand the full array of complex strings that come attached. Failure to do so can be costly.
Guard against sexual harassment by board members and other volunteers and know what to do if it happens. Many nonprofits do a good job of protecting the organization's employees from sexual harassment by other employees, but many do not properly protect them from such conduct by volunteer leaders. Yet, the organization can be liable nonetheless. Understand what proactive policies and procedures you should have in place, and know what to do should an incident or other troubling behavior arise.
Update your organization's conflict of interest policy and disclosure process. In recent years, awareness of conflicts of interest in the nonprofit sector has probably been at an all-time high. Too many nonprofit conflict policies are vague, ambiguous, contradictory, or just incomprehensible. Moreover, many policies are not clear as to how to determine what is and is not a prohibited conflict, and what to do about them. Finally, it is important to have good procedures in place for annual and ongoing disclosure and vetting of potential conflicts of interest.
Understand the complicated world of copyrights and trademarks to both protect your organization from liability and maximize your rights. The law governing copyrights and trademarks is not intuitive; in fact, it is often counter-intuitive. Many problems in this area can be proactively solved up front with easy solutions, yet if you do not understand the complexities of this area, you may find your organization in a heap of trouble down the road.
Protect your organization from legal pitfalls on the Internet. The web can be a hornet's nest of potential liabilities. From social media to copyright and trademark infringement to defamation liability to privacy violations, the legal pitfalls abound. Understand what practices-such as using click-and-accept agreements, sending links to web pages instead of copies, and adopting social media policies for your employees-you can institute now to protect your organization down the road.
Develop an appropriate, defensible system for conducting employee evaluations, and if you need to terminate an employee, do it the right away. Employee lawsuits remain the number one category by far of litigation against nonprofits. To minimize these risks, it is critical to develop appropriate systems and procedures for both evaluating and terminating employees. This is a tricky and risky area of the law with significant consequences if you don't get it right.
Jeffrey S. Tenenbaum is the chair of the nonprofit organizations practice at Venable LLP. He can be reached at 202-344-8138 or jstenebaum@venable.com.
This article is not intended to provide legal advice or opinion and should not be relied on as such. Legal advice can only be provided in response to specific fact situations.
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