Breaking the Rules = Liability

Do you know anyone who believes that rules or laws don’t apply to them? I’m guessing you are nodding your head with an affirmative “yes.” There is nothing wrong with a little bit of rebellion or creativity, but our society continues to exist because most people are willing to follow rules/laws and if not, deal with consequences.

Nonprofits organizations work the same way. In Minnesota, Chapter 317A of the Minnesota Statutes governs nonprofit corporations and provides various standards of conduct for directors or nonprofits. It also defines conflict of interest transactions. Other portions of the Minnesota Statutes provide unpaid nonprofit directors (board members) with immunity from liability in certain situations (e.g. if they are acting in good faith, within the scope of their duties and did not act recklessly or willfully in their conduct). If a director is NOT following the “rules” they lose their immunity (ex. actions brought by the Minnesota Attorney General, breach of fiduciary duties and actions pursuant to federal law).

Today’s take-away: Follow the rules and understand your duties, otherwise be prepared to face the consequences.

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