August 12, 2004 | Read Time: 3 minutes
IN THE TRENCHES
Nonprofit organizations that use naiveté or a lack of resources as excuses for their
illegal blunders are no longer met with sympathetic ears.
“Increasingly, the contributing public expects nonprofits to be managed and held accountable to the same standards of care and performance as the for-profit businesses in which they invest,” says Cliff Ernst, a lawyer in Austin, Tex., who works with nonprofit clients. “It is the duty of the executive director and the board chairman of each nonprofit to be sure that all of its board members, staff, and volunteers are educated about ethical, business, and legal issues that can affect the organization.”
Indeed, education is the only real cure for avoiding the most major legal headaches, says Mr. Ernst. First, he says, charities should carefully assess the strengths of their current board members, and then attempt to recruit trustees who have expertise in areas with gaps, such as accounting or human resources. Then, he suggests, all paid staff members should be encouraged, or even required, to attend continuing education programs or seminars to help them become more knowledgeable in these areas.
“They should consider resources beyond the nonprofit world,” he says. “Most colleges and other schools of business offer classes that would be helpful.”
Here are some resources geared toward charitable organizations that might prove helpful:
The American Bar Association. This professional group offers several books on nonprofit issues, including Guidebook for Directors of Nonprofit Corporations, by the ABA Nonprofit Corporations Committee, and Nonprofit Governance and Management, by Judith A. Coin, Victor Futter, and George V. Overton.
The American Society of Association Executives. This professional organization, whose Web site is located here, offers numerous articles, books, conferences, and other educational tools for nonprofit organizations.
The Council on Foundations. This group, whose Web site is located here, offers general information, books, and articles on legal issues affecting grant makers, as well as updates on recent changes in the law.
Internal Revenue Service. The IRS’s Charities and Non-Profits Division maintains a Web site that allows users to download documents related to nonprofit tax rules.
Nonprofitlaw.com. Sandra Pfau Englund, a lawyer in Alexandria, Va., runs a Web site that offers some free resources, such as an annual checklist of mandatory filings and a sample chief-executive-officer contract.
Nonprofit Law Resource Library. Hurwit & Associates, a Newton, Mass., law firm specializing in legal counsel to philanthropic organizations., includes as part of its Web site an exhaustive list of links to information on such topics as how to start a nonprofit organization, IRS requirements for charitable contributions, and state-by-state filing and compliance rules. Click on “Links to Nonprofit Resources” in the lower left-hand corner of the home page, and then on the “Education & Training” link for information on educational opportunities.
Nonprofit Risk Management Center. The center provides assistance and resources on an array of topics, from employment practices to insurance purchasing. The organization, whose Web site is located here, publishes booklets such as “Managing Facility Risk, 10 Steps to Safety” (available for $15) and “Ready in Defense: A Liability, Litigation, and Legal Guide for Nonprofits” ($20). Eligible charities can sign up to receive, free, the center’s newsletter, which showcases the group’s training and workshops.
State attorneys general. These offices maintain charities divisions that offer lots of legal tips and publications for download. To find states’ offices, consult this list maintained by the National Association of State Charity Officials.
The United States Copyright Office. The federal agency can provide answers to questions about copyright law.
— Rebecca Gardyn
