Are directors of a non-profit corporation at risk?

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Rob
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Re: Are directors of a non-profit corporation at risk?

Post by Rob »

pita3333 wrote:Rob: Agree...ask QUALIFIED attorney.

Who sponsors the Community Association, where does funding come from? What is the board and Association tasked with and responsible for? Read the GL policy for them...will then really advise if there is coverage.

These answers might also give the ultimate answer. However...the reality is that even if a Corp, the board are not protected for the decisions tehy make as members without a proper D&O policy. If nothing else D&O would provide defense!
Funding comes from membership dues which is only $20 per year for people in the neighborhood who choose to sign up and they get a monthly newsletter. The organization basically serves as the community’s advocate on local and county issues and to sponsor community events and programs. The Board’s primary function is to carryout the association’s administrative duties, including operating five program committees that implement board policies, programs, and events.

So for one example, the organization is trying to get some of the local businesses to support (financially) extra patrols on the main street on Friday and Saturday nights. Another example: The County supervisor's office send a representative to the meetings occasionally to hear local concerns and brief the organization on what is being done (i.e. inform us that stimulus money is coming for some street repairs).

It's a bit different than an HOA. For example, there is no power to enforce codes.

In any case, I can see cases where there is potential exposure. For example, if the organization advocates for speed bumps in a certain part of the neighborhood and there is an incident in another neighborhood that didn't get a speed bump and a child is injured, an accusation could be made such as "I've been telling them we need a speed bump for years now!"
pita3333
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Re: Are directors of a non-profit corporation at risk?

Post by pita3333 »

Oh Ya...definate need for D&O!

Since you and I are both in California...what about a Brown Act violation (or allegation).

For those not in CA...Brown Act is a State Law/Code that prohibits closed meetings unless they relate to certain excluded activities (personnel maters, litigation etc). Someone suggests that the Comm Assoc had a secret meeting and decided where those speed bumps went and just so happens was not in front of the local gladflys home/business but was in front of a board members.

I wonder if this is an "officially" sponsored city/county group...if so might be some protection under the city/county charter. But still ... do your due dilligence and find out how you are protected in advance. Nothing like trying to be a good citizen by joining the board and getting drug into a fight that costs you legal fees!
Michael Trouillon
Greater Los Angeles area

Consultant/Trainer agency automation system

Industry since 82

Past: Compliance Mgr master pol pgm, Ops Mgr, Marketing Mgr, Account Mgr
pita3333
Insurance Journal Addict
Posts: 216
Joined: Tue Dec 23, 2003 10:22 am
Location: Greater Los Angeles Area

Re: Are directors of a non-profit corporation at risk?

Post by pita3333 »

This is not completely on the topic...but check out this IJ article:

http://www.insurancejournal.com/news/in ... /99463.htm
Michael Trouillon
Greater Los Angeles area

Consultant/Trainer agency automation system

Industry since 82

Past: Compliance Mgr master pol pgm, Ops Mgr, Marketing Mgr, Account Mgr
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