Board Members Beware
by John Weckerle
Given the amount of interest (and correspondence) generated by our earlier article on the tax exempt status of the Moriarty Chamber of Commerce, we find this recent letter in the Albuquerque Journal rather interesting. In the letter, the author, Linda Drilling of the Country Club Homeowners Assocation in Deming, expresses the opinion that a judge’s recent decision renders null and void certain state laws associated with “so-called immunity” for the directors of nonprofit organizations.
Little information is easily available on the case – it’s apparently a recent case, and disputes involving homeowners associations may fly a little below the broad radar of journalism - and the specifics are perhaps less important than the broader issue in any case. “So-called immunity” is perhaps a better choice of words than Ms. Drilling realizes; the statute does grant some level of immunity, but specifically excludes situations in which:
- the director has breached or failed to perform the duties of the director’s office; and
- the breach or failure to perform constitutes willful misconduct or recklessness.
Altogether too many people, including nonprofit board members, are under the impression that there is a blanket immunity granted that essentially prescribes that those who do good can do no wrong. This is in error. The law does appear to grant some protection to those who find themselves in difficulty due to innocent mistakes and the acts of others, but that protection can be tenuous, and there is no protection for those who choose to “play it fast and loose” with the law and ethics associated with serving on nonprofit boards. The short course I took on this issue earlier this year through Jean Block Consulting in Albuquerque was very informative, and I highly recommend that those serving on nonprofit boards consider taking this or similar training to learn just what is expected of them by those who can award damages.