Its hard to believe the speech given by Dr. Martin Luther King Jr in front of the Lincoln memorial was given when he was only 34 years old. As a matter of fact, all of his achievements were accomplished before he even had a chance to turn 40. We live in much different times thanks to leaders like him.
Many organizations exist today to continue the legacy of Dr. King to promote equality and better access for those who are disenfranchised. Because of the internet, its easier than ever to start a non-profit and begin work toward a common mission.
One of the things we enjoy doing is working with startup businesses. Its a time when everything is new, things move quickly, and sound advice is invaluable. One of the forgotten elements of building a charitable organization or service organization is the perpetuation plan. I like to think about it like this, aside from any budget shortfalls today, what elements would your organization need at the next level of its growth? When do you start paying volunteers? What are some exposures that non-profits have?
These are questions that are just as relevant to a 10 person club as they are to a 500 person organization.
To answer the most important question, exposure or legal liability exists no matter what size your group is. Any actions taken by the group with the authority of the group exposes the group to potential legal action. For example, if the group decides to host an event and advertise it on social media, that group can be held responsible for the materials, presented in the ad. Another example could be an event the group organizes to raise funds. If someone gets hurt while participating in those activities, the group could be held responsible.
There are many clubs that create a separate corporation to reduce the risk of liability the members could face. This may not eliminate the risk completely and one should always consult an attorney and CPA about the legal and tax rammifications of how the group is organized. The other way to reduce the risk of financial loss due to legal action would be to properly insure the group.
The costs associated with risk mitigation may seem like they take away from the mission of the organization but they can be vital to preserve the organization so it can continue its mission.
One of the service organizations I co-founded, Better Baker, utilizes a non-profit corporation structure and has liability coverage for its events. This was budgeted as a minimum cost of running the organization and now we can focus on whats important to our community. If you would like to know more about perpetuation plans regarding non-profits, please let me know what I can do to help.