Non-profit Lawyer vs. Lawyer With a Non-profit: There is a Difference

businessman

I recently had a conversation with an Executive Director  that raised an issue  I’ve never really thought about, but thought important  to discuss. Her Board was currently in the process of reviewing all its compliance documents (as everyone should be in lieu of all the new regulations) and  found they were missing several key documents. The Board was also having trouble with creating policies to govern fundraising and giving. When I asked her how the Board was going to go about solving their dilemma, she quickly brushed it aside, finding consolation in the fact that, “There’s a lawyer on the Board,” and, “he said he can handle all that.”

Wrong answer.

Ok. Maybe not wrong…but it’s not quite right. What she and many others fail to understand is that there are only two instances in which attorneys are expected to know every law that be. That is law school finals and the State Bar Exam. That’s it. Once attorneys become licensed, they often find a niche in which to practice in. Consequently, someone who practices property law likely won’t be able to give a dissertation on Chapter 11 bankruptcy. Likewise, a bankruptcy lawyer probably won’t be able to go into much detail about eminent domain.

I raise this point because MOST attorneys probably won’t know very much about the law surrounding non-profits right off the bat. For example, Mr. Boardlawyer may understand the liabilities there are with a certain fundraiser. But does Mr. Boardlawyer understand the tax implications? Does he know whether you are placing your exemption status at risk? Is he fully apprised of the State and Federal laws that might apply specifically to non-profit organizations and fundraising? Does he know whether there are internal documents by which fundraising in this manner way might conflict?  Or better yet, does Mr. Boardlawyer fully understand the culture totally unique to non-profits? Even if the fundraiser is legal, is it culturally appropriate? Does the legal method of execution align with best practices?

Understand, I can’t underscore how important it is to have a legal presence in an organization. But to assume that any counsel you get from an attorney on the board is sound (or even correct) is a very dangerous proposition.

I wouldn’t recommend demanding Mr. Boardlawyer, who you’re likely not paying, to go read an entire Business Orgs Code and every decision the Tax Court has passed down in the last ten years. However, it is important to understand that the law surrounding non-profits is a beast in itself. And if Mr. Boardlawyer is going to draft documents or give advice, the most responsible thing for the Board to do is stress the importance of  his (or someone) being familiar with the provisions that might be applicable to the organization. He doesn’t have to be able to fully recite every statute from recall, but if someone is willing to play the role of counsel then they should at least take the time to understand which resources will have what answer, and have the diligence to actually use them.