TERRIBLE LEGAL MISTAKES

NONPROFIT ORGANIZATIONS MAKE THAT YOU EASILY CAN AVOID

By Laura Fowler….Inspired by Her Charitable Friends!

The Austin Business Journal reported recently that more than one hundred people a day moved to Austin in 2017. That kind of growth results in numerous challenges from affordable housing and homelessness to complex public infrastructure and transportation issues. While many move here for career advancement and greater prosperity, the rapid growth of the city has most certainly increased the pressure on Austin’s nonprofit sector to work harder to serve those who are left behind.

These organizations strive to create lasting social change are often filled with generous spirits and good intentions. However, nonprofit organizations are bound by Texas law to act responsibly and abide by the rules—as are their administrators and board members. The following are some things to be considered by nonprofit directors and board members to ensure your organization does not leave itself open to costly legal mistakes that can be avoided.

Ensure the organization is filed as a nonprofit with the Texas Secretary of State and IRS and has done its due diligence in selecting a name that is legal. Many well-meaning organizations are so anxious to get to work they simply do not take the necessary steps to act within the law. This can leave representatives of the organization exposed to legal consequences. Charity Navigator is an excellent online resource to do some research on reputable organizations that are operating within the rules.

A sound organization will also be diligent about its reputation.  Administrators should strongly consider trademarking the nonprofit’s name or assumed name to protect itself from misuse by others. Nonprofits do not receive a free ride in respecting the work of others just because they are do-gooders. Social organizations should always get the proper permissions required when using copyrighted music or other materials to promote or fundraise. The same applies to obtaining the proper permits, insurance and other risk management strategies for charitable raffles and other fundraising efforts.

A reputable nonprofit organization should also have bylaws that have been approved and signed by the Chair pursuant to a properly posted and duly convened meeting, and should be willing to provide a copy for review. While often boring and lengthy documents, they are incredibly important. They define and control every significant action by board members and often by volunteers. Action outside the authority created by the bylaws may forfeit liability insurance coverage, grants and funding.

In addition to bylaws, nonprofits should keep scrupulous minutes of all Board meetings and activity. Board minutes leave an important paper trail of intent about an organization’s decisions that can prove helpful in legal matters.

Nonprofit leadership should strongly consider consulting an experienced attorney that is adept in the laws that govern such organizations in their state. A responsible lawyer or firm should strive to understand your organization’s mission and thoughtfully consider the specific legal challenges that may apply to your work.

The Fowler Law Firm PC will host a series of seminars for nonprofit board members and senior administrators designed to help protect organizations from costly legal mistakes. Contact Laura Fowler at lfowler@thefowleralwfirm.com for more details.   

About your author: Laura Fowler is the Managing Shareholder of The Fowler Law Firm PC and takes greatest delight in trying to help her charitable friends avoid costly mistakes so they can have more money for their wonderful work. Ms. Fowler and other entertaining lawyers will be presenting on the above discussed topics in various locations across Austin, Central Texas beginning in August of 2018. Please email lfowler@thefowlerlawfirm.com if you would like to attend.

About The Fowler Law Firm PC: Attorneys with The Fowler Law Firm PC proudly donate their talents and resources to many area charities and teach courses in Continuing Education Click HERE for more information. Follow our charitable adventures on our Facebook page. Click HERE for a printer-friendly version of this electronic alert.       

Receipt of this Electronic Alert or printer-friendly version does not establish or constitute an attorney-client relationship.  This information is not intended as a substitute for careful review by legal counsel of your own choosing. As with any legal issue, please consult your attorney with questions.