Monday, March 08, 2010

Serving on a Non-Profit Board

From my weekly (AM) radio segment titled "Legal Minute"

Nationally, non-profit organizations are on the rise. One of the key tasks facing a founder of any non-profit is establishing a board of directors to oversee the organization. Non-profits receive favorable tax treatment due to the public interest they serve. The Boards of non-profits serve an important legal function to ensure that the non-profit is remaining true to its mission of service of the public interest. This is why non-profit directors are often called “trustees”. Being asked to serve on a non-profit Board can be a great honor but before stepping into the director role, investigate the non-profit carefully. During these trying economic times, many non-profits are in dire financial straits. Being asked to serve on a Board of a non-profit suffering under financial mismanagement can be a risky move. While the Board itself will not necessarily be responsible for the non-profit’s debt, a Board member may be held personally liable for unpaid taxes and penalties for failure to file returns or properly withhold wages. If there is not adequate Directors and Officers’ liability insurance, it is best to pass on, or resign from, the opportunity to serve on a non-profit Board.