Many people volunteer their time to work in charities, not-for-profit corporations, social clubs, athletic groups, and other organizations.
Most of these groups perform needed services. However, there are occasions where internal arguments or outside lawsuits threaten these groups’ existence. If you are a member or leader of one of these groups, there are steps you should consider to protect yourself and your organization.
Incorporating Your Not-For Profit
If your group is not a corporation, you should consider incorporating. By creating a corporation, the members of your group gain extra legal protection. In the case of lawsuits, a corporation will usually limit each members losses to what is in the corporation.
If your organization is not incorporated, there is a chance that, in a lawsuit, all of the individuals in the group could be responsible for any losses. In some cases, your own property (house, car, bank accounts) can be claimed against.
All groups face possible risks. A good way to protect against these is to purchase insurance. Insurance can be purchased to cover virtually every possible problem. Insurance can protect against damage to the group’s property, injuries members may suffer while working for the group, and financial damages other people may suffer when accessing services of the group.
In addition, while a corporation provides general protection, there are a number of exceptions which could result individual directors of the corporation being personally liable. As a result, even if you incorporate your community group, it is a good idea to consider purchasing directors’ and officers’ liability insurance.
The importance of well written by-laws or a constitution
There are a number of court cases in which directors or members of a corporation or organization fight amongst themselves. The best protection against this is to have a well written constitution (in the case of unincorporated organizations) or by-laws (in the case of corporations). A constitution and by-laws provide a set of rules for all members of the corporation to follow. While these documents cannot eliminate inter-personal conflicts, if a set of clear rules exists, disputes can be minimized.
This Article is prepared for general information purposes only and is intended to provide comments for readers and friends of the Filipino Journal. The contents should not be viewed as legal advice or opinion. If you have specific questions regarding doing business overseas, you should discuss them with a legal advisor of your choice.
Reis is a lawyer with the law firm of Aikins, MacAulay & Thorvaldson LLP and practices in the areas of immigration law and corporate & commercial law. His direct line is 957-4640. If you would like to know more about Reis or Aikins you can visit the firm’s web page at www.aikins.com