Operating a Washington Non-Profit: 5 Legal Mistakes to Avoid

Non-profit organizations in Washington do an immeasurable amount of good and help millions of people each year. Those who are interested in starting or running a non-profit, however, have to be very careful to ensure they are doing it correctly so they can avoid any legal issues. The following are several of the most common legal mistakes, and how to avoid them when operating a non-profit organization.

Failing to Properly Avoid Self-Serving

Self-serving is one of the most common issues that people running non-profits encounter. While most people would not intentionally engage in self-serving activities, this is actually something that commonly happens without even realizing it. Those who are on the board of a non-profit have a fiduciary responsibility to act only in the best interests of the non-profit. If you make a decision that will also benefit you personally, it will at the very least have the appearance of putting your own interests ahead of the non-profit’s. If a decision must be made that could benefit you personally, make sure to recuse yourself from the decision making process to avoid this issue.

Insufficient Oversight

Non-profits almost always delegate certain tasks to officers, committees, staff, volunteers, and others. While this is completely acceptable, and even encouraged, it is the responsibility of the board of directors to ensure adequate oversight is in place to ensure those who take on these tasks are acting in the best interest of the non-profit. Even if you know the people who you are delegating to quite well, it is necessary to have oversight policies there to avoid problems.

Awareness of Tax Laws Applicable to Non-Profits

Both state and federal governments understand that non-profits provide great services to the community; and to help incentivize this type of work, they are given exemptions from paying taxes. Many people assume that this simply means the non-profit doesn’t have to worry about any tax issues. The fact is, however, that non-profits are actually required to know a lot about their tax status in order to ensure the tax-exempt status isn’t abused or used improperly.

Poor Documentation

Those who start charities and other non-profits typically do so in order to serve their community. Things like taking proper minutes of board meetings, documenting how donations are spent, and other activities may seem like more of a burden than a help to the charity. The reality is, however, that proper documentation of these types of activities is essential for holding nonprofits accountable, and protecting their non-profit status, which is very important.

Handling Legal Decisions Yourself

It can be tempting to try to file the necessary paperwork and issue the required contracts on your own in order to save money, but that will almost always end up causing significant legal problems. Having an attorney available to consult, and use to provide legal services, is critical for most non-profit organizations. Contact APH Law to go over your situation and get the help you need.