Volunteer nonprofit board members; recent Supreme Judicial Court decision examines scope of immunity from suit
The global pandemic has suddenly thrown many nonprofit organizations into a churning sea of economic uncertainty. As a result, volunteer board members are being asked to make exceedingly difficult decisions about whether and how to try to keep their missions alive and “doors” open. Economic models have been quickly generated assuming projections of future revenue that may or may not be realized. What happens if those projections are wrong and nonprofits are not able to meet future obligations? Could any of the volunteers who sit on the boards of these nonprofits face personal exposure for those obligations? As confirmed by a recent decision of the Supreme Judicial Court in Lynch v. Crawford, 483 Mass. 631 (2019), the answer is probably no — at least so long as board members act in good faith and follow a reasonable process in conducting their financial analysis. Federal and state law affords volunteers serving on nonprofit boards significant protection from not just liability but from suit. But such protection is not unlimited. Board members can have personal liability for wrongful intentional, reckless behavior and gross negligence. And board members who also serve as officers of the nonprofit – generally, the president and the treasurer...