According to Richard Hammer, attorney, CPA, and best-selling author specializing in legal and tax issues for churches and clergy, there are four important issues that could put board members of nonprofit organizations at risk personally.
Most states, Florida included, grant personal immunity to board members of nonprofit organizations with three exceptions. We have cited the Florida Statute at the bottom of this article but our focus today is on exception number three which excludes immunity for gross negligence – exhibiting wanton and willful disregard of human rights, safety or property.
We recently attended the 21st Annual Nonprofit Conference in Orlando, Florida – presented by nonprofit CPA firm Batts, Morrison, Wales & Lee. Richard Hammer’s information-packed presentation titled 2013 Legal Update for Church Leaders contained important information that all nonprofit board members should be made aware of.
In his seminar, he said the four leading reasons that the board could be grossly negligent and lose their immunity stemmed from the following:
- Refusal to adopt a Child Protection Screening Policy
- 15 Passenger Vans
- Ignoring the December 2012 CPSC crib regulations
- No Cell Phone Policy
The Freeh Report is an independent report by Louis Freeh and his law firm, Freeh Sporkin & Sullivan, LLP, concerning the facts and circumstances of the actions of The Pennsylvania State University surrounding the child abuse committed by a former employee. The Freeh Report recommends that risk managers provide reports to the board on assessment of risks, pending investigations, compliance with state and federal regulations and measures in place to mitigate the risks.
If you are wondering why fifteen passenger vans expose board members to gross negligence, Mr. Hammer said it is because the warnings about fifteen passenger van rollovers are widely known. Continued use of fifteen passenger vans after knowing the risk, leaves the organization and its board members at risk of a gross negligence ruling. The National Transportation Safety Board alone has issued five warning memos about 15 passenger vans. Tragically, just this past weekend three members of a Florida church were killed and sixteen passengers were injured in a fifteen passenger van that rolled over after a tire blew.
If your church has any of the four risks listed above, all board members should be made aware and immediate steps should be taken to address the risk.
If we can assist you with reducing your risk or obtaining the proper insurance to protect your organization and its board members, please contact us at 407-898-2211.