What You Can(‘t) Do With a Nonprofit

A Senator was recently accused of stealing $30,000 from what’s being called a “sham nonprofit.” Apparently, the nonprofit received money for a “parent workshop.”  The senator allegedly took the money herself, and lied about educating community members.  If these allegations are true, it’s pretty obvious that this behavior was dishonest, and wrong.  You definitely can’t do that with a nonprofit.  But some activities that might seem innocent can also open a nonprofit up to liability.

Like other corporations, nonprofits are governed by bylaws.  Bylaws are a list of procedures or rules that directors must follow when making decisions.  For example, bylaws might require directors to present certain proposed actions to the membership.  If the directors take certain actions without member approval, the directors may be sued.  A court might issue an injunction, stopping the directors from taking those actions.  That could tie up the nonprofit’s assets, or cause the nonprofit to miss out on contracts, grants, or other opportunities.

For this reason, it is always advisable to speak with an attorney if bylaws seem ambiguous.  A qualified attorney can help directors decide what, exactly, they must do before they take action.

The Law Firm of Vaughn, Weber & Prakope, PLLC can advise you on nonprofit bylaws, or other aspects of nonprofit decision-making and governance.  Call 516-858-2620 today for a free consultation.