In January of this year country music star Garth Brooks was awarded $1 million by a jury in a lawsuit stemming from a donation made to Integris Rural Health Inc. The civil dispute arose from a $500,000 donation Brooks made to the hospital. Brooks insisted the donation was made in exchange for the naming rights for a new women’s health center opening at the hospital, which he intended to name after his deceased mother. The hospital, for its part, claimed that the donation was made anonymously, had no spending restrictions, and that the discussions for a $15 million gift in exchange for naming rights had eventually broken down. Despite the evidence that backs up the hospital’s claim the jury awarded Brooks $500,000 in damages for breach of contract in addition to another $500,000 in punitive damages.
These disputes illustrate a growing trend among donors to non-profits and charities and can tie up valuable resources and leave non-profits exposed to significant financial losses. In addition, in these tough economic times, non-profits have increasingly found themselves involved in employment practices and wrongful termination suits. Unpaid interns, on whose free labor the non-profit world has long relied, have begun to try and assert legal rights and protections similar to those of full time employees. Non-profits management may not know that, while they may not be chasing profits, they do have to comply with all federal, state, and local statutes and regulations the same as any other corporate entity, including pertinent employment practices regulations. However, unlike most corporations, non-profits usually tend to lack the experience, staff, and resources to ensure that they are in full compliance, and are often woefully underinsured.
Taking a proactive, three-dimensional approach to risk can provide the board of directors of non-profit organizations with transparency they need to not only ensure that they have proper insurance, but also address potential claims by litigious donors and current and former employees before they occur.
If you would like to learn more about risk mitigation procedures your non-profit can implement to lower its Total Cost of Risk (TCoR) please feel free to contact Albert Sica at 732.395.4251, or at [email protected].
