Chicago IL Nonprofit Attorney
Can My Nonprofit Be Sued?
Like any organization, nonprofits in Illinois are susceptible to legal liability and lawsuits. As such, the short answer is “Yes,” your nonprofit can be sued, but only under certain circumstances. For instance, incorporating a business protects the owners from personal liability, and individuals filing a lawsuit may do so against the business and not the owner’s personal assets. It is the same with nonprofits. Once you incorporate the nonprofit, you are, therefore, protecting your directors or trustees, officers, employees, and members from the nonprofit’s debts and liabilities.
Although the owners, directors, and board members of the nonprofit are protected, the nonprofit itself can still be held liable over and above any amount that’s covered by insurance. For this reason, it’s critical to have an experienced Chicago nonprofit attorney who will protect your interests in the event of a lawsuit. With decades of experience helping nonprofits in the Chicago area, attorney James C. Provenza & Associates will help defend any lawsuits in Illinois courts. We offer diligent, expert-backed legal representation, and we’ll always put your interests at the forefront of our legal strategy. For a free, no-obligation consultation with attorney Provenza, call our nonprofit law office today at (847) 729-3939.
Personal Liability for Nonprofits
Incorporation is an essential aspect of any Illinois nonprofit. By incorporating your nonprofit, you are, essentially, protecting the nonprofit’s board from personal liability in a lawsuit. For instance, take the following example:
A nonprofit in Chicago is hosting an art gallery. A visitor to the gallery falls due to a poorly maintained staircase railing. The visitor files a lawsuit and the court rules in his favor. The court then issues a judgment against the nonprofit for a large amount, much more than is covered by the nonprofit’s insurance. That judgment could become a debt of the nonprofit, but because the organization is incorporated, the nonprofit’s directors, officers, and members are not personally responsible for paying that debt.
There are a few exceptions to this rule. In a few situations, the people involved with a nonprofit could be held personally responsible for the nonprofit’s debts. Some examples of this could include:
- Personally and directly injuring someone
- Personally guaranteeing a bank loan on which the nonprofit defaults
- Failing to ensure that the nonprofit files the necessary tax returns or deposits taxes
- Doing something fraudulent or illegal, or causing harm
- Co-mingling nonprofit and personal funds
Most Common Lawsuits Against Nonprofits
When an individual (or entity) files a lawsuit against a nonprofit in Illinois, it’s essential to remember that litigating in courts can eat up a lot of time and energy. Some of the most common lawsuits affecting nonprofits include contract disputes, employment law claims, and personal injury lawsuits.
To better protect your nonprofit against these types of lawsuits, here are some easy to follow tips:
- Put agreements into writing, and always read before you sign. Establish exactly what’s being agreed to, and put it into writing. No oral agreements.
- Understand and follow any relevant employment laws. Employment-related claims, such as sexual harassment, wrongful termination, discrimination, and wage-hour disputes, make up the majority of lawsuits against nonprofits.
- Take extra steps to prevent injuries.
- And just in case, buy insurance.
Who Can Sue an Illinois Nonprofit
The vast majority of lawsuits against Illinois nonprofits are filed by current and former employees; however, it’s essential to remember that nonprofits also serve large constituencies and their boards often owe a fiduciary duty to these constituencies. Aside from the current and former employees, these constituencies are commonly potential plaintiffs in legal action against the nonprofit.
Some of the most common plaintiffs suing a nonprofit include:
- Current and former staff, who bring allegations of wrongful termination, discrimination, sexual harassment, and ADA violations.
- Third parties who have a relationship with the nonprofit, alleging harm caused by the nonprofit and its directors, officers, and employees.
- The nonprofit itself can bring action against its directors and officers.
- The directors and/or board members can sue other directors, alleging violations of the duty owed to the nonprofit.
- Service recipients (beneficiaries) may bring claims of wrongdoing against the nonprofit.
- The nonprofit’s contributors (donors) may sue the nonprofit, alleging misuse of a restricted gift.
- The state attorney general or other government officials can sue nonprofits, alleging wrongdoing.
Call James C. Provenza & Associates PC, Chicago Nonprofit Lawyer
Nonprofits already operate in a difficult sector throughout Illinois, and a lawsuit can bring extensive damage to the nonprofit’s finances as well as its reputation. As such, if your nonprofit is facing a lawsuit, it’s crucial to contact Chicago nonprofit lawyer James C. Provenza as soon as possible. We offer aggressive defense strategies combined with professional, compassionate care for our clients. For a free consultation with James C. Provenza & Associates, call our nonprofit law firm today at (847) 729-3939.