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Nonprofit Law/501(c)(3) general liability

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Question
My husband and I are recently elected officers of our local Home School organization.  One of the main issues that we're facing is the question of liability.  We own no property of our own.  When we rent a facility, such as a church, for one of our events, what liabitlies do we incur as an organization (not as individual officers), if damage or injury were to occur while we occupied the facility?  The basic question is whether or not it would be prudent to spend approximately $1300/year to cover potential accidents with a general liability policy if our total assets only amount to about $5000?

Answer
Usually churches and other organizations, who would rent to your 501(c)(3) organization, themselves maintain general liability coverage and that would cover for slip and falls and other such problems that happen on their premises, even if they have rented particular space.  You may want to review their insurance policies.  In any case, I do not think that your exposure is great enough to spend $1300 per year as your organization probably does not even have employees and would not have the following type of exposures that larger nonprofit organizations might have:

POTENTIAL CLAIM AREAS:

   1. Discrimination (Age, Race, Sex)
   2. Wrongful dismissal of employee
   3. Mismanagement
   4. Financial failure/bankruptcy
   5. Poor administration resulting in losses
   6. Causing the organization to incur unnecessary tax liability
   7. Imprudent investments
   8. Misuse of contributions
   9. Conflict of interest
  10. Unauthorized loans
  11. Failure to obtain competitive bids
  12. Unwarranted expansion
  13. Failure to obtain government funding or lower interest loans
  14. Misuse of government funds or grants

POTENTIAL CLAIMANTS:

   1. Rejected job applicants
   2. Disgruntled employees
   3. Disapproved prospective members
   4. Creditors
   5. Members
   6. Residents
   7. Patients
   8. Consumers
   9. Donors
  10. Government agencies
  11. Third parties

You will normally have quite a bit of protection against lawsuits
as well. Taking your job seriously and practicing good governance
is, of course, the strongest protection. There is also a federal
Volunteer Protection Act. In addition, most states protect
volunteers and the risk of legal liability
should be quite low if the organization is run well.

Harvey Mechanic
Attorney At Law
Harvey108@hotmail.com  

Nonprofit Law

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Harvey Mechanic

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DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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