1. Nonprofit Legal Review
Step One Of An Effective
Risk Management Program
Robert J. Weil
Law Office of Robert J. Weil, PLLC
4031 University Drive, Suite 100
Fairfax, Virginia 22030
(703) 934 2036 O
(703) 277 7730 F
(703) 399 5671 C
bob@rweillaw.com
2. 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
3. Corporate Records
Legally 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)
4. 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
5. Policies and Procedures
Employee 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
7. Insurance
Directors 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 overlook
Certificates of Insurance - Frequently ignored
8. Lobbying Disclosures
In 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
9. 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!
10. Contracts
Vendors
• 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
11. Other Risks
Client 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
12. 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
13. 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
14. Robert J. Weil
Law Office of Robert J. Weil, PLLC
4031 University Drive, Suite 100
Fairfax, Virginia 22030
(703) 934 2036 O
(703) 277 7730 F
(703) 399 5671 C
bob@rweillaw.com