Just as you visit your doctor to get your annual physical, as an in-house attorney, it is prudent at least once a year to diagnose your nonprofit organization's legal health and well-being. As always, there are legal trends of which you should be cognizant. Identified below are ten key current legal issues and trends to which every nonprofit should pay close attention. Alongside each issue is a link to one or more articles on the topic (on our website) to provide you with the initial information necessary to do some legal self-examination.

Understand what the new IRS Form 990 means for your organization. At the very end of last year, the IRS released the much-anticipated overhauled Form 990, the annual information form filed by tax-exempt organizations with the IRS. The form is substantially different from the prior year's version, and should be carefully scrutinized by your organization now, so that changes in policies, practices and the like can be instituted before it is too late to avoid uncomfortable or embarrassing reporting on the year-end Form 990.



Especially in this election year, know the limitations on your organization's lobbying and political activity so that your voice can be heard. Myths abound about the limitations or prohibitions on the lobbying and political activity of 501(c)(3) organizations - but many are simply not true. Your organization and its constituency will be best served by your understanding where the limitations lie - and where you can safely engage in needed advocacy. Also be sure to pay attention to the new lobbying disclosure and congressional gift and ethics rules enacted by Congress last year.





Learn lessons from the governance scandals that have plagued the nonprofit sector. From the Smithsonian to the American Red Cross, nonprofits have not been immune to the governance scandals that seem to recur every year. There are important tips and pitfalls to be gleaned from the mistakes of others - to ensure they do not occur at your organization. In addition, keep your organization's bylaws current, flexible and appropriate for your organization today, and ensure they are consistent with the applicable state nonprofit corporation statute as well as the other governing documents of your organization.





Avoid the most common pitfalls in meeting contracts. While hotel and convention center contracts may not be the most exciting subject in the world, it is incumbent on staff to understand the most common sources of liability for nonprofits, as failure to prudently address these issues in meeting contracts can leave your organization holding the bag for significant unforeseen liabilities.





Take full advantage of federal contract and grant opportunities - but understand the restrictions and requirements that come along with them. Federal grant and contract opportunities continue to abound for nonprofit organizations, but many recipients of these opportunities do not understand the full array of complex strings that come attached. Failure to do so can be costly.



Guard against sexual harassment by board members and other volunteers - and know what to do if it happens. Many nonprofits do a good job of protecting the organization's employees from sexual harassment by other employees, but many do not properly protect them from such conduct by volunteer leaders. Yet the organization can be liable nonetheless. Understand what proactive policies and procedures you should have in place, and know what to do should an incident or other troubling behavior arise.

Article: http://www.venable.com/publications.cfm?action=view&publication_id=1223&publication_type_id=2

Update your organization's conflict of interest policy and disclosure process. In recent years, awareness of conflicts of interest in the nonprofit sector has probably been at an all-time high. Yet too many nonprofit conflict policies are vague, ambiguous, contradictory, or just incomprehensible. Moreover, many policies are not clear as to how to determine what is and is not a prohibited conflict, and what to do about them. Finally, it is important to have good procedures in place for annual and ongoing disclosure and vetting of potential conflicts of interest.



Understand the complicated world of copyrights and trademarks to both protect your organization from liability and maximize your rights. The law governing copyrights and trademarks is not intuitive; in fact, it is often counter-intuitive. Many problems in this area can be proactively solved up front with easy solutions, yet if you do not understand the complexities of this area, you may find your organization in a heap of trouble down the road.





Protect your organization from legal pitfalls on the Internet. The web can be a hornet's nest of potential liabilities. From copyright and trademark infringement to defamation liability to privacy violations, the legal pitfalls abound. Understand what practices - such as using click-and-accept agreements and sending links to web pages instead of copies - you can institute now to protect your organization down the road.






Develop an appropriate, defensible system for conducting employee evaluations. And if you need to terminate an employee, do it the right away. Employee lawsuits remain the number one category - by far - of litigation against nonprofits. To minimize these risks, it is critical to develop appropriate systems and procedures for both evaluating and terminating employees. This is a tricky and risky area of the law - with significant consequences if you don't get it right.