Unilateral Silencing of Charities Deemed to be Terrorist Organizations: Pending Legislation
Although it has not made much news, a proposed Bill titled Stop Terror-Financing and Tax Penalties on American Hostages has been making its way through Congress. As of November 21, 2024, the Bill was approved in a vote of 219-184 and received support from all Republicans except for one and by 15 Democrats.
As of December 2, 2024, the Bill was received by the Senate. If approved, it would only take approval by the President for this Bill to become law and potentially silence nonprofits that a presidential administration deems to be involved in terrorist activity.
Nonprofits Are Already Prohibited from Supporting Terrorist Activity
The Internal Revenue Code already provides a mechanism for a nonprofit to lose its tax-exempt status if it is deemed to be engaging in terrorist activity. The definition of terrorist activity, the process of revocation and the rights of the accused charity are outlined in paragraphs (1) through (7) of Section 501(p) the Code.
A terrorist organization whose tax-exempt status may be revoked is defined in paragraph (2). Terrorist classification is determined by other Federal acts and departments, including the Immigration Nationality Act (INA), an Executive Order related to terrorism under the authority of the International Emergency Economic Powers Act, or an Executive Order issued under the authority of any Federal law related to INA or as it pertains to subnational groups. In other words, it’s a method of checks and balances where the Treasury Department relies on the expertise and knowledge of other Federal departments to identify and designate a terrorist organization.
Key Points of the Bill that May Silence Nonprofits
The Bill proposes adding a new paragraph (8), which would vest the Secretary of Treasury with unilateral authority to designate a nonprofit as meeting the definition of a terrorist organization as defined in paragraph (2). The Secretary of Treasury is a Presidential appointment.
Although it appears that the Secretary would be limited to the definition of a terrorist organization based on an outside agency or Act, there is a vulnerability to organizations which may be deemed as a subnational group, which is one that advocates for a certain point of view or policy which may not be supported by the Federal government.
In addition, if the Secretary identifies a nonprofit as a terrorist organization, the organization has only 90 days from the date of the notice to provide a response or certification that it did not support the alleged terrorist activity. This leaves the nonprofit very little time to understand the allegations and prepare a satisfactory response.
Take Action to Improve Internal Controls
Nonprofits support charitable causes throughout the world and advocate for improved human rights with the United States. It is important to maintain updated policies and expenditure responsibility.
This may include the following:
- Reviewing your OFAC Policy to comply with anti-money laundering laws
- Auditing your expenditure responsibility reports and
- Updating your grant agreement policies.
On a regular basis, review your Bylaws and Committee Procedures to determine if they reflect the latest laws and best governance practices.
In addition, maintaining timely and detailed minutes is important for all organizations as they reflect the decisions made and the underlying reasons.
Finally, prepare a team of professionals to support your organization, including an accountant, attorney and other advisors who understand your organization before a need arises. At Abelaj Law, PC, we are committed to assisting nonprofits with their governance needs. Contact our experienced legal team today at 212-328-9568 for an introductory call to learn more.
Protecting Non-Profit Volunteers From Liability
Many nonprofit organizations rely on volunteers to accomplish their goals and serve their causes. Just like workplaces with paid employees, nonprofits that use volunteers need to be aware of potential liabilities related to these activities. Fortunately, the federal Volunteer Protection Act of 1997 protects volunteers from liability in many situations, and several states have their own volunteer liability protection laws. However, volunteer liability is a complicated legal concept, and there are some circumstances in which a volunteer can be held liable for injuries or property damage. To learn more about protecting nonprofit volunteers from liability, and to ensure that your nonprofit organization is legally protected, contact the nonprofit lawyers of the Jennifer V. Abelaj Law Firm at 212-328-9568.
Understanding the Volunteer Protection Act
In 1997, the United States Congress passed the Volunteer Protection Act in an effort to promote volunteerism. This law protects nonprofit volunteers from civil liability for injuries or property damage as long as the volunteer:
- Was acting within the scope of their volunteer duties;
- Had proper licensing, if needed;
- Did not cause injuries or damage due to gross negligence, willful misconduct, recklessness, or a conscious disregard for the safety of the person injured;
- Was not using a motor vehicle, aircraft, or any other vehicle when the injuries or damage happened
Although state volunteer protection laws vary, this federal law uniformly protects nonprofit volunteers in all 50 states. However, the VPA does not protect the nonprofit organization from liability, only individual volunteers. Nonprofit organizations can still be held liable for negligence by their volunteers. Additionally, nonprofit volunteers can sue an organization they volunteered for if they suffered an injury due to the organization’s negligence.
New York Courts and Nonprofit Volunteer Liability
The New York State Supreme Court recently dismissed a negligence claim filed against a nonprofit volunteer, ruling that the defendant was statutorily immune from liability according to the federal Volunteer Protection Act. In Jeraci v. Cooper, the plaintiff and defendant were both members of the Sullivan County ATV Association, which is a 501(c)(3) nonprofit that raises charity funds through all-terrain vehicle rallies. The plaintiff sued the defendant, the ATV Association, and other parties for personal injuries he sustained during trail maintenance before an event.
In this example of the VPA in action, the plaintiff suffered an injury when his saw got stuck in a tree and the defendant used an excavator on the tree trunk, causing it to move suddenly and break the plaintiff’s leg. The defendant and his legal team filed a motion to dismiss the complaint, which was opposed by the plaintiff’s legal team. However, the court sided with the defense and dismissed the claim based on the protections guaranteed by the VPA.
How Can Nonprofits Minimize Volunteer Liability Risks?
While federal law protects nonprofit volunteers from liability in most situations, nonprofit organizations also have a responsibility to do what they can to reduce the risk of potential liability for both the organization and its volunteers. You can learn about minimizing nonprofit liability risks and protecting nonprofit volunteers from liability by contacting the experienced nonprofit lawyers of the Jennifer V. Abelaj Law Firm.
Some general best practices that can help minimize liability risk include:
- Use reasonable care when deciding whether to accept or reject volunteer applicants, including a screening process to identify risky volunteers.
- Properly train volunteers and provide professional guidance.
- Write and distribute a volunteer handbook with instructions for reporting and resolving any issues that arise.
- Have rules for the supervision of volunteers.
- Terminate volunteer agreements when the volunteer shows that they are unable to safely perform their duties.
- The nonprofit board members should be familiar with state and federal volunteer liability laws and situations in which a volunteer could be exempt from liability.
- Make sure that insurance policies adequately cover the potential liability risks for volunteers.
What Happens When a Nonprofit Volunteer is Sued?
If a nonprofit volunteer causes injuries or other losses due to negligence or another circumstance not covered by the Volunteer Protection Act, they could face liability. For example, imagine that a volunteer is on the way to conduct an errand for a nonprofit and causes a car accident, which injures the other driver. This incident would not be covered by the VPA because the injury involved a motor vehicle. Thus, the other driver would have the option to seek financial compensation by filing an insurance claim. In some cases, the injured person may have grounds to file a personal injury lawsuit for damages beyond the volunteer’s insurance coverage.
Lawsuits Against Nonprofits for Volunteer Negligence
If someone is injured in an incident involving a nonprofit volunteer but is unable to seek damages from the volunteer directly, they may consider filing a lawsuit against the nonprofit organization itself. While tort lawsuits against nonprofits are relatively rare, they can be extremely costly if the court awards a judgment to the party filing the lawsuit, or if the nonprofit needs to offer a settlement based on the facts of the case.
Nonprofit leaders should take preventative measures to minimize the risk of injuries and subsequent lawsuits. Board members should regularly evaluate the organization for potential risks and make specific plans for minimizing those risks. A well-managed organization with strong safety and supervision guidelines can drastically limit the organization’s risk of facing liability for preventable injuries.
Learn More From Our Nonprofit Lawyers
Liability is one of several important legal considerations for nonprofit organizations. Nonprofit leaders must account for their liability risks and take all appropriate measures to reduce these risks as much as possible. However, identifying these risks and crafting effective solutions can be a difficult process. This is why many nonprofit organizations enlist the help of experienced nonprofit lawyers who understand how to evaluate risks and take action to minimize these risks.
At the Jennifer V. Abelaj Law Firm, our team of veteran nonprofit lawyers has experience helping nonprofits limit their liability risks, respond to lawsuits for alleged negligence, and handle all other legal matters related to running a nonprofit. If you have questions related to protecting nonprofit volunteers from liability, you can learn more by contacting the Jennifer V. Abelaj Law Firm today at 212-328-9568.