Legal guidance vital for nonprofits
Business First of Buffalo - by Jane Schmitt
In pure revenues and scope of services, the nonprofit community is big business these days.
That’s evident in Business First’s recent publication, “All About Nonprofits,” which lists, incredibly, more than 200 organizations whose annual revenues exceed $1 million.
“It is big business, and you can make big mistakes if you don’t have the correct information and the correct legal guidance,” says James Boles, president/CEO of People Inc.
Having an attorney on the board of directors is a boon to nonprofits that provide much-needed programs and services to individuals, families and the community at large. Legal guidance, a keen eye to scrutinize documents and contracts, a trusted source for professional referrals – that’s what attorneys bring to the mix, and most are proud to do so.
One thing, though: Make sure they have adequate, up-to-date insurance so as not to put your organization at risk.
Here’s what Buffalo attorney Robert Greene has to say on the subject of lawyers, nonprofits and insurance: “It depends on what function the lawyer is serving. If (he or she) is giving legal advice, then effectively the corporation is his or her client. Any issue would be covered by the lawyer’s professional liability policy. If they’re not functioning as a lawyer, per se, but are there as a volunteer and doing everything a board member does except practice law, the lawyer should look to see if the corporation has officers and directors liability coverage. And most of the more substantial not-for-profit entities carry that kind of insurance to protect officers and directors against any potential liability for decisions that they make in good faith.”
Greene is a partner in Phillips Lytle LLP and sits on numerous local boards, including Albright-Knox Art Gallery, WNED and its foundation, the Buffalo Zoo and the Diocese of Buffalo. He says those organizations all have regular counsel, so he isn’t usually called upon for legal advice.
People Inc., according to Boles, has in-house counsel and a paralegal yet it still hires different attorneys from a handful of local firms to handle certain legal matters. The nonprofit health and human services agency annually serves more than 10,000 individuals with special needs.
Word of mouth helps when People Inc. needs an attorney who concentrates in a specific area of law.
“There are all kinds of issues,” Boles says. “You just don’t want, necessarily, a general attorney covering all of your issues. You’re going to get into trouble … I really feel that it’s cheaper in the long run to go and get a specialist and get the right information at that time. You have a particular problem you need solved, you hire that expertise.”
James Greco, a shareholder in Colucci & Gallaher P.C., spent 10 years as a board member for the Taste of Buffalo and still provides some legal work for organizers on a pro bono basis. He says the insurance issue is a biggie for nonprofits at every level.
“Usually an attorney in private practice will be covered by his firm’s malpractice insurance,” Greco says, adding that that’s not always the case for municipal workers.
“We have had attorneys who wanted to get involved with the Taste of Buffalo, but because they work for a municipality or a public-sector entity, the malpractice insurance will not cover them in their work on behalf of a not-for-profit or a board of directors. It creates a different set of challenges, because not many boards will actually go out and buy (insurance) for one of their attorney board members.”
Jane Schmitt is a freelance writer.
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